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New Directions for Rival BDs

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Several employee-advisor firms have reached significant milestones recently. Raymond James, for instance, completed an important wealth-management acquisition, while Wells Fargo Advisors tapped a new chief.

With over 6,500 advisors, Raymond James wrapped up its purchase of Deutsche Bank’s U.S. Private Client Services Unit in September. The company says that Alex. Brown’s 190-plus advisors have joined it and are now on the firm’s technology platform.

The group of former Deutsche Bank reps serves high-net-worth and ultra-high-net-worth investors in 16 branches, concentrated in the Northeast and West. “This combination continues our focus on strategic additions to augment consistent organic growth while also complementing our core private-wealth business in geographic areas targeted for expansion,” said Raymond James CEO Paul Reilly in a statement.

Alex. Brown is led by Haig Ariyan, who earlier was co-head of Deutsche Bank Wealth Management Americas. Ariyan joined the firm in 1996 as an advisor at Alex. Brown, which was acquired by Deutsche Bank three years later. (Alex. Brown was founded in 1800 as the first U.S. investment bank.)

The New York-based executive reports to Raymond James COO Dennis Zank and also works closely with Raymond James & Associates President Tash Elwyn, who leads the firm’s employee-advisor channel. “Tash and I are committed to keeping both businesses separate but aligned,” said Ariyan in an interview.

“There is much value in keeping the Alex. Brown brand alive as a unique null, while recognizing that Raymond James serves high-net-worth clients through its advisor business, as well. We are embracing a collaborative approach with the ultimate objective being to build a more successful and larger Raymond James,” he explained.

When the deal was announced nine months ago, recruiters said it was a good move for the broker-dealer. “This is a very clever strategy,” explained Mark Elzweig, an executive search consultant, in an interview at the time. “If Raymond James is successful in retaining the bulk of the 200 Deutsche Bank advisors, it can really position itself to compete for advisors who want to work at a small, high-end boutique.”

The unit had about $50 billion of client assets and $300 million of revenue as of late 2015, which means its advisors have an average level of production (or fees and commissions) of roughly $1.5 million — putting it way ahead of Merrill Lynch, for instance, whose reps have an average of about $1 million in production. “The timing is perfect,” Elzweig said. “They are doing this as the number of high-end boutiques in the world is shrinking, with many foreign banks exiting the business.”

In December, Raymond James expected to pay 1.4 times revenue for the acquisition, or $420 million. About 70% of this, or nearly $300 million, was to be spent on seven-year retention agreements; assuming these packages have been offered to roughly 200 advisors, that represented an average of about $1.5 million per advisor for the retention deals.

The two firms now work jointly on recruiting, diversity, technology and other issues: “We’ve been getting calls from those who lead the effort to support women and minority advisors and network with them. It’s […] more organized than what we have been able to do historically, so we are very excited about what this can do for us both commercially and culturally,” Ariyan said. (Raymond James will host its 22nd annual Women’s Symposium for advisors in October in Orlando, Florida.)

This news comes just after Raymond James said its advisors have full use of its mobile technology platform. Advisor Mobile platform works on iPhones and iPads, and it gives FAs access to client contact and account information on the go, including recent trades, as well as production and asset statistics.

The broker-dealer gave some advisors access to the new technology at its independent-advisor conference in April, but the full rollout of the program happened in July.

New Chief for Wells Fargo

David Kowach is the new head of Wells Fargo Advisors. The announcement came about one month after the prior head of the advisor group, Mary Mack, was tapped to lead Wells Fargo’s retail (or community) bank group. Mack had spent nearly three years at the helm of WFA, which has about $1.5 trillion in client assets and some 15,000 financial advisors.

Kowach, who has been in the financial services industry for 25 years, now reports to David Carroll, head of Wells Fargo’s Wealth and Investment Management unit.

Starting in 2012, Kowach worked as head of WFA’s Private Client Group, which includes nearly 11,000 registered reps. Earlier, he led WFA’s Business Development Group and was responsible for recruitment, retention, growth strategies and national sales.

Wells Fargo recently recruited two advisors from JPMorgan, who have managed a total of over $700 million in assets. The Anderson Remchuck Wealth Management Group is now part of WFA in Tulsa, Oklahoma.

It also added six advisors from Morgan Stanley with combined assets of $600 million to WFA Financial Network, or FiNet, the channel for independent reps. The group plans to do business as Encore Wealth Management in Fresno, California.

In other recruiting news, RBC Wealth Management says it has attracted a group of employee advisors from Morgan Stanley with about $1 billion in combined assets and about $3.6 million in yearly production. The five advisors and two associates will operate out of a satellite office in Lufkin, Texas, northeast of Houston, and at RBC’s San Antonio office; they will do business as the Evergreen Group.

“The team has extensive industry experience and knowledge, and truly exemplifies the ‘clients first’ attitude that we value at RBC Wealth Management,” said Steve Ogle, San Antonio branch manager, in a statement.

Independent BD Updates

LPL Financial hosted the firm’s annual advisor event, Focus, in August in San Diego. The event drew some 3,500 advisors and their staff, along with more than 2,500 other guests. Chairman and CEO Mark Casady, along with other executives, made the case for how LPL is improving the performance of its corporate operations and technology platform.

“The journey never ends,” said Casady, “but we have rounded a corner through our heavy investments, […] and we want to have continuous improvements and forge ahead.”

LPL President Dan Arnold said his role is to help the IBD “increase capacity, lower costs, evolve the value proposition and evolve in the face of change.” 

“We have heard you. The better [the service experience] is, the better your experience is, and the better you can serve your clients. It’s important to get it right,” according to Arnold. The IBD has boosted its yearly spending on technology from roughly $40 million to about $80 million, he said
separately during an interview.

“Last year at this time, we took about two minutes to answer the phone. Now, we are down to an average of 17 seconds. This was achieved by adding 25% more people to the service [group],” said Tom Gooley, head of service, trading and operations.

The group he leads rolled out a tool in May to track service tasks, “so you don’t need to call us, and that was 25% of calls,” Gooley explained. “We are taking two-day services processes down to one, with 75% of three-day processing [services] being completed within one business day.”

In addition, LPL’s risk-management team has reduced the time it takes to answer the phone down to less than 30 seconds (from around one minute a year ago). Most responses to advisors’ inquiries and requests are now processed in one business day. 

The Advisor Solutions unit is piloting a robo-offering, Guided Wealth Portfolios, that will be fully introduced in January. The firm also wants to help its advisors by integrating capabilities, such as goals-based planning and third-party reporting. In addition, LPL is set to launch the Moving Money
account tool for assets going to the Advisor Solutions unit from the brokerage business in the fourth quarter of 2016.

In terms of its Model Wealth Portfolios, the firm is eliminating its LPL Research strategist fee; it plans to reduce the program fee starting in January 2017, along with lowering account minimums and eliminating IRA maintenance charges.

“And we are developing a no-transaction-fee program for mutual-fund-only accounts. […] The no-transaction program will be rolled out in the final quarter of this year,” Arnold said. 

LPL also says it will host its first standalone women’s conference in November. It expects about 125 female registered reps to attend. During LPL’s Focus event, more than 160 female advisors met for the ninth year in a row to participate in special sessions, which featured top women reps and guest speakers. 

In other IBD developments, the Cetera Financial Group said board Chairman Robert Moore will take over the CEO post from Larry Roth on Sept. 12. According to Moore, Roth will stay on as a consultant through year-end. Board member Robert Dineen is set to become the acting non-executive chairman of Aretec, Cetera’s parent company. 

Cetera’s new CEO, who served as president of LPL Financial from May 2012 to March 2015, is giving up his role as head of Legal & General Investment Management America, an asset manager.