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September 29, 2013 at 09:26 PM
Like bad sci-fi, BrokersXpress lives on, only in a different form.
The announcement in May 2012 that owner Charles Schwab would shutter the broker-dealer was a surprise to industry watchers. Part of the OptionsXpress acquisition made by the custodial and clearing giant for $1 billion in September 2011, BrokersXpress was more difficult to integrate than its options clearing counterpart — at least that was the reason given.
The move, however, opened an opportunity for a number of other firms, one in particular being fellow Chicago-based firm TradingBlock. It naturally looked to brokersXpress alumni to help build out a similar style broker-dealer, and a number of senior staff made the leap. Gary Martino was one; he’s a nine-year veteran of BrokersXpress with 30 years racked up in the industry overall.
He picked up where BrokersXpress left off, helping TradingBlock form its MoneyBlock spinoff as vice president of sales and business development, with a focus on options in the independent rep space.
“Initially there was a period of time where they were working on how they were going to integrate brokersXpress into the Schwab Advisor Services umbrella,” he began by way framing the story behind the purchase and subsequent sale. “They would offer services for RIAs as well as having our own broker-dealer to service the independent reps in their own corporate RIAs, or their IARs.”
Ultimately, Schwab, for whatever reason, decided to wind down the BrokerXpress model, which Martino called, “sort of a shock to folks, considering it was a profitable company and clean from a regulatory perspective, which is why most other firms typically shut down.”
In doing so, Schwab gave BrokersXpress-affiliated reps and advisors 90 days to move their books of business.
“Although 90 days is a decent amount of time, it isn’t necessarily a large amount of time for a broker or advisor to service their clients and go through the transition process and move those accounts,” he noted. “I was asked to stay and help those reps and advisors transition their business and find firms that would be a good fit.”
TradingBlock, it turned out, was one such firm. The small broker-dealer primarily serviced self-directed accounts, and had some of the same tools and features that were attractive to the reps and advisors at BrokersXpress.
“It’s what I refer to as the holy trinity; features such as cost structure, options capability and technology,” Martino said. “In the RIA space there are a lot of firms with similar capabilities, but in the independent rep community there wasn’t really a lot out there.”
Being in Chicago, TradingBlock knew about BrokersXpress, and always “sort of envied” the model. When they were approached by BrokersXpress reps about moving their business, the powers that be decided it would be a great opportunity to enter the independent space.
“The TradingBlock team reached out to us and asked us if we would be interested in helping them rebuild the model, which ultimately became MoneyBlock.”
The rest, as they say, is history. However, he emphasizes it’s not a carbon copy of the former firm; there are differences.
