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Securities America Forms Arbor Point Venture for Hybrid Advisors

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Securities America and NorthStar Financial Services Group said Thursday that they had formed Arbor Point Advisors, a joint venture that aims to “fill the gap” for independent advisors looking to operate via a hybrid-business model with a choice of custodial firms and without the need to run their own RIA, according to partners.

Arbor Point Advisors is a new SEC-registered investment advisory firm with an integrated platform that lets hybrid advisory firms serve fee-based clients through TD Ameritrade (AMTD), Charles Schwab (SCHW) and Fidelity Institutional, for instance, while also maintaining their clients with commission-based accounts.

“The challenge advisors face in running their own RIA is the significant time spent on compliance, technology and administration – time they aren’t spending with clients,” said Jim Nagengast (left), CEO and president of Securities America, in a statement. “We saw a need in the market for a turnkey RIA with a custodian-agnostic platform, and we partnered with another Omaha-based industry leader, NorthStar, to create an innovative and compelling solution.”

According to Cerulli Associates, RIAs are expected to administer about 14% of total client assets by the end of this year, the partnership says. In addition, several large RIA firms have joined forces in the past decade or so to lower their overhead costs.

While RIAs with $1 billion or more in assets are able keep their costs under control thanks to the size of their asset base, many independent RIAs have a harder time coping with the overhead and associated issues of such an infrastructure. This situation prompted Securities America, which is owned by Ladenburg Thalmann (LTS) and has about 1,700 affiliated reps, to work with NorthStar in devising a platform for advisors with $50 million to $250 million in assets, says Arbor Point President Curtis Reed, CFP.

“For every advisor with $1 billion in assets looking to form or join an RIA, there are hundreds of firms with $100 million who need the same support to serve their clients,” Reed said in a press release. “We’re not an RIA consolidator. We’re a support platform – an RIA ‘easy button,’ so to speak – for independent advisors who want the freedom to choose a custodial firm and serve their clients the way they want.”

Previously, Reed operated his own RIA, Windy City Wealth Management. “Many of the companies that service RIAs have moved their focus upstream to larger firms,” he said. “In addition, the volatile markets and uncertain regulatory environment have heightened the challenges and complexity of delivering financial advisory services.  The traditional advisor office is feeling less valued and a little lost.

“There is a strong need for focused practice management and business growth support,” Reed continued. “Advisors are finding they have to make choices about where to spend their time, and realizing they want to spend more of it with clients.”

To help RIAs who want to continue to work with commission-based clients, Arbor Point uses the services of Securities America. NorthStar unit Orion Advisor Services supports advisors’ fee-based advisory business. (Orion is one of the nation’s largest privately held portfolio-accounting service bureaus for RIAs, while NorthStar has some $140 billion in assets under administration.)

“We’re not telling advisors which business model to use,” Reed noted. “We’re giving them the solutions they need for the business model they choose. Partnering with Arbor Point allows independent advisors to devote their time and attention to serving clients first, relying on our professional staff to shoulder the compliance and operational duties.”