Despite word that Securities America and Ameriprise Financial “made substantial progress” in last week’s mediation, the overall environment at Securities America has deteriorated markedly, with several advisors leaving this week and more set to leave soon, according to a departing Securities America rep and a veteran recruiter.
The news and conversations have “caught everyone off guard, and they are all freaked out … and have begun having meetings” about their next steps, the departing advisor, who has more than 20 years in the business and several years with Securities America, said in a phone interview with AdvisorOne on Sunday. “There’s a feeling that Securities America cannot last long, maybe two to three months or less, depending on what happens.”
In an interview on Monday, Janine Wertheim, Securities America’s senior VP and chief marketing officer, denied that any of its reps had left the broker-dealer “over the past few weeks because of these events.” In fact, she said that Securities America has “experienced a positive net gain” in the number of reps in 2011, and that its advisors have been “incredibly supportive of us.” There has been only one loss in the “last couple of weeks” of an advisor, she said, and that was a termination due to a “change in business model” at that rep’s practice.
Calls between executives at Securities America, which is led by CEO Jim Nagengast (left), and its advisors were cancelled last week but now have been rescheduled for late Monday and early Tuesday. “This is just to try and keep those advisors who may be nervous from jumping ship,” said the departing advisor. “I am extremely skeptical about what is happening.”
What Your Peers Are Reading
However, Wertheim said that beginning Monday afternoon, the broker-dealer was holding a series of conference calls with its reps to “bring them up to speed” on developments in the case, especially on the process that was announced late Friday, March 25, under which “all interested parties have committed to a process that we hope will result in a full and final resolution of these matters.”
What the Recruiters, IBDs Are Saying
A veteran recruiter confirmed the situation as described by the Securities America rep. “Some reps are already leaving, some will do so in the next couple of weeks and others in the next couple of months,” the recruiter said in a phone interview with AdvisorOne on Monday. “They all pretty much have a Plan B, with some saying this is a good time go.”
Still, the recruiter says, those advisors with large books of business “see switching firms as a herculean task and hope things work out.”
The recruiter is in contact with about 25 Securities America advisors of whom two-thirds want to move regardless of the outcome of any negotiations involving Ameriprise Financial.
And other broker-dealers are getting calls, too.
"We are currently in conversation with some advisors from Securities America who have reached out to us," said Robert Foney, chief marketing officer of Investors Capital, in an interview. "Our five-star service model is perfect for them as well as any for any advisor with an acceptable U4 and business mix, producing over $100,000 per year," added Foney.
At least one recruiter, though, says there may be a silver lining for Securities America.
“If Securities America [and Ameriprise] are able to engineer a settlement, this makes them look good,” said Mark Elzweig (left), an executive-search consultant in New York.