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Amid ‘transformation,’ HD Vest grabs $220M Raymond James team

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HD Vest Financial Services has poached a CPA and financial advisor whose practice amassed $220 million in assets under administration during 35 years with Raymond James.

Richard Mitchen and the three other advisors of the Baton Rouge, Louisiana-based practice joined the tax-focused independent broker-dealer after what HD Vest CEO Bob Oros describes as a “year of transformation.” Oros cites a shift to recruiting more experienced advisors as one of many big changes.

The No. 19 IBD often trains CPAs and enrolled agents to convert them to full planners. HD Vest also added two accounting firms with combined accounting revenue of $9 million in the fourth quarter, according to the latest earnings report of the Dallas-area firm’s parent, Blucora.

However, HD Vest shed 473 low-producing advisors in 2017, with its 3,999-broker headcount expected to fall by another 500 during the next three months. At the same time, the firm set records in the fourth quarter with $44.2 billion in AUA and $12.5 billion in assets under management.

“One of the areas that drives growth is absolutely recruiting. So we’ve taken a fresh approach to how we recruit and who we bring onto the platform,” Oros said in an interview in late January. “If you look in the industry, you could probably look inside any broker-dealer and find tax professionals affiliated there. So there are like-minded people who we think are a good fit for us.”

Among recent career changes, Merrill Lynch lost brokers managing $2.2 billion to rival J.P. Morgan Securities.
February 20

Representatives for the firm didn’t respond to a request for the rough breakdown of established advisors and new planners among its recruits.

Mitchen joined HD Vest on Jan. 18 after working for Raymond James’ independent channel since 1982, according to FINRA BrokerCheck. His team, which also includes three support staff members, caters to high-net-worth clients in addition to its accounting and tax-focused wealth management services.

“Our shared belief that tax information is key to effective overall financial planning and our common focus on clients and families make HD Vest the ideal platform for us to continue to grow and enhance the client experience we deliver," Mitchen said in a statement.

A spokeswoman for Raymond James confirmed Mitchen’s departure but declined further comment.

His transition to HD Vest came as the firm moves its assets to Fidelity Clearing & Custody Solutions, which its parent says will grow its profits by $60 million to $100 million over the next 10 years. Oros came to HD Vest last year after stepping down as Fidelity’s RIA head.

HD Vest conducted nearly four months of due diligence before announcing the move last July, with full conversion slated for September, Oros says. In selecting Fidelity, the firm “ran a very rigid process” that Oros kept at arm’s length because of his prior role, he says.

Blucora CEO John Clendening mentioned the Fidelity migration, as well as the firm’s addition of Mitchen, in prepared remarks during the firm’s earnings call. He also noted new minimum AUA requirements for advisors, as well as the firm’s new model for identifying tax pros who could make successful advisors.

A rule of thumb dictates that the ratio of potential AUA for every dollar of accounting revenue is 100 to 1, according to Clendening. Therefore, the firm estimates the two other accounting firms that came to HD Vest with $9 million in combined accounting revenue could eventually manage nearly $1 billion.

“While we don’t plan to share this level of detail every quarter, we think it is important to share these data or proof points from time to time as indicators we are heading in the right direction,” Clendening said.

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