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$875M SII team opts for small IBD over ‘big-box store model’

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An SII Investments team with $875 million in client assets bolted for a smaller independent broker-dealer that has added more than a dozen firms from SII’s parent after LPL Financial purchased its assets.

Managing partners Greg Ostrowski, Ian Arrowsmith, Jay Sprinkel, Ryan Ansted and Shawn Walker of Scarborough Capital Management joined Independent Financial Group, the firm said this week. Scarborough’s 10 advisors produce more than $6.5 million annually in fees and commissions.

The Annapolis, Maryland-based practice followed 13 other firms that have moved to their new BD since LPL’s deal with SII’s parent, National Planning Holdings, in August, according to Independent Financial. Independent Financial’s 14 ex-NPH practices include 44 advisors with almost $3 billion in assets under management.

Scarborough constitutes the 11th office of supervisory jurisdiction to come to the firm from NPH, and LPL’s competitors have seen strong recruiting after the purchase. At least 370 NPH advisors with $15.9 billion in client assets have picked other firms over LPL since the acquisition.

“We did a pretty exhaustive search of broker-dealers,” Ostrowski said in a statement, adding that Independent Financial’s “nimbleness and size compared to the big-box store model was attractive to us.”

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A spokeswoman for NPH and a spokesman for LPL declined to comment on the firm’s exit.

Since the acquisition, LPL, the No. 1 IBD by revenue, has announced 11 different ex-NPH practices with more than $500 million in client assets that have come to LPL from two of NPH’s four BDs. The firm will complete the transition of the remaining advisors and assets in February, LPL has said.

Scarborough took its assets from SII Investments on Dec. 31, according to FINRA BrokerCheck. Scarborough, which also has its own RIA, had been with SII since 2008. The managing partners, longtime advisors with the firm, bought Scarborough in 2013, according to its Form ADV brochure.

“Our unique value proposition continues to pique the interest of larger offices like [Scarborough] because consolidation is plaguing our industry, undermining both independence and advisor happiness,” David Fischer, managing partner of Independent Financial, said in a statement.

Independent Financial’s annual revenue has jumped 62% to $122.9 million during the past five years, boosting the IBD’s ranking to No. 41 in 2016 from No. 52 in 2012. The San Diego-based firm supports more than 640 advisors in 370 offices with roughly $18.7 billion in client assets.

It has taken an outsized share of advisors out of LPL’s incoming group of 3,200 advisors at the four NPH’s firms. In November, Independent Financial recruited 10 ex-National Planning OSJs, delivering a combined $2 billion in AUM to the firm.

The recently completed year brought record recruiting for the company, according to Fischer. Independent Financial’s total crop of new advisors added almost $25 million in revenue to the firm in 2017, he says.

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