Determined to keep its 48-year-old firms small, hometown feel, Investors Security of Suffolk, Va., has decided to drop its own broker-dealer and affiliate with Securities America, a subsidiary of Ladenburg Thalman Financial Services, the nations eighth largest independent broker-dealer.
The deal is one of the largest in the history of Securities America, which appears to have successfully emerged from the troubled period capped by its sale by Ameriprise to Ladenburg last year. And it marks a triumph for a firm, which landed the deal after Investors Security weighed partnering with larger independent B-Ds like LPL Financial and Commonwealth.
Investors Security has $96 million in assets under management, and almost $1 billion in assets under administration.
Securities America bent over backward to make the transition a smooth one for the smaller broker-dealer, says Christopher Holloway, the president of Investors Security, adding that the deal will solve succession issues for his firm.
One of the things I think everybody in the independent B-D field worries about, when you are a smaller firm, is what happens if something happens to the founder, says Holloway, who works closely with the Virginia firms founder and chairman, Cabell Birdsong. You have to create a liquidating event in case he passes away. We needed to find a firm that, no matter what happened, we always knew we would be in business -- where our clients would be taken care of.
Critical to Investors Securitys decision, says Holloway, was a weekend its leadership spent at a Securities America meeting in California in March. The meeting gave them the chance to spend several days of unfiltered time with advisors from other firms who are part of the Securities America network.
Also in attendance were the heads of some of those firms offices of supervisory jurisdiction or OSJs, basically super branches. Given that Investors Security was looking to become an OSJ super branch within Securities America, talking directly with these branch heads made him confident in proceeding, Holloway says.
Ultimately, the firm didnt go with the countrys largest independent B-D, LPL Financial, because we were so satisfied with what we discovered about Securities America, he adds.
Investors Security also decided against another large independent B-D, Commonwealth, because it clears through National Financial and not its current clearing firm, Pershing, Holloway says.
Additionally, as a "super branch" of Securities America, Investors Security advisors will not be required to call into a large, unknown firm, he says.
Keeping the Name
As a super branch of Securities America, Investors Security will retain its firms name; all its advisors will remain independent contractors -- rather than employees -- of Securities America. In addition to the 130 advisors who are making the transition to Securities America, another 10 Investors Security advisors decided to go off on their own or to retire, Holloway says.
Securities America actually prefers that its advisors retain their smaller firms names, says Gregg Johnson, Securities Americas senior vice president of branch office development and acquisitions. The direction that some of our competitors are going is to put their name or brand a little more front and center, he adds. That is not a direction we are going in.
"We feel it is the advisors who carry the value to our clients," Johnson continues. "We are passionate about independence. That is why we are very accommodating about our advisors using their own name and their own branding. We are very much in the background.
Founder to Remain
For at least the next several years, Holloway says, Investors Security founder Birdsong will remain at the firm, even though he is nearing 80. Then again, Birdsongs mother turns 107 next month, says Holloway: He always says, Im 78 and my mother still tells me what to do.
For his part, Holloway says the Securities America deal will ease burdens on his firm while also helping it to grow.
We really look forward to taking things to the next level with their support, their technology and their expertise, he says. Im excited to ... get rid of the B-D responsibility, [which] did nothing but cost a lot of money, and I get to spend time doing what I love -- which is help registered reps to build their books of business.