NEW ORLEANS — Ladenburg Thalmann’s largest independent broker-dealer is launching RIA-only affiliation as the sector aims to serve fee-only practices while confronting the competitive challenge.
Securities America will roll out the tailored services without any formal BD affiliation it plans to offer advisors next week, CEO Jim Nagengast said in an interview at this week’s FSI OneVoice conference. The program is similar to one
About 27,000 advisors — 9% of the industry’s roughly 310,000 — changed firms in 2018, according
However, Cerulli remains “relatively optimistic” about the IBD sector because of the continuing independence movement. Erinn Ford, president of fellow Ladenburg firm KMS Financial Services, agreed, adding she expects more so-called reverse breakaways to come back to IBDs from the full RIA channel.
Ford, who
Securities America also expects to report record revenue for 2018, based on annualized figures from the third quarter, Nagengast says. Helping the firm’s advisors purchase RIAs and recruit new ones into the profession served as the main motivating factors for the firm’s fee-only offering, according to Nagengast.
If advisors “want to acquire an RIA-only practice,” they “should be able to bring that into the family,” he says, arguing that the firm is creating “an easier track to get young people into the business” by enabling practices to hire advisors who don’t have Series 6 or 7 licenses. “It is really about growth and flexibility,” he added.
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With 27,000 advisors on the move this year in wealth management, the industry remains in a period of flux.
December 3 -
The fully-independent channel remain a competitive threat to IBDs attempting to retain top advisors while dealing with lost revenue.
November 16 -
Executives from Pershing and Fidelity say smaller firms can find a home in the hybrid space.
February 5
Macroeconomic trends and matters of convenience will move advisors, assets and markets next year in the ever-changing wealth management space.
The setup will also allow existing advisors to drop their FINRA registration, though Nagengast says he hasn’t seen an “overreaching demand” to do so among the firm’s more than 2,000 advisors. Securities America’s revenue soared by 26% in 2018 to more than $800 million, according to the metrics shared by the CEO.
Rising interest rates helped push up the revenue, as well as the firm’s
KMS has a much smaller headcount of about 350 advisors, and Ford says the firm ended the year with about $1.8 million in recruited gross dealer concessions. Next year, her team has set a “fair number” target of $10 million and a “stretch goal” of $15 million.
At least one reverse breakaway advisor affiliated with KMS just before Ford started as president last year, and she says she expects such moves to “continue to pick up” in coming years. Compliance and risk services, technology and support for growth could help IBDs get the full RIAs back, according to Ford.
“What it ultimately comes down to is, what does an advisor want to spend their time doing? Do they want to build the infrastructure of compliance and operational support, or do they want to work with clients and grow their firms?” she says. “The infrastructure’s already built in the IBD space.”
KMS works with four custodians, and Triad launched a multi-custodial corporate RIA called Triad Hybrid Solutions in 2014. While Triad has about two or three advisors with no brokerage affiliations, about 80% of its more than 600 advisors operate from outside RIAs, according to Rosenthal.
While he declines to state more specific metrics for 2018 ahead of Ladenburg’s fourth-quarter earnings announcement, Rosenthal says the firm recruited advisors producing $26 million in revenue.
Regulation, volatility in the stock markets and “consistent change” faced by advisors will help IBDs grow, he says.
“What we’ve found and what we thought was, advisors don’t get into business just to be a CCO; they don’t get into business to figure out their tech deck," Rosenthal says. "They really want to go out and serve investors.”
