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$200M advisors drop OSJ for super-OSJ amid 'disruptive' forces

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Robo advisors and the fiduciary rule represent two recent “disruptive and game-changing events,” says financial advisor David Quick of Meliora Wealth Management. So disruptive, in fact, they caused Quick to make a game-changing shift of his own.

While assessing his independent broker-dealer relationship — as he does every five to seven years — Quick noted how much these trends were influencing wealth management. He decided to join Ladenburg Thalmann’s Securities America from Cambridge Investment Research, saying the switch would help his firm navigate the disruption.

“As far as I see it, neither of those need to be a challenge,” Quick says. “Neither of them needs to be negative, but they're certainly something that you need to address.”

The Rochester, New York-based Quick and five other advisors from a small business-serving practice named Allied Financial Partners aligned with Evolution Financial Advisors, a former IBD purchased by Securities America in 2016. Their new IBD announced the move on April 23.

Quick had served as the manager of an office of supervisory jurisdiction for the two teams from the Rochester area with more than $200 million in client assets. Under the move, they became part of Evolution’s OSJ, which had been called the Wall Street Financial Group as an IBD.

With rising expenses and tighter margins, smaller IBDs are selling to larger partners — whether to fold in as OSJs or independent subsidiaries. The former IBD now taps Securities America resources like technology and practice management, Evolution CEO Victoria Bach says.

“We've been really able to add to our value proposition, which is a small family type of atmosphere with the backing of a larger organization that can add things which are just not feasible for smaller firms to have on their platform,” Bach says.

“You can really focus on the advisors and their clients,” she continues, “and you spend time helping them grow their practices and achieving their goals rather than spending time doing administrative and compliance matters.”

Evolution has expanded to 86 advisors managing $2.6 billion in client assets on Securities America’s corporate RIA, from 67 representatives with $2.1 billion at the time of the September 2016 acquisition. Like the newly recruited teams, it has its headquarters in the Rochester area.

Quick’s practice manages around $60 million in client assets, while Allied’s five advisors have about $140 million. Allied advisor Dave Younis had started his career as a college intern under Quick when he was at Lincoln Financial Network. Quick later launched Meliora — which gets its name from a Latin term meaning “ever better.”

The market is expected to remain heated in the months ahead.
April 9

Allied takes a “integrated, multi-disciplinary, full-service” approach in providing small businesses with services like payroll, insurance, accounting and wealth management, Quick says. He argues the model displays how advisory teams can provide greater value than robos in an era of fee compression

Quick’s 20-year career includes two years with Signator Investors, 10 with Lincoln and six with Cambridge, according to FINRA BrokerCheck. Quick affiliated with Securities America on Dec. 18, while Younis moved on Feb. 7.

“We believe independent financial professionals have choice in managing their respective businesses and defining their priorities in serving their clients,” Cambridge spokeswoman Cindy Schaus said in an emailed statement about their departure.

Offerings under Evolution and Ladenburg’s largest IBD like technology, compliance and insurance will help Quick allow people to specialize in their roles, he says.

“It's important to the independent advisor to make sure that — whatever those needs are for their growth — they’re getting the most out of their IBD,” Quick says. “I didn't realize that moving out of an OSJ role and into a super-OSJ relationship would have been as beneficial as it has proven to be.”

Securities America’s parent generated record revenue of $1.4 billion and record net income of $34 million in 2018, according to Ladenburg’s April 30 proxy statement. A headcount of 4,400 advisors at Ladenburg’s five subsidiary IBD firms “reflects our successful recruiting efforts of talented advisors over the past three years,” the document states.

The transaction which led to Evolution becoming a Securities America OSJ marked its ninth acquisition in an eight-year span at the time. In those nine deals, the firm added 1,000 advisors producing $127.8 million in annual revenue and managing nearly $15 billion in client assets.

In a statement, Gregg Johnson, Securities America’s executive vice president of branch office development and acquisitions, said the firm is committed to helping advisors “scale up their businesses.”

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