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Advisor Group Touts Plans at Confab

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(Los Angeles) The Advisor Group’s three broker-dealers had strong results in 2011, according to President and CEO Larry Roth. The challenge will be to boost recruiting this year, while acquiring and attracting a higher number of advisors, he said at the group’s sixth annual Women’s Conference, taking place March 4-6 in downtown Los Angeles.

“Our results last year were excellent,” said Roth (below), in an exclusive interview. “Revenues were up 15% in flat market, and retention was as good ever — at 96.5%, like in ’07. Recruiting’s been good, though not as strong as a couple years ago,” he explained.

The Advisor Group, which includes more than 4,430 producing advisors, recruited some 400 advisors to its three broker-dealers — Royal Alliance, FSC Securities and SagePoint Financial — in 2011. But it’s raising the bar for 2012. “Our target is closer to 750 overall this year,” said Roth, who adds that more than 20% (or 886) of its reps are women.

One way the group hopes to do achieve this recruiting goal is by retooling its hybrid model for RIAs, says Art Tambaro, head of Royal. “We’ve been in this space for some 10 years or so … and are expanding what we do with various custodians,” he explained in an interview.

“We are refining the hybrid model so we can get institutional pricing to compete better,” Tambaro noted. Plus, there are reps that are using other independent broker-dealer platforms who have expressed a desire to move to — and, in some cases, return to — the Advisor Group given its more robust platform, he added.

The Advisor Group’s reps have about $100 billion in assets of which some $35 billion is in fee-based accounts. More than half — at least $20 billion — is being managed by advisors with hybrid operations.

“Our value comes in compliance,” said Roth. “Some firms do not necessarily do this work [the way Advisor Group does] for independent RIAs. We expect these RIAs to wake up with today’s regulatory environment and say, ‘I really need someone to do this compliance and supervision work for me.’ ”

For Advisor Group, “We want to deliver a better operating environment versus the excellent one that we now offer. And we want to do it better than all the other alternatives, meaning the six or seven other hybrid-platform options out there,” he emphasized.

Another area of growth for the organization, says Roth, is acquiring “super OSJs,” those with several sub-OSJs under a managing field associate, or MFA, umbrella. “As we work on acquisitions, we are seeing some new areas that represent a large chunk of business migration, and this is one of them,” he explained.

This growth area is closely related to striking more deals with smaller broker-dealers that have about $20 million in yearly sales. “They are feeling the pressure over capitalization, regulation, supervision, technology and other issues,” said Jerry Murphy, head of FSC, in an interview. “For us, this means an opportunity to partner with them, since we’ve built up the operations and technology we can offer in the past few years.”

The motivation for broker-dealers to sell and join the Advisor Group, adds Tambaro, are the razor-thin profits in the business. “The margins are very thin, and the costs to supply advisors with what they need are very high,” he shared.

A big piece of this equation is technology, points out SagePoint President Jeff Auld. “Expectations are growing as rapidly as the technology, and advisors expect access to the changing technology,” as do their client, he explained.

According to David Ballard, head of technology for the Advisor Group, “More and more advisors are using Andriods, iPads, iPhones and other devices, and they want information to be seamless across their devices as they use them at home, in the office and other road,” he explained.

This trend prompted Advisor Group to strike an alliance with in mid-January to integrate the tech company’s CRM onto the Advisor Group platform (VISION2020). Also, in March, Advisor Group announced a partnership with Lightbulb Press to help advisors produce customized educational booklets for use with current and prospective clients through the VISION2020 portal. •


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