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Portfolio > Mutual Funds > Equity Funds

RCS to Buy Investors Cap; Advisor Group Names New CEO

By Janet Levaux

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RCS Capital Corp., founded by real estate mogul Nicholas Schorsch, has filed the paperwork to purchase the independent broker-dealer Investors Capital Corp. The news comes on the heels of news that RCS would acquire the liquid-alternative investment firm Hatteras Funds, as well as the announcement in early September that high-profile Advisor Group president Larry Roth would join Realty Capital Securities, the non-traded REIT broker-dealer and wholesaler arm of RCS Capital, as its CEO. According to RCS, longtime Investors Capital President and CEO Tim Murphy and Hatteras Funds founder David Perkins will continue in their leadership roles with their respective firms.

Jon Henschen, president of IBD recruiting firm Henschen & Associates, praised the Investors Capital acquisition as a win for the Lynn, Mass.-based firm. “Investors Capital has been a family culture operation since inception,” he said in an interview.

“With the purchase of the firm, the family culture will stay intact, but now they will have deep pockets behind them, which is always welcome in a small-spread industry,” Henschen continued. “The terms of the purchase were contingent on staffing and culture to stay intact, so for Investors Capital, this was a win-win.”

Access to capital is a struggle in the independent channel, he added, and the Schorsch purchase “is a smart way to achieve this goal while remaining conflict-free.” Incorporated in 1995, Investors Capital has 550 registered representatives across the United States.

Still, RCAP says it has pretty much tapped funds raised from its June IPO, points out Chip Roame, head of Tiburon Strategic Advisors, which could be a signal that its “buying spree is over for now,” in an interview. Roame says RCAP’s latest purchases remind him of the playbook followed by AIG and Advanced Equities as part of their respective growth strategies.

“AIG rolled up IBDs, and Advanced Equities bought IBDS and sought specifically to distribute alternative products,” he explained in an interview. In other words, “Larry Roth’s move to RCAP is making more sense every day,” shared the consultant.

New Leader Tapped

Advisor Group just named Erica McGinnis as its new president and CEO. McGinnis, who most recently was the group’s senior vice president and chief compliance officer, replaces interim Advisor Group head Peter Harbeck, who was tapped to lead the firm in early September after Roth departed.

“I have enormous respect for Larry Roth,” said McGinnis in an interview. “He opened doors for me and encouraged me to walk through them, so I owe him a lot.” McGinnis says that she will not try to fill his shoes. “We have different skills, and I would love to put some of my focus on the Advisor Group staff of 800 across the firm,” she said. “The core of our business is about serving advisors and taking care of these employees, too, since they deliver the great services to our network.”

Advisor Group includes more than 6,000 independent reps, who are affiliated with FSC Securities Corp., Royal Alliance Associates, SagePoint Financial and the recently acquired Woodbury Financial. “We are making the transition smooth for Woodbury,” McGinnis said. “As other [broker-dealer networks] have streamlined their operations, we have very much done so as well with our back office. That’s allowed us to really go into a growth mode.”

McGinnis joined the network of IBDs in 2004 as director of branch exams, based in Phoenix. She previously managed operations, training and compliance efforts for Charles Schwab, Wells Fargo and Ameriprise Financial.

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