A Simple Retirement Income Conversation

JANUARY 27-31, 2020

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Introducing A Simple Retirement Income Conversation.

IN012197.indd 1 1/23/20 3:36 PM

EMONEY SHAKES UP MERRILL STRIKES TOP INDEPENDENT HERE’S WHY RPAs 4 SALES LEADERSHIP 5 OUT VS. MLB STAR 10 BR0KER-DEALERS 23 NEED RFPs

JANUARY 27-31, 2020

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ROAD TO NOWHERE? MAPPING THE FUTURE FOR IBDs AFTER A DECADE-LONG MERGER BINGE PAGE 8 TOP 10 HOLDINGS AND WEIGHTINGS OF EACH SECTOR OF THE S&P 500 (AS OF 12/31/19)

Apple Johnson & Johnson Berkshire Hathaway B Microsoft Unitedhealth JP Morgan Chase XLK Visa A XLV Merck XLF Bank of America TECHNOLOGY Mastercard A HEALTH CARE Pfizer FINANCIALS Wells Fargo 23.20% Intel 14.20% Abbott Labs 12.95% Citigroup Cisco Systems Medtronic US Bancorp Adobe Bristol-Myers Squibb American Express Salesforce.com Amgen Truist Financial Nvidia AbbVie Goldman Sachs Accenture A Thermo Fisher Scientific CME Group A

Facebook A Amazon.com Boeing Alphabet A Home Depot Honeywell Intl XLC Alphabet C XLY McDonald’s XLI Union Pacific COMMUNICATION NetFlix CONSUMER NIKE B INDUSTRIALS United Technologies SERVICES Comcast A DISCRETIONARY Starbucks 9.05% 3M 10.39% Charter Communications A 9.75% Lowe’s General Electric AT&T Booking Holdings Lockheed Martin Activision Blizzard TJX United Parcel Service B Verizon Communications Target Caterpillar Walt Disney General Motors Raytheon

Procter & Gamble Exxon Mobil NextEra Energy Coca-Cola Chevron Dominion Energy XLP PepsiCo XLE EOG Resources XLU Southern CONSUMER Walmart ENERGY ConocoPhillips UTILITIES Duke Energy STAPLES Mondelez 4.35% Schlumberger 3.32% American Electric Power 7.20% Costco Wholesale Phillips 66 Exelon Philip Morris Int’l Kinder Morgan Sempra Energy Altria Group Marathon Petroleum Xcel Energy Colgate-Palmolive Valero Energy Consolidated Edison Kimberly-Clark Occidental Petroleum Public Service Enterprise

American Tower A Linde Crown Castle Intl Air Products & Chemicals XLRE ProLogis XLB Ecolab REAL ESTATE Equinix MATERIALS Sherwin-Williams 2.93% Simon Property A 2.65% DuPont de Nemours Welltower Dow Public Storage Newmont Goldcorp AvalonBay Communities PPG Industries THE S&P 500 DIVIDED INTO 11 SECTOR ETFS Equity Residential LyondellBasell SBA Communications Corteva

Only Sector SPDR ETFs can divide this benchmark index into 11 investable pieces. Allowing you to overweight or underweight An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, di erent sectors to best meet your investment objectives. Sector SPDR ETFs have the diversification of a mutual fund, the call 1-866-SECTOR-ETF or visit www.sectorspdrs.com. Read the prospectus carefully before investing. transparency of an index and the all-day tradability of a stock. The S&P 500, SPDRs®, and Select Sector SPDRs® are registered trademarks of Standard & Poor’s Financial Services LLC. and have been licensed for use. The stocks included in each Select Sector Index were selected by the To learn more about how to use Sector SPDR ETFs as part of your overall investment strategy visit: compilation agent. Their composition and weighting can be expected to di er to that in any similar indexes that are published by S&P. The S&P 500 Index is an unmanaged index of 500 common stocks that is generally sectorspdrs.com/sectorspdr/custom-allocation considered representative of the U.S. stock market. The index is heavily weighted toward stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. Investors cannot invest directly in an index.

1-866-SECTOR-ETF The S&P 500 Index figures do not reflect any fees, expenses or taxes. Ordinary brokerage commissions apply. ETFs are considered transparent because their portfolio holdings are disclosed daily. Liquidity is characterized by a high level of trading activity. Select Sector SPDRs are subject to risks similar to those of stocks, including those regarding short-selling and margin account maintenance. All ETFs are subject to risk, including possible loss of principal. Funds focusing on a single sector generally experience greater volatility. Diversification does not eliminate the risk of experiencing investment losses.

ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is distributor for the Select Sector SPDR Trust.

IN012193_left.indd 2 1/21/20 1:20 PM TOP 10 HOLDINGS AND WEIGHTINGS OF EACH SECTOR OF THE S&P 500 (AS OF 12/31/19)

ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is distributor for the Select Sector SPDR Trust.

IN012193_right.indd 3 1/21/20 1:20 PM TopNews ACCURACY / EXCELLENCE / FAIRNESS / IMPARTIALITY / INDEPENDENCE

5 On Technology IBD 2020 outlook Listen up! 6 Editorial Eight takes on what’s Podcasting is gaining in store for the space. popularity among INSIDE 20 On Retirement Page 10-18 advisers. Page 22 JAN. 27-31, 2020 Cover illustration: Mark Smith

EDITOR’S NOTE New look, Ron Carson’s same trust his week marks another Finra victory Tpage in an exciting new chapter at InvestmentNews. After introducing our premium resize of the magazine with rings hollow the Jan. 6 issue, we are taking another step forward in this exciting year of change and inno- vation. Our brand-new logo and tagline acknowledge our history while signaling our move into the future. Our refreshed design is being rolled out on all platforms. Along with a new look EMoney shakes up sales on the brand, GEORGE B. MORIARTY beneath the surface you’ll find BY MARK SCHOEFF JR. tools that reflect our continuing team, refocuses on core focus on improving our service RON CARSON succeeded in re- to you. Our designers and moving a customer dispute from developers have provided these BY RYAN W. NEAL pursue in 2020,’” Mr. O’Brien said. his record, but the decision by tools to meet our commitment Areas of the adviser fintech market a Finra arbitrator illustrates the to delivering content that is ac- FIDELITY-OWNED FINANCIAL plan- where it could have made sense for problems with expungement, in- cessible in every way you wish to ning vendor eMoney Advisor is kicking eMoney to expand are either saturated vestor attorneys asserted. consume it, and I believe they’ve off 2020 with significant changes to its or have entrenched providers already Earlier this month, a Financial achieved that goal. strategy and leadership. there, he added. “We like our strategy Industry Regulatory Authority Inc. This refresh does not ignore EMoney is moving away from a that employs open architecture.” arbitrator granted Mr. Carson’s the great history of Investment- project to build a new multicustodial In 2020, eMoney is focusing on its request for the expungement of a News, which we cherish and portfolio management, reporting and primary financial planning offering, customer dispute from 2004 over will protect. Our new tagline, billing platform data aggregation and improving service mutual funds purchased from Mr. “The Trusted Resource for Fi- that would have to advisers. Carson when he was with LPL nancial Advisers,” embodies a KEY POINTS rivaled Orion Ad- Financial. The customer claimed reputation we have earned over • Two eMoney visor Services, ac- PRESSURE TO COMPETE that they were unsuitable and not 20 years, as we have evolved business cording to multiple The company faces increased competi- properly diversified and requested with the industry. development sources who asked tion in the market. Envestnet acquired $20,000 in damages. Our cover story this week leaders exit. to remain anony- rival technology vendor MoneyGuide The arbitrator, Philip J. Glick, features our annual survey of • CEO Ed mous due to their for $500 million in March and recruit- held that the incident should be independent broker-dealers, O’Brien says relationships with ed eMoney founder Edmond Walters to deleted from Mr. Carson’s record which provides the unique data shake-up eMoney. build a new financial planning product because the claim was “factually and insights you’ve come to is not the While eMoney targeted at ultra-wealthy investors un- impossible or clearly erroneous … expect. And it comes the same result of slow CEO Ed O’Brien der the name of Apprise Labs. and is false.” week that we are launching our growth or would not com- Orion acquired startup planning In his explanation of the deci- newest podcast, Her Mentorship missed goals. ment specifically technology Advizr, and Advicent is in- sion, the arbitrator noted that the Matters, our latest offering as we on what the com- vested in building what it says will be complaint was withdrawn, the delve deeper into new content. pany is building or the next generation of planning. customer was not paid any money I can’t overstate how how far along any “We need to make sure that we are and there was no settlement. exciting it is to be part of IN project is in development, he said that the best planning platform in the indus- right now. Let me know your eMoney is always “looking at adjacent try,” Mr. O’Brien said. “As we think about CONCERNS RAISED thoughts. verticals.” our business, that means making deci- A lawyer who represents investors “I put that work into the category of sions about what we don’t do as well.” in arbitration cases is concerned [email protected] ‘eMoney evaluating opportunities to in- In addition, two leaders of eMoney’s that Mr. Carson’s win occurred Twitter: @geomoriarty novate and grow but we’re not going to CONTINUED ON PAGE 24 CONTINUED ON PAGE 24

Contents © Copyright 2020 by InvestmentNews LLC. All rights reserved. Vol. 24, No. 4, January 27, 2020. InvestmentNews (ISSN 1098-1837) is published weekly, except bi-monthly in July, August and the last two weeks in December by InvestmentNews LLC. The agent is Crain Communications Inc., 1155 Gratiot Avenue, Detroit, MI 48207-2912. Periodicals postage paid at Detroit, MI and additional mailing offices. POSTMASTER: Send address changes to InvestmentNews, Circulation Dept., 1155 Gratiot Avenue, Detroit, MI 48207-2912. U.S. subscription price: $89 a year. 4 | InvestmentNews January 27, 2020 InvestmentNews.com Wells Fargo reassessing wealth tech

BY RYAN W. NEAL Fargo expenses were unusually ANGEL high in the last quarter of 2019. PAGAN WELLS FARGO’S conference Noninterest expenses were up call earlier this month to dis- $685 million, or 23%. cuss the bank’s fourth-quarter Particularly interesting is earnings amounted to a mea the $166 million Wells Fargo Ex-MLB star culpa for new chief executive spent on “the strategic reas- Charles Scharf. sessment of technology projects in wealth and investment management,” as CFO John scores $1.7M in Shrewsberry put it.

RYAN W. NEW PRIORITIES NEAL When asked what exactly the Merrill action rm is reassessing, Mr. Shrews- CHARLES berry said Jon Weiss, senior ex- ONTECHNOLOGY SCHARF ecutive vice president of Wells BY MARK SCHOEFF JR. Fargo wealth and investment management, which includes A FORMER PROFESSIONAL baseball In his rst earnings report since the Wells Fargo Advisors' brand, “sub- player and his wife hit the ball out of the joining Wells in October, Mr. Scharf “WE MADE stantially reconstituted the leadership park in a Finra arbitration case against acknowledged the problems that team” and set new priorities that take Merrill Lynch over Puerto Rican bonds. have been dragging on at the rm SOME TERRIBLE the division in a different direction A three-person Financial Industry since 2016, when the fake-account with technology. The result was “im- Regulatory Authority Inc. arbitration scandal rst came to light. He said he MISTAKES AND pairment to the capitalized software panel ordered Merrill Lynch to pay will institute “fundamental changes” development costs.” Angel and Windy Pagan $1.7 million to tackle the issues with “urgency and HAVEN’T ... In a slideshow accompanying the in compensatory damages and $88,758 resolve.” earnings report, Wells Fargo said the in costs, according to a Jan. 21 award ADDRESSED OUR $166 million primarily went toward document. Merrill must also pay 4.5% MISTAKES MADE equipment. Was the team just sorely interest on the damages from June 2017 “We came out of the nancial crisis as SHORTCOMINGS.” in need of some new computers? through the award date. the most valuable and most respected CHARLES SCHARF, CEO, WELLS FARGO Unfortunately, neither Mr. Shrews- Mr. Pagan, who was an out elder bank in the U.S.,” Mr. Scharf said on the berry nor Mr. Scharf provided more for the New York Mets, Chicago Cubs conference call. “But as you know, we detail, and a Wells Fargo spokesman and San Francisco made some terrible mistakes and ha- lators and lawmakers, a continued ex- declined to comment further. Giants from 2006 to ven't effectively addressed our short- odus of nancial advisers, a tarnished But it’s no surprise Wells Fargo has 2016, and his wife comings.” public reputation and agging busi- struggled with technology. In February claimed they lost In addition to pressure from regu- ness lines, Mr. Scharf said that Wells CONTINUED ON PAGE 24 about $2 million when the Puerto $40M Rican bond market ANGEL PAGAN’S collapsed in 2013. After Mr. Pagan 4-YEAR DEAL “In the Americas, there were two signed a four-year, WITH THE S.F. large out ows which contributed to $40-million contract UBS hires $10.8 billion team as net the negative net new money result, with the Giants in GIANTS IN 2012 although these were very low mar- 2012, he opened an gin,” Mr. Gardner said. “We remain account in Merrill Lynch’s Puerto Rico new client money in US slides con dent in our ability to generate of ce, according to his attorney, Lloyd net new money growth. However, as Schwed, president of Schwed Kahle and [CEO Sergio Ermotti] highlighted, we Kress. BY BRUCE KELLY nancial of cer, Kit Gardner, in an will continue to focus on quality and Altogether, Mr. Pagan invested $3.3 earnings call. Its Asia-Paci c region more speci cally on the pro tability million in Puerto Rican bonds and UBS PRIVATE WEALTH Manage- reported $31 billion of net new mon- and resource ef ciency of existing in- closed-end funds. The broker who rec- ment scored a coup Jan. 17 with its hire ey in 2019. vested assets and net ows.” ommended the investments, Alex J. Gi- of R. Mitchell Wickham and his 16-per- erbolini, sold most of the bonds to Mr. son team in Charlotte, N.C. from Mer- MAKING CUTS Pagan when Mr. Gierbolini worked for rill Lynch, Wickham Cash Partners, The Swiss bank has been cutting jobs UBS, Mr. Schwed said. UBS also has which manages $10.8 billion of client and reorganizing its global wealth been hit with arbitration claims over assets and produces $16.7 million in management business as it focuses Puerto Rican bond sales. fees and commissions annually. on ultra-wealthy clients. The overar- In 2012, Mr. Gierbolini moved to Mer- UBS said a few years ago it would ching goal is to trim management and rill, where he still works, according to back away from recruiting advis- increase resources, such as planning BrokerCheck. He has 24 customer dis- ers and instead focus on the organic and banking, that its nancial advis- putes on his pro le. Mr. Gierbolini was growth of its existing advisers. Howev- ers can use with clients. not named in the Finra arbitration case. er, it continues to selectively recruit. UBS reported 6,549 nancial advis- He was not available for comment. Meanwhile, UBS’ Americas wealth ers at the end of 2019, a decline of 301, Mr. Schwed said Mr. Gierbolini and management business last Tuesday re- or 4.4%, year over year. Its advisers, Merrill failed to heed warnings in Febru- ported a drop of $9 billion of new mon- however, generate high revenues, and ary 2013 of a coming devaluation of Puer- ey during the nal quarter of 2019; oth- the rm claims they lead the indus- to Rican bonds and left the Pagans over- er regions reported an increase of new try in that category. As of the fourth exposed in their portfolio. client money of $4.4 billion. quarter, UBS advisers in the Americas A Finra spokeswoman said the award generated, on average, $1.4 million in is the largest contested award against GLOBAL DOING BETTER annual fees and commissions and had Merrill over Puerto Rican bonds. UBS’ global wealth management is on average $214 million in client assets. Merrill disagreed with the outcome. having better success in attracting new clients and money outside the [email protected]; [email protected] U.S., said the bank’s chief Twitter: @bdnewsguy Twitter: @markschoeff SERGIO InvestmentNews.com ERMOTTI January 27, 2020 InvestmentNews | 5 The Trusted Resource for Financial Advisers Opinion InvestmentNews.com Chief Executive Of cer EDITORIAL / LETTERS / OP-ED / GUEST BLOGS Christine Shaw, [email protected] EDITORIAL Chief Content Of cer: George B. Moriarty [email protected] Managing Editor: Paul Curcio Assistant Managing Editor: Susan Kelly Special Projects Editor: Liz Skinner Copy Editor: Anne Marie D. Lee Contributing Editor: Mary Beth Franklin Senior Columnists: Jeff Benjamin, Bruce Kelly Senior Reporter: Mark Schoeff Jr. Reporters: Ryan W. Neal, Emile Hallez Director of Multimedia: Matt Ackermann Senior Multimedia Manager: Stephen Lamb Multimedia Project Manager: Audrey Rose Joseph Special Projects Coordinator: Brittney Grimes

ART DEPARTMENT Executive Art Director: Scott Valenzano Keep sweep Associate Art Director: Pablo Turcios Senior Graphic Designer: Kyung Yoo-Pursell namely money market mutual funds. DIGITAL, CUSTOM AND RESEARCH Senior Research Analyst: James Gallardo To be sure, the bank sweep accounts offered by broker- Research Analyst: Devin McGinley age rms come with several user conveniences, including Senior Operations Manager: Gillian Albert Digital Operations Manager: Thomas Markley debit cards and ATM withdrawals. At the same time, bank Digital Operations Specialist: Carla Flores sweeps often pay far less interest than money market funds Custom Content Producer: Jay Cooper accounts — about 175 basis points less, on average, according to ADVERTISING Bankrate.com. Chief Revenue Of cer: Scott Miller, [email protected] What’s left unstated by Finra is that it is clearly in a bro- 212-210-0717 ker-dealer’s nancial interest, and not necessarily in the cus- Business Solutions Manager: Kevin Reardon, [email protected] tomer’s, to avoid money market mutual funds and instead 212-210-0476 steer idle cash to a bank sweep account controlled by the Business Solutions Manager: Lauren DeRiggi, [email protected] brokerage rm’s parent. This creates an ethical and business 212-210-0154 con ict for rms: Do the right thing for the customer by en- Business Solutions Manager: clean and Judith Kelly, [email protected] abling them to earn a higher return on their cash, or do the 212-210-0167 Business Solutions Manager: right thing for the rm by keeping those returns in-house? John Shaughnessy, [email protected] With brokerage commissions falling to zero at many of 212-210-0112 Business Solutions Manager: the largest rms, interest earned on idle cash — or in this Jason Anciulis, [email protected] case, the spread between what brokerage rms pay custom- 312-280-3115 Account Executive: Michelle Richard ers on bank sweep account balances and what their parent [email protected], 212-210-0238 rm earns on those funds as an institutional investor — is Manager US Event Sales: transparent Dan Rubinetti, [email protected] a signi cant pro t center for broker-dealers. It is not likely 212-210-0432 one they will want to cede. Business Solutions Manager & U.S. Events: Sabrina Straub, [email protected] Finra said it will take several factors into consideration 646-437-7956 when looking at rms’ sweep practices, most of which Reprint Manager: Laura Picariello, [email protected] 732-723-0569 involve clear and complete disclosure of where the cash Sales Operations Manager: Letitia Y. Buchan, is going and [email protected] 212-210-0451 the alternatives ADVERTISING OPERATIONS available to the Head of Digital Advertising Operations: Berta Franco, [email protected] investor. Among Sr. Digital Advertising Operations Manager: or at least up until the mid- the many speci cs IDLE CASH ... IS Valdimir Severe, [email protected] N “OLDEN” DAYS, Digital Campaign Manager: 1990s, the Glass-Steagall Act prohibited commercial it will be review- Jess Friedman, [email protected] A SIGNIFICANT Digital Ad Operations Campaign Manager: banks from owning or operating brokerage rms, and ing are whether Kimberly Hall, [email protected] equity trades required ve days to settle. rms omit or PROFIT CENTER AUDIENCE, MARKETING AND EVENTS Since then, much has changed. Banks and broker- misrepresent Director of Audience and Analytics: age rms now operate under one roof. And settlement material informa- George Ortiz, [email protected] FOR BROKER- Email Marketing Specialist: Nicole Chantharaj — the process of going from transaction to receiving pay- tion concerning Audience Data Specialist: Julie Vanderperre I Marketing Director, Brand and Products: Katie Downey ment or securities — has shrunk to two days. But concerns the relationship of DEALERS. Vice President, Events: remain about whether brokerage rms are giving investors the brokerage ac- Josh Brous, [email protected] a fair deal on cash — whether it’s the cash received when counts to partner Marketing Director: Sasha Burgansky Senior Operations Manager: Tara Means securities are sold or the cash that must be available for banks, the nature Events and Operations Manager: Natalie Taylor securities to be purchased. and terms of the arrangements, and the amount of time it Marketing Manager: Kate Arends Social Media Manager: Scott Kleinberg Unlike in the past, when idle cash sitting in a customer’s may take for customer funds to reach the bank accounts. Content Producer: Letitia Bow brokerage account typically received no interest, cash today In the old days, there was little investors could do to Executive Assistant to the CEO: usually is swept into a money market mutual fund or into speed the settlement process or share in part of the sizeable Irma Rodriguez, [email protected] a money market bank account, typically at a bank that is a interest earned by brokerage rms on the cash that coursed 212-210-0430 unit of the same parent as the broker-dealer. leisurely through customer accounts on the way toward PRODUCTION As noted in a recent report by Mark Schoeff Jr., the settlement. In those days, too, brokerage rms were often Prepress/Production Director: Simone Pryce Production Manager: Paul Vaccari Financial Industry Regulatory Authority Inc. will be making less than diligent about making sure idle cash was moved brokerage rm cash sweep programs one of its examination promptly into customers’ hands — prompting complaints INVESTMENTNEWS OFFICES Headquarters: 685 Third Avenue, New York, NY 10017-4024 priorities this year, citing its own worries and those of the about “dirty sweeps.” Bureau of ce: Washington: 601 13th Street, N.W. Suite Securities and Exchange Commission. Essentially, Finra In today’s faster, interconnected world, there is no 900 South, Washington, DC 20005 is concerned that brokerage rms may be encouraging reason for anything other than clean sweeps. Let’s hope Advertising main number: 212-210-0451 customers to use in-house bank sweep accounts without that Finra’s efforts result in more transparency and greater BONHILL GROUP, PLC informing them of other alternatives for cash management, cleanliness in the cash sweep process. Chief Executive Of cer: Simon Stilwell Chief Operating Of cer: James Robson Head Of ce: Bonhill Group, Plc 14 Bonhill Street, London EC2A 4BX

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IN012188.indd 1 1/17/20 1:01 PM A NEW PLAYBOOK FOR INDEPENDENT BROKER-DEALER M&A

BY BRUCE KELLY

After 10 years of IBD acquisitions, there’s little left on the block. But everyone is up for sale at the right price – and private equity is buying.

8 | InvestmentNews January 27, 2020 InvestmentNews.com or more than a decade, the growth private equity consolidating the broker-dealer land- strategy for large independent bro- scape,” according to a report by Echelon. “In fact, Ad- ker-dealers has been simple. First, visor Group announced a prospective merger with sell to a private equity manager with Ladenburg Thalmann only months later, which would plenty of cash. Next, lever up and take create a megaplatform serving approximately 11,500 on a mountain of debt. Then go on a advisers and boost assets to more than $450 billion.” buying binge, picking off broker-deal- And those megadeals were overshadowed by per- ers one, two or even three at a time. haps the greatest grab for scale the financial advice Even better, acquire a network of bro- industry has ever seen. While not directly involv- kerage firms that an insurance company no ing independent broker-dealers, Charles Schwab’s longer wants to own, because advisers don’t acquisition of TD Ameritrade affects thousands of like to sell proprietary products. advisers registered with IBDs who use those two LPL Financial and Cetera Financial Group custodians to run separate but related registered in- are perhaps the poster children of this strate- vestment adviser businesses. gy. Since 2005, when two private equity man- That means private equity buyers, as they acquire agers took a majority stake in LPL Financial, and sell more firms, will only have an even greater that firm has acquired at least 11 firms. And since impact on financial advisers who work at indepen- 2010, when what eventually became Cetera was spun dent broker-dealers or registered investment advisers off from Dutch insurer ING Groep and bought by over the next five to 10 years, executives said. Lightyear Capital, the network has done at least a “The firms are getting bigger to be better, and fo- dozen such deals. cusing on more specialized services to advisers, as “Bulk up and do it fast” has been the game plan for opposed to getting bigger to be bigger,” said Ms. Ar- independent broker-dealers, until now. Consolidation mitage, who worked previously with LPL and a pre- in the independent broker-dealer industry will look decessor Cetera firm. “Private equity to private equity a lot different in the 2020s than it did in the 2010s. sales [of broker-dealers] will happen, for sure.” Growth from snatching up decent-sized individual Perhaps the biggest difference in the independent firms, say those with 200 to 1,000 reps or advisers, for broker-dealer industry is that it is entering this de- the most part is over because most firms of any decade from a position of strength. Ten years ago, that cent size have already been bought. Further, anxiety wasn’t the case, as the industry was reeling from about the risks of the debt-laden strategy has started market losses and product failures of the credit crisis. to raise its head, as the danger of easy money and Now, firms are generating record revenues from all- high valuations concern financial advisers. time highs in the stock market and corporate tax cuts that have fattened profits. MEGAMERGERS — THE NEXT STAGE In the past 10 to 15 years, private equity money “We get calls almost every week from private equity has descended on the IBD and RIA industries like a firms trying to get into this business,” said Carolyn giant cloud of locusts, gobbling up every type of firm Armitage, managing director at the investment bank it can. The problem is, of the top 25 independent bro- Echelon Partners. “Over the next decade, the IBD ker-dealers, as ranked by InvestmentNews — mean- industry is poised for continued consolidation and ing those with $220 million or more in total revenue in making the business more professional.” 2018 — there is almost nothing substantial left to buy. “Around the industry there are certainly fewer That could change, however, if one of the remain- large firms to acquire,” said James Poer, president and ing seven large insurance company-owned firms CEO of Kestra Financial Inc. is put on the block, but insurance brokers are un- “But there are a fair number of attractive and notorious for being among the low- firms out there of $50 million est producing advisers when it comes to generating to $150 million” as ranked by securities commissions and fees. Ten of the Invest- total revenues, he noted. mentNews top 25, or 40%, are already, or soon to be, Now, for IBDs to see real owned by two giant broker-dealer networks owned by growth, megamergers will a private equity manager — the previously mentioned have to happen. A handful of Cetera Financial Group and Advisor Group. such deals occurred last year. $268B In February, private equity TOTAL CLIENT AUM SERVED DEBT USE BY ADVISOR GROUP manager Warburg Pincus said Three more, Commonwealth Financial Network, Cam- it was buying from another bridge Investment Research Inc. and Lincoln Invest- private equity manager Kestra ment Planning, are closely held private companies, Financial Inc., an independent and ownership of Commonwealth and Cambridge broker-dealer platform that serves over 2,000 advis- have consistently been adamant about having no de- ers and $92 billion in client assets. According to in- sire to sell. Four more — LPL, Ameriprise Financial vestment bank Echelon Partners, the estimated trans- Services Inc., Raymond James Financial Services Inc. action value was $600 million to $800 million, nine to and Waddell & Reed Financial Advisors — are essen- 12 times EBITDA, or earnings before interest, taxes tial businesses for large, publicly traded companies. depreciation and amortization. “There are a lot of smaller, niche firms that are re- And, over the summer, Reverence Capital Partners ally great organizations, profitable, and have advisers bought Advisor Group, an independent broker-deal- with good profiles,” said Mr. Poer, “and there are some er network that serves over 7,000 advisers and $268 that are not. We don’t view the world as needing to get billion in client assets under administration. The esti- big. We look at the industry through a lens of the qual- mated transaction value was $2.3 billion, or a 12 to 15 ity of advisers, not quantity.” times EBITDA multiple, according to Echelon. With larger deals, valuations for independent “The transaction is part of a growing theme in CONTINUED ON PAGE 19

InvestmentNews.com January 27, 2020 InvestmentNews | 9 TOP INDEPENDENT BROKER-DEALERS 2020 8 DEVELOPMENTS TO WATCH IN THE IBD INDUSTRY IN 2020 THIS YEAR, KEEP AN EYE OUT FOR INVESTOR DATA PROTECTION, MERGER MADNESS, THE OPENING OF PRIVATE MARKETS, COMPETITIVE RECRUITING COSTS AND MORE. AND OH YES, REG BI IS COMING. Reg BI implementation looms for independent broker-dealers Brokerage industry wants to stop state fiduciary rules No regulatory deadline has dominated the compliance Before the Securities and Exchange Commission’s landscape in recent memory like June 30, the date Regulation Best Interest is implemented, it may have a when the Securities and Exchange Commission’s couple of competitors at the state level — an outcome Regulation Best Interest must be implemented. the brokerage industry is trying to stop. Reg BI is meant to raise the broker standard above Massachusetts, New Jersey and Nevada are all the current suitability requirement. It comes with working on their own regulations that would impose a many new disclosures, including a customer relation- fiduciary standard of care for financial professionals ship summary, known as Form CRS. in those states. It’s not clear which state will cross With Reg BI looming, the effort the brokerage indus- the finish line first, but the Massachusetts and New try has put into getting ready for the vacated Labor Jersey rules are nearing the final stage. Department fiduciary rule is now paying dividends. Massachusetts Secretary of the Commonwealth Wil- “Our members have a lot of work ahead of them to liam Galvin said he is moving ahead with a state-level ensure compliance with Reg BI,” said David Bellaire, rule because Reg BI doesn’t offer strong enough in- executive vice president and general counsel at the vestor protections. Brokerage firms and industry trade Financial Services Institute, a trade association repre- associations are urging the states to stand down and senting independent brokers and financial advisers. let Reg BI serve as the national advice standard. — Mark Schoeff Jr. — Mark Schoeff Jr.

TOP INDEPENDENT BROKER-DEALERS 2020 THE 2020 INVESTMENTNEWS INDEPENDENT BROKER-DEALER DIRECTORY IS BASED ON INFORMATION PROVIDED BY 78 ELIGIBLE FIRMS. TO BE CONSIDERED FOR FUTURE LISTINGS, CONTACT [email protected].

Payout ratio by gross production

$250,000- $500,000- $750,000- $1M Firm/parent company (if any) Phone/website/CEO1 Recruiting contact Product $0-$249,999 $499,999 $749,999 $999,999 and greater

Alden Investment Group (215) 572-8700 John Mulqueen Mutual funds 76%-80% 81%-85% 86%-90% 86%-90% 86%-90% aldeninvestmentgroup.com (215) 572-8700 Securities 76%-80% 81%-85% 86%-90% 86%-90% 86%-90% Lee Calfo [email protected] Insurance 76%-80% 81%-85% 86%-90% 86%-90% 86%-90% Variable annuities 76%-80% 81%-85% 86%-90% 86%-90% 86%-90% Limited partnerships 76%-80% 81%-85% 86%-90% 86%-90% 86%-90%

American Portfolios Financial Services Inc. (631) 439-4600 Tim O’Grady Mutual funds 86%-90% 86%-90% 86%-90% 86%-90% 91%-95% American Portfolios Holdings Inc. americanportfolios.com (800) 889-3914 ext. 285 Securities 86%-90% 86%-90% 86%-90% 86%-90% 91%-95% Lon T. Dolber (President & CEO) [email protected] Insurance 86%-90% 86%-90% 86%-90% 86%-90% 91%-95% Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% 91%-95% Limited partnerships 86%-90% 86%-90% 86%-90% 86%-90% 91%-95%

Ameriprise Financial Services Inc. (612) 671-3131 Manish P. Dave Mutual funds Up to 91% Up to 91% Up to 91% Up to 91% Up to 91% Ameriprise Financial joinameriprise.com (612) 671-0932 Securities Up to 91% Up to 91% Up to 91% Up to 91% Up to 91% Jim Cracchiolo (Chairman & CEO) [email protected] Insurance Up to 91% Up to 91% Up to 91% Up to 91% Up to 91% Variable annuities Up to 91% Up to 91% Up to 91% Up to 91% Up to 91% Limited partnerships Up to 91% Up to 91% Up to 91% Up to 91% Up to 91%

Ameritas Investment Corp. (800) 335-9858 Brandon Mann Mutual funds 60%-75% 75%-83% 83%-86% 86%-89% 90%-94% Ameritas Life Insurance Co. ameritas.com (402) 325-4185 Securities 60%-75% 75%-83% 83%-86% 86%-89% 90%-94% Kurt Shallow (President) [email protected] Insurance 60%-75% 75%-83% 83%-86% 86%-89% 90%-94% Variable annuities 60%-75% 75%-83% 83%-86% 86%-89% 90%-94% Limited partnerships 60%-75% 75%-83% 83%-86% 86%-89% 90%-94%

Arete Wealth Management (312) 940-3684 Joshua Rogers Mutual funds 76%-80% 81%-85% 81%-85% 86%-90% 86%-90% SFA Holdings Inc. aretewealth.com (312) 940-3684 Securities 76%-80% 81%-85% 81%-85% 86%-90% 86%-90% Joshua Rogers [email protected] Insurance 76%-80% 81%-85% 81%-85% 86%-90% 86%-90% Variable annuities 76%-80% 81%-85% 81%-85% 86%-90% 86%-90% Limited partnerships 76%-80% 81%-85% 81%-85% 86%-90% 86%-90%

Avantax Wealth Management (800) 821-8254 Tim Stewart Mutual funds 45%-87% 88% 89% 89% 90%-94% Blucora Inc. avantaxwealthmanagement.com (972) 870-6142 Securities 45%-87% 88% 89% 89% 90%-94% John S. Clendening (President & CEO) [email protected] Insurance 45%-87% 88% 89% 89% 90%-94% Variable annuities 45%-87% 88% 89% 89% 90%-94% Limited partnerships 45%-87% 88% 89% 89% 90%-94%

AXA Advisors (212) 554-1234 David Goettelmann Mutual funds 40%-75% 40%-75% 81%-85% 86%-90% 91%-95% Thurston Springer Financial us.axa.com (212) 314-2057 Securities 40%-75% 40%-83% 81%-85% 86%-90% 91%-95% David Karr [email protected] Insurance 51%-75% 53%-83% 81%-85% 86%-90% 91%-95% Variable annuities 51%-75% 53%-83% 81%-85% 86%-90% 91%-95% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Berthel Fisher & Co. Financial Services Inc. (319) 447-5700 Randy Wilcox Mutual funds 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Berthel Fisher & Co. berthel.com (800) 356-5234 Securities 81%-85% 86%-90% 86%-90% 86%-90% 86%-90% Thomas J. Berthel [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Limited partnerships 81%-85% 86%-90% 86%-90% 86%-90% 86%-90%

1If the CEO post is vacant or does not exist, top executive is listed; executives may share or have additional titles. N/D: Not disclosed. Source: InvestmentNews Data

10 | InvestmentNews January 27, 2020 InvestmentNews.com ®

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IN012195.indd 1 1/21/20 1:21 PM TOP INDEPENDENT BROKER-DEALERS 2020 8 DEVELOPMENTS TO WATCH IN THE IBD INDUSTRY IN 2020 Brokers raise concern over collection of investors’ information SEC wants to expand investor access to private placements The Consolidated Audit Trail, which would capture The Securities and Exchange Commission proposed data on customers and orders for U.S. exchange-list- changes to the accredited investor standard late last ed equities and over-the-counter securities, is sched- year, allowing more people to qualify for private place- uled to be implemented in 2022, while the transactions ment purchases based on professional licenses they database will go into operation this year. Brokers are hold or special knowledge they’ve acquired. Critics worried that the CAT will be used by hackers seeking assert the SEC doesn’t understand potential investor investors’ personally identifiable information. harm from participation in private markets. — Mark Schoeff Jr. — Mark Schoeff Jr.

Payout ratio by gross production

$250,000- $500,000- $750,000- $1M Firm/parent company (if any) Phone/website/CEO1 Recruiting contact Product $0-$249,999 $499,999 $749,999 $999,999 and greater

Cadaret Grant & Co. (800) 288-8601 Kevin Beard Mutual funds 86%-90% 86%-90% 86%-90% 86%-90% Negotiable AWS 4 Inc. cadaretgrant.com (646) 887-9023 Securities 86%-90% 86%-90% 86%-90% 86%-90% Negotiable Douglas J. Ketterer [email protected] Insurance 86%-90% 86%-90% 86%-90% 86%-90% Negotiable Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% Negotiable Limited partnerships 86%-90% 86%-90% 86%-90% 86%-90% Negotiable

Cambridge Investment Research Inc. (800) 777-6080 Kyle Selberg Mutual funds Up to 100% Up to 100% Up to 100% Up to 100% Up to 100% joincambridge.com (800) 777-6080 Securities Up to 100% Up to 100% Up to 100% Up to 100% Up to 100% Amy Webber (President & CEO) [email protected] Insurance Up to 100% Up to 100% Up to 100% Up to 100% Up to 100% Variable annuities Up to 100% Up to 100% Up to 100% Up to 100% Up to 100% Limited partnerships Up to 100% Up to 100% Up to 100% Up to 100% Up to 100%

Cantella & Co. (617) 521-8630 Matthew Rigatti Mutual funds N/D N/D N/D N/D N/D cantella.com (617) 224-1483 Securities N/D N/D N/D N/D N/D Jay Lanstein [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

Centaurus Financial Inc. (800) 880-4234 Tyler Shumaker Mutual funds 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Federation of Financial Services joincfi.com (800) 880-4234 Securities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% J. Ronald King (Chairman & CEO) [email protected] Insurance 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Limited partnerships 86%-90% 86%-90% 86%-90% 86%-90% 86%-90%

Century Securities Associates Inc. (314) 342-4050 Terrence D. Frank Mutual funds 60%-90% 60%-90% 60%-90% 60%-90% 60%-90% Stifel Financial Corp. centurysecurities.com (800) 488-7994 Securities 60%-90% 60%-90% 60%-90% 60%-90% 60%-90% Allen Brautigam [email protected] Insurance 60%-90% 60%-90% 60%-90% 60%-90% 60%-90% Variable annuities 60%-90% 60%-90% 60%-90% 60%-90% 60%-90% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Cetera Advisor Networks (800) 879-8100 JC Young Mutual funds N/D N/D N/D N/D N/D Cetera Financial Group ceteraadvisornetworks.com (310) 257-7300 Securities N/D N/D N/D N/D N/D Tom Taylor (President & CEO) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

Cetera Advisors (800) 929-3485 Michael Murray Mutual funds N/D N/D N/D N/D N/D Cetera Financial Group ceteraadvisors.com (619) 702-9698 Securities N/D N/D N/D N/D N/D Brett L. Harrison [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

Cetera Financial Institutions (800) 245-0467 Sean Casey Mutual funds N/D N/D N/D N/D N/D Cetera Financial Group ceterafinancialinstitutions.com (800) 245-0467 Securities N/D N/D N/D N/D N/D LeAnn Rummel (President & CEO) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

Cetera Financial Specialists (888) 528-2987 James Alagna Mutual funds N/D N/D N/D N/D N/D Cetera Financial Group ceterafinancialspecialists.com (847) 330-7828 Securities N/D N/D N/D N/D N/D Gregg A. Ruvoli (President & CEO) Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

CFD Investments Inc. (800) 745-7776 Brent A. Owens Mutual funds 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% joincfd.com, cfdinvestments.com (800) 745-7776 ext. 3006 Securities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Brent A. Owens (President) [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 86%-90% 91%-95% 91%-95% 91%-95%

Commonwealth Financial Network (866) 462-3638 Andrew Daniels Mutual funds 50%-87% 86%-90% 86%-90% 86%-90% 90%-95% commonwealth.com (866) 462-3638 Securities 50%-87% 86%-90% 86%-90% 86%-90% 90%-95% Wayne Bloom [email protected] Insurance 96%-100% 96%-100% 96%-100% 96%-100% 96%-100% Variable annuities 50%-87% 86%-90% 86%-90% 86%-90% 90%-95% Limited partnerships 50%-87% 86%-90% 86%-90% 86%-90% 90%-95%

Correll Co. Investment Services Corp. (708) 599-2900 M. Nicole Correll Mutual funds 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% cciscinvestments.com (708) 599-2900 Securities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% James C. Correll (President) [email protected] Insurance 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Limited partnerships 86%-90% 86%-90% 86%-90% 86%-90% 86%-90%

Equity Services Inc. (800) 344-7437 Jeff Wood Mutual funds N/D N/D N/D N/D N/D National Life Group equity-services.com (802) 229-7489 Securities N/D N/D N/D N/D N/D Lance Reihl (President & CEO) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

1If the CEO post is vacant or does not exist, top executive is listed; executives may share or have additional titles. N/D: Not disclosed. Source: InvestmentNews Data

12 | InvestmentNews January 27, 2020 InvestmentNews.com WHEN Y O U KNOW YOU W H A T KNOW YO U WHAT O W N YOU GET

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IN012186.indd 1 1/15/20 2:59 PM TOP INDEPENDENT BROKER-DEALERS 2020 8 DEVELOPMENTS TO WATCH IN THE IBD INDUSTRY IN 2020 LPL to focus on employee broker-dealer IBD recruiting will continue to get more expensive LPL Financial raised some eyebrows last year when it In 2019, LPL Financial offered recruits fat deals to jump said it was acquiring a B-D with employee reps, Allen to LPL. So far, no direct recruiting war has broken out & Co. The firm wants to broaden its appeal and offer a among the largest IBDs, who historically pay far less in platform for a variety of advisers, including employees, recruiting bonuses than other broker-dealers because who get a lower payout but receive better benefits. their advisers receive a higher overall payout. But LPL Look for LPL to attempt to recruit and offer attractive will continue to put its foot to the floor when it comes to bonuses to advisers who want to remain employees. recruiting, driving up the cost for its competition. — Bruce Kelly — Bruce Kelly

Payout ratio by gross production

$250,000- $500,000- $750,000- $1M Firm/parent company (if any) Phone/website/CEO1 Recruiting contact Product $0-$249,999 $499,999 $749,999 $999,999 and greater

Fortune Financial Services Inc. (724) 846-2488 Gregory J. Bentley Mutual funds 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% fortunefinancialservices.com (724) 846-2488 Securities Not offered Not offered Not offered Not offered Not offered Gregory J. Bentley (President & CEO) [email protected] Insurance 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Founders Financial Securities (888) 523-1162 Hank Multala Mutual funds Up to 90% Up to 90% Up to 90% Up to 90% Up to 90% Founders Financial Inc. foundersfinancial.com (888) 523-1162 ext. 1257 Securities Up to 90% Up to 90% Up to 90% Up to 90% Up to 90% Bradley M. Shepherd (President & CEO) [email protected] Insurance Up to 90% Up to 90% Up to 90% Up to 90% Up to 90% Variable annuities Up to 90% Up to 90% Up to 90% Up to 90% Up to 90% Limited partnerships Up to 90% Up to 90% Up to 90% Up to 90% Up to 90%

FSC Securities Corp. (800) 547-2382 Mutual funds 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Advisor Group joinfsc.com Securities 81%-85% 81%-85% 81%-85% 81%-85% 81%-85% Derek Burke (President & CEO) Insurance 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 91%-95% 91%-95% 91%-95% 91%-95% 91%-95%

Geneos Wealth Management Inc. (888) 812-5043 Ryan W. Diachok Mutual funds 81%-85% 86%-90% 91%-95% 91%-95% 91%-95% geneoswealth.com (303) 785-8470 ext.115 Securities 76%-80% 76%-80% 81%-85% 81%-85% 81%-85% Russell R. Diachok [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 81%-85% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 81%-85% 86%-90% 91%-95% 91%-95% 91%-95%

H. Beck Inc. (301) 944-5900 Violetta Pukas Mutual funds 80%-90% 88%-90% 90%-92% 91%-95% 91%+ Kestra Financial hbeckinc.com (301) 944-5900 Securities 80%-90% 86%-90% 90%-92% 91%-95% 91%+ Michelle A. Barry (President) [email protected] Insurance 80%-90% 86%-90% 90%-92% 91%-95% 91%+ Variable annuities 80%-90% 86%-90% 90%-92% 91%-95% 91%+ Limited partnerships 80%-90% 86%-90% 90%-92% 91%-95% 91%+

Harbour Investments Inc. (608) 662-6100 Aaron M. Hager Mutual funds Up to 90% Up to 91% Up to 92% Up to 93% Up to 94% harbourinv.com (608) 662-6100 Securities Up to 90% Up to 91% Up to 92% Up to 93% Up to 94% Aaron M. Hager (President) [email protected] Insurance Up to 100% Up to 100% Up to 100% Up to 100% Up to 100% Variable annuities Up to 90% Up to 91% Up to 92% Up to 93% Up to 94% Limited partnerships Up to 90% Up to 91% Up to 92% Up to 93% Up to 94%

Hornor Townsend & Kent (800) 873-7637 Dusten Long Mutual funds N/D N/D N/D N/D N/D Penn Mutual Life Insurance Co. htk.com (215) 957-7285 Securities N/D N/D N/D N/D N/D Timothy N. Donahue (President & CEO) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

Independent Financial Group (858) 436-3180 David A. Fischer Mutual funds 86%-90% 90%-91% 91%-95% 91%-95% 91%-95% ifgsd.com (800) 269-1903 Securities 86%-90% 90%-91% 91%-95% 91%-95% 91%-95% Joe H. Miller, Scott Heising [email protected] Insurance 86%-90% 90%-95% 91%-95% 91%-95% 91%-95% & David A. Fischer (Managing Directors) Variable annuities 86%-90% 90%-91% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 90%-91% 91%-95% 91%-95% 91%-95%

Infinity Financial Services (510) 588-8000 Gregory Gilbert Mutual funds 80%-100% 80%-100% 80%-100% 80%-100% 80%-100% infinitysecurities.com (510) 588-8000 Securities 80%-100% 80%-100% 80%-100% 80%-100% 80%-100% Gregory Gilbert [email protected] Insurance 80%-100% 80%-100% 80%-100% 80%-100% 80%-100% Variable annuities 80%-100% 80%-100% 80%-100% 80%-100% 80%-100% Limited partnerships 80%-100% 80%-100% 80%-100% 80%-100% 80%-100%

Investacorp Inc. (305) 557-3000 Leslie Vigil Mutual funds 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Ladenburg Thalmann Financial Services Inc. investacorp.com (305) 901-1825 Securities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Patrick C. Farrell (President & CEO ) [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 86%-90% 91%-95% 91%-95% 91%-95%

The Investment Center Inc. (800) 345-8041 Nicole Johnson Mutual funds 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% investmentctr.com (888) 868-4805 Securities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Ralph J. DeVito (President & CEO) [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 86%-90% 91%-95% 91%-95% 91%-95%

J.W. Cole Financial Inc. (866) 592-6531 John Carlson Mutual funds 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% jw-cole.com (866) 592-6531 Securities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Robert Wood (Principal & Owner) [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 86%-90% 91%-95% 91%-95% 91%-95%

Kalos Capital Inc. (678) 356-1100 Vicki Cerri Mutual funds 76%-80% 81%-85% 86%-90% 86%-90% 86%-90% kalosfinancial.com (770) 407-5413 Securities 76%-80% 81%-85% 86%-90% 86%-90% 86%-90% Daniel L. Wildermuth [email protected] Insurance Not offered Not offered Not offered Not offered Not offered Variable annuities 76%-80% 81%-85% 86%-90% 86%-90% 86%-90% Limited partnerships 76%-80% 81%-85% 86%-90% 86%-90% 86%-90%

1If the CEO post is vacant or does not exist, top executive is listed; executives may share or have additional titles. N/D: Not disclosed. Source: InvestmentNews Data

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IN012196.indd 1 1/21/20 1:22 PM TOP INDEPENDENT BROKER-DEALERS 2020 8 DEVELOPMENTS TO WATCH IN THE IBD INDUSTRY IN 2020 RIA networks will eat away at IBD market share Private-placement sales could spark lawsuits against IBDs Last year’s acquisition of United Capital by Goldman Since 2013, GPB Capital sold $1.8 billion of high-com- Sachs underscores the gold rush occurring in the mission private placements through 60 IBDs. The financial advice industry right now; private equity company has faced investigations from the FBI and investors see better returns on investment from the Securities and Exchange Commission. IBDs will RIAs, and with lower profit margins and higher costs be hammered this year by lawsuits in the form of ar- of regulation than RIAs, IBDs will lose advisers to bitration complaints filed on behalf of these investors this fast-growing segment of advisers. by plaintiffs’ lawyers. — Bruce Kelly — Bruce Kelly

Payout ratio by gross production

$250,000- $500,000- $750,000- $1M Firm/parent company (if any) Phone/website/CEO1 Recruiting contact Product $0-$249,999 $499,999 $749,999 $999,999 and greater

Kestra Financial Inc. (844) 553-7872 Daniel Schwamb Mutual funds 65%-85% 88%-91% 92% 93% 93% kestrafinancial.com (737) 443-2400 Securities 65%-88% 88%-91% 92% 93% 91%-95% James L. Poer (President & CEO) [email protected] Insurance 65%-100% 88%-100% 92%-100% 93%-100% 93%-100% Variable annuities 65%-88% 88%-91% 92% 93% 91%-95% Limited partnerships 65%-88% 88%-91% 92% 93% 91%-95%

KMS Financial Services Inc. (206) 441-2885 Howard Englehart Mutual funds 65%-90% 91%-95% 91%-95% 95% 96% Ladenburg Thalmann Financial Services Inc. kms.com (206) 441-2885 ext. 232 Securities 65%-90% 91%-95% 91%-95% 95% 96% Erinn Ford (President & CEO) [email protected] Insurance 65%-90% 91%-95% 91%-95% 95% 96% Variable annuities 65%-90% 91%-95% 91%-95% 95% 96% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Kovack Securities Inc. (866) 564-6574 Carlo A. Bidone Jr. Mutual funds 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Kovack Financial Companies joinksi.com (954) 670-0616 Securities 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Ronald J. Kovack (Chairman) [email protected] Insurance 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships Not offered Not offered Not offered Not offered Not offered

LaSalle St. Securities (800) 777-7865 Mark Contey Mutual funds 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% lasallest.com (630) 600-0360 Securities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Jack McDermott [email protected] Insurance 96%-100% 96%-100% 96%-100% 96%-100% 96%-100% Variable annuities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 86%-90% 91%-95% 91%-95% 91%-95%

Leaders Group (303) 797-9080 Micah Hesting Mutual funds 81%-85% 86%-90% 91%-95% 91%-95% 91%-95% leadersgroup.net/about-us/ (303) 797-9080 ext. 113 Securities 81%-85% 86%-90% 91%-95% 91%-95% 91%-95% David R. Wickersham [email protected] Insurance 81%-85% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 81%-85% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Lincoln Financial Network (866) 533-3410 National recruiting team Mutual funds N/D N/D N/D N/D N/D Lincoln Financial Group joinlfn.com (866) 533-3410 Securities N/D N/D N/D N/D N/D David S. Berkowitz (President) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

Lincoln Investment Planning (215) 887-8111 Thomas Lakatos Mutual funds N/D N/D N/D N/D N/D Lincoln Investment Group Holdings lincolninvestment.com (215) 881-4657 Securities N/D N/D N/D N/D N/D Edward Forst (President & CEO) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

LPL Financial (888) 250-2420 Rich Steinmeier Mutual funds 90%-92% 90%-92% 90%-93% 90%-94% 90%-98% LPL Financial Holdings Inc. lpl.com (888) 250-2420 Securities 77%-79% 82%-84% 83%-86% 83%-87% 83%-91% Dan Arnold (President & CEO) Insurance 90%-92% 90%-92% 90%-93% 90%-94% 90%-94% Variable annuities 90%-92% 90%-92% 90%-93% 90%-94% 90%-94% Limited partnerships 90%-92% 90%-92% 90%-93% 90%-94% 90%-94%

M Holdings Securities Inc. (M Securities) (503) 232-6960 Jeff Bear Mutual funds N/D N/D N/D N/D N/D M Financial Group mfin.com Securities N/D N/D N/D N/D N/D Bridget McNamara-Fenesy (President & CEO) Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

MML Investors Services (800) 542-6767 Renee Sherman Mutual funds 40%-80% 80%-82.5% 82.5% 82.5% 82.5% Massachusetts Mutual Life Insurance Co. mmlinvestors.com (413) 744-1626 Securities 40%-80% 80%-82.5% 82.5% 82.5% 82.5% John Vaccaro [email protected] Insurance 40%-80% 80%-82.5% 82.5% 82.5% 82.5% Variable annuities 40%-80% 80%-82.5% 82.5% 82.5% 82.5% Limited partnerships 40%-80% 80%-82.5% 82.5% 82.5% 82.5%

National Securities Corp. (212) 417-8000 Michael Gill Mutual funds N/D N/D N/D N/D N/D National Holdings Corp. yournational.com (866) 995-6420 Securities N/D N/D N/D N/D N/D Michael A. Mullen (Chairman & CEO) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

Nationwide Planning Associates Inc. (201) 476-0029 Michael J. De Pol Mutual funds N/D N/D N/D N/D N/D nationwideplanning.com (201) 819-6204 Securities N/D N/D N/D N/D N/D Michael J. Karalewich [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

NEXT Financial Group Inc. (877) 876-6398 Jeff Crystal Mutual funds 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Atria Wealth Solutions Inc. www.nextfinancial.com (888) 566-1482 Securities 81%-85% 86%-90% 86%-90% 86%-90% 86%-90% Douglas Ketterer (Founding Partner & CEO) [email protected] Insurance 96%-100% 96%-100% 96%-100% 96%-100% 96%-100% Variable annuities 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 81%-85% 86%-90% 86%-90% 86%-90% 86%-90%

1If the CEO post is vacant or does not exist, top executive is listed; executives may share or have additional titles. N/D: Not disclosed. Source: InvestmentNews Data

16 | InvestmentNews January 27, 2020 InvestmentNews.com TOP INDEPENDENT BROKER-DEALERS 2020

Payout ratio by gross production

$250,000- $500,000- $750,000- $1M Firm/parent company (if any) Phone/website/CEO1 Recruiting contact Product $0-$249,999 $499,999 $749,999 $999,999 and greater

Northwestern Mutual Investment Services (866) 664-7737 Mike Power Mutual funds N/D N/D N/D N/D N/D The Northwestern Mutual Life Insurance Co. northwesternmutual.com (414) 665-4558 Securities N/D N/D N/D N/D N/D Evamarie Schoenborn (VP, IPS Products & President, [email protected] Insurance N/D N/D N/D N/D N/D Northwestern Mutual Wealth Management Co.) Variable annuities N/D N/D N/D N/D N/D Limited partnerships N/D N/D N/D N/D N/D

The O.N. Equity Sales Co. (877) 663-7267 Patrick H. McEvoy Mutual funds Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Ohio National Life Insurance Co. joinonesco.com (513) 797-3400 Securities Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Patrick H. McEvoy (President & CEO) [email protected] Insurance Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Variable annuities Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Limited partnerships Up to 92% Up to 92% Up to 92% Up to 92% Up to 92%

Packerland Brokerage Services Inc. (920) 662-9500 Scott Zwierzynski Mutual funds 70%-92% 92%-94% 94% 94% 94% packerlandbrokerage.com (920) 662-9500 Securities 70%-92% 92%-94% 94% 94% 94% Zach Kelly (Chief Financial Officer & CEO) [email protected] Insurance 70%-92% 92%-94% 94% 94% 94% Variable annuities 70%-92% 92%-94% 94% 94% 94% Limited partnerships 70%-92% 92%-94% 94% 94% 94%

Park Avenue Securities (888) 600-4667 Frank Galdieri Mutual funds Set by Agency Set by Agency Set by Agency Set by Agency Set by Agency Guardian Life Insurance Co. of America parkavenuesecurities.com (908) 208-3970 Securities Set by Agency Set by Agency Set by Agency Set by Agency Set by Agency William Morrissey (President) [email protected] Insurance Set by Agency Set by Agency Set by Agency Set by Agency Set by Agency Variable annuities Set by Agency Set by Agency Set by Agency Set by Agency Set by Agency Limited partnerships Set by Agency Set by Agency Set by Agency Set by Agency Set by Agency

Parkland Securities (800) 373-1612 Jennifer Bacarella Mutual funds 50%-90% 86%-90% 91%-95% 91%-95% 91%-95% parklandsecurities.com (888) 744-6264 Securities 40%-80% 76%-80% 81%-85% 81%-85% 81%-85% Jerome Rydell (President) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities 50%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 50%-90% 86%-90% 91%-95% 91%-95% 91%-95%

PlanMember Securities Corp. (800) 874-6910 Kevin Twohy Mutual funds Up to 90% Up to 92% Up to 92% Up to 92% N/D joinplanmember.com (800) 874-6910 ext. 2209 Securities Up to 90% Up to 92% Up to 100% Up to 100% N/D Jon Ziehl (Founder, President & CEO) [email protected] Insurance 100% Up to 92% Up to 92% Up to 92% N/D Variable annuities Up to 90% Up to 92% Up to 92% Up to 92% N/D Limited partnerships Not offered Not offered Not offered Not offered Not offered

Principal Securities Inc. (888) 774-6267 Betsy Jepsen Mutual funds Up to 77% Up to 84% Up to 89% Up to 92% Up to 95% Principal Life Insurance Co. principal.com (515) 878-1704 Securities Up to 77% Up to 84% Up to 89% Up to 92% Up to 95% Michael F. Murray (President & CEO) [email protected] Insurance Up to 85% Up to 86% Up to 87% Up to 87% Up to 87% Variable annuities Up to 77% Up to 84% Up to 89% Up to 92% Up to 95% Limited partnerships Up to 77% Up to 84% Up to 89% Up to 92% Up to 95%

ProEquities Inc. (800) 288-3035 Tammy Robbins Mutual funds Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Protective Life Corp. joinproequities.com [email protected] Securities Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Christopher W. Flint (President & CEO) Insurance Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Variable annuities Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Limited partnerships Up to 92% Up to 92% Up to 92% Up to 92% Up to 92%

Prospera Financial Services Inc. (972) 581-3000 Tim Edwards Mutual funds 86%-90% 86%-90% 86%-90% 91%-95% 92%-99% prosperafinancial.com (972) 581-3007 Securities 86%-90% 86%-90% 86%-90% 90%-92% 92%-99% David W. Stringer (Principal & President) [email protected] Insurance 86%-90% 86%-90% 86%-90% 90%-92% 92%-99% Variable annuities 86%-90% 86%-90% 86%-90% 90%-92% 92%-99% Limited partnerships 86%-90% 86%-90% 86%-90% 90%-92% 92%-99%

Raymond James Financial Services Inc. (727) 567-1000 Barry Papa Mutual funds 81%-90% 81%-90% 81%-90% 81%-90% 81%-90% Raymond James Financial advisorchoice.com (866) 877-1685 Securities 81%-90% 81%-90% 81%-90% 81%-90% 81%-90% Paul Reilly [email protected] Insurance 81%-90% 81%-90% 81%-90% 81%-90% 81%-90% Variable annuities 81%-90% 81%-90% 81%-90% 81%-90% 81%-90% Limited partnerships 81%-90% 81%-90% 81%-90% 81%-90% 81%-90%

Royal Alliance Associates Inc. (800) 821-5100 Al Grilli Mutual funds 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Advisor Group royalalliance.com (212) 551-5650 Securities 81%-85% 81%-85% 81%-85% 81%-85% 81%-85% Dmitry Goldin (President & CEO) [email protected] Insurance 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 91%-95% 91%-95% 91%-95% 91%-95% 91%-95%

SagePoint Financial Inc. (866) 462-4432 Genevieve Sisco Mutual funds 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Advisor Group sagepointfinancial.com (866) 462-4432 Securities 81%-85% 81%-85% 81%-85% 81%-85% 81%-85% Jeff Auld (President & CEO) [email protected] Insurance 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 91%-95% 91%-95% 91%-95% 91%-95% 91%-95%

Securian Financial Services Inc. (651) 665-3500 Robert Subjects Mutual funds Up to 84% Up to 92% Up to 93% Up to 94% Up to 95% Securian Financial Group Inc. securian.com (651) 665-5887 Securities Up to 84% Up to 92% Up to 93% Up to 94% Up to 95% George Connolly [email protected] Insurance Up to 89% Up to 91% Up to 92% Up to 92% Up to 93% Variable annuities Up to 84% Up to 92% Up to 93% Up to 94% Up to 95% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Securities America Inc. (800) 747-6111 Gregg Johnson Mutual funds 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Ladenburg Thalmann Financial Services Inc. securitiesamerica.com (800) 747-6111 Securities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Jim Nagengast (President & CEO) [email protected] Insurance 96%-100% 96%-100% 96%-100% 96%-100% 96%-100% Variable annuities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 91%-95% 91%-95% 91%-95% 91%-95% 91%-95%

Securities Management & Research (800) 526-8346 Randy Wilcox Mutual funds 81%-85% 86%-90% 86%-90% 86%-90% 86%-90% One Financial Inc. smrinvestments.com (800) 526-8346 Securities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Thomas J. Berthel [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Limited partnerships 86%-90% 86%-90% 86%-90% 86%-90% 86%-90%

Securities Service Network (855) 382-8754 Landon Moore Mutual funds 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Ladenburg Thalmann Financial Services Inc. joinssn.com (855) 382-8754 Securities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Wade S. Wilkinson (President & CEO) [email protected] Insurance 96%-100% 96%-100% 96%-100% 96%-100% 96%-100% Variable annuities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 81%-85% 81%-85% 81%-85% 81%-85% 81%-85%

1If the CEO post is vacant or does not exist, top executive is listed; executives may share or have additional titles. N/D: Not disclosed. Source: InvestmentNews Data

InvestmentNews.com January 27, 2020 InvestmentNews | 17 TOP INDEPENDENT BROKER-DEALERS 2020

Payout ratio by gross production

$250,000- $500,000- $750,000- $1M Firm/parent company (if any) Phone/website/CEO1 Recruiting contact Product $0-$249,999 $499,999 $749,999 $999,999 and greater

Sigma Financial Corp. (888) 744-6264 Jennifer Bacarella Mutual funds 50%-90% 86%-90% 91%-95% 91%-95% 91%-95% sigmafinancial.com (888) 744-6264 Securities 40%-80% 76%-80% 81%-85% 81%-85% 81%-85% Jerome Rydell (President) [email protected] Insurance N/D N/D N/D N/D N/D Variable annuities 50%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 50%-90% 86%-90% 91%-95% 91%-95% 91%-95%

Spire Investment Partners (703) 748-5800 LauraMarie Ross Mutual funds 81%-85% 86%-90% 86%-90% 86%-90% 86%-90% spireip.com (703) 748-5837 Securities 81%-85% 91%-95% 91%-95% 91%-95% 91%-95% David L. Blisk [email protected] Insurance 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 81%-85% 86%-90% 86%-90% 86%-90% 86%-90% Limited partnerships 81%-85% 86%-90% 86%-90% 86%-90% 86%-90%

St. Bernard Financial Services Inc. (479) 967-1200 Robert Keenan Mutual funds 81%-85% 81%-85% 86%-90% 86%-90% 91%-95% stbernardfinancial.com (479) 967-1200 Securities 81%-85% 81%-85% 86%-90% 86%-90% 91%-95% Robert Keenan [email protected] Insurance 81%-85% 81%-85% 86%-90% 86%-90% 91%-95% Variable annuities 81%-85% 81%-85% 86%-90% 86%-90% 91%-95% Limited partnerships Not offered Not offered Not offered Not offered Not offered

The Strategic Financial Alliance Inc. (678) 954-4000 Jamie Mackay Mutual funds 90% 90% 90% 90% 92% SFA Holdings Inc. thesfa.net (678) 954-4058 Securities 90% 90% 90% 90% 92% Clive Slovin (President & CEO) [email protected] Insurance 95% 95% 95% 95% 95% Variable annuities 90% 90% 90% 90% 92% Limited partnerships 90% 90% 90% 90% 92%

TFS Securities Inc. (732) 758-9300 Eric S. Edwards Mutual funds 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Tomorrow’s Financial Services Inc. jointfswealth.com (732) 758-9300, ext.125 Securities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Thomas P. Hyland (President) [email protected] Insurance 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 86%-90% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 86%-90% 91%-95% 91%-95% 91%-95%

Thurston Springer Miller Herd & Titak (317) 581-4000 Mark Damer Mutual funds 26%-50% 51%-75% 51%-75% 51%-75% 51%-75% Thurston Springer Financial thurstonspringer.com (317) 975-3796 Securities 26%-50% 51%-75% 51%-75% 51%-75% 51%-75% Richard Parker [email protected] Insurance 26%-50% 51%-75% 51%-75% 51%-75% 51%-75% Variable annuities 26%-50% 51%-75% 51%-75% 51%-75% 51%-75% Limited partnerships 26%-50% 51%-75% 51%-75% 51%-75% 51%-75%

Transamerica Financial Advisors Inc. (770) 248-3271 Matt Chambers Mutual funds Up to 87% Up to 87% Up to 87% Up to 87% Up to 87% AUSA Holding Co., an Aegon company tfaconnect.com (801) 372-6797 Securities Up to 90% Up to 90% Up to 90% Up to 90% Up to 90% George Chuang [email protected] Insurance Up to 87% Up to 87% Up to 87% Up to 87% Up to 87% Variable annuities Up to 87% Up to 87% Up to 87% Up to 87% Up to 87% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Triad Advisors (800) 720-4003 Nathan Stibbs Mutual funds 81%-85% 91%-95% 91%-95% 91%-95% 91%-95% Ladenburg Thalmann Financial Services Inc. triad-advisors.com (800) 720-4003 Securities 81%-85% 86%-90% 86%-90% 91%-95% 91%-95% Jeff Rosenthal (President & CEO) [email protected] Insurance 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 81%-85% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 81%-85% 91%-95% 91%-95% 91%-95% 91%-95%

Trustmont Financial Group Inc. (724) 468-5665 Lacey Dochinez Mutual funds 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% trustmontgroup.com (724) 468-5665 Securities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Anthony C. Hladek (President) [email protected] Insurance 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Variable annuities 86%-90% 86%-90% 86%-90% 86%-90% 86%-90% Limited partnerships 86%-90% 86%-90% 86%-90% 86%-90% 86%-90%

United Planners Financial Services (800) 966-8737 Sheila J. Cuffari-Agasi Mutual funds 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% unitedplanners.com (800) 966-8737 ext. 240 Securities 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Michael A. Baker (President & CEO) [email protected] Insurance 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 86%-90% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 86%-90% 91%-95% 91%-95% 91%-95% 91%-95%

Veritas Independent Partners (501) 358-6131 Debra Shannon Mutual funds 65%-90% 90% 90% 90% 91%-95% veritasindependentpartners.com (501) 358-6131 Securities 65%-90% 90% 90% 90% 91%-95% Gail Murdoch [email protected] Insurance 65%-90% 90% 90% 90% 91%-95% Variable annuities 65%-90% 90% 90% 90% 91%-95% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Voya Financial Advisors Inc. (800) 356-2906 Tim Murphy Mutual funds Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Voya Financial voyafinancialadvisors.com (781) 796-9553 Securities Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Thomas Halloran (President) [email protected] Insurance Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Variable annuities Up to 92% Up to 92% Up to 92% Up to 92% Up to 92% Limited partnerships Up to 92% Up to 92% Up to 92% Up to 92% Up to 92%

Waddell & Reed Financial Advisors (913) 236-2000 David Call Mutual funds up to 75% 76%-80% 81%-85% 86%-90% 91%-95% Waddell & Reed Financial Inc. joinwaddell.com (913) 236-3994 Securities up to 75% 76%-80% 81%-85% 86%-90% 91%-95% Shawn Mihal (President) [email protected] Insurance up to 75% 76%-80% 81%-85% 86%-90% 91%-95% Variable annuities up to 75% 76%-80% 81%-85% 86%-90% 91%-95% Limited partnerships Not offered Not offered Not offered Not offered Not offered

Woodbury Financial Services (800) 388-7773 Scott Little Mutual funds 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Advisor Group joinwoodbury.com (651) 702-1930 Securities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Rick Fergesen (President) [email protected] Insurance 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Variable annuities 91%-95% 91%-95% 91%-95% 91%-95% 91%-95% Limited partnerships 91%-95% 91%-95% 91%-95% 91%-95% 91%-95%

World Capital Brokerage Inc. (888) 742-0631 Patrick E. Dukette Mutual funds 50%-100% 50%-100% 50%-100% 50%-100% 50%-100% worldcapitalbrokerage.com (303) 626-0601 Securities 50%-100% 50%-100% 50%-100% 50%-100% 50%-100% Timothy E. Taggart (President ) [email protected] Insurance 50%-120% 50%-120% 50%-120% 50%-120% 50%-120% Variable annuities 50%-100% 50%-100% 50%-100% 50%-100% 50%-100% Limited partnerships 50%-100% 50%-100% 50%-100% 50%-100% 50%-100%

1If the CEO post is vacant or does not exist, top executive is listed; executives may share or have additional titles. N/D: Not disclosed. Source: InvestmentNews Data

18 | InvestmentNews January 27, 2020 InvestmentNews.com “THERE WILL BE A LOT OF HAND-TO-HAND CONTINUED FROM PAGE 9 broker-dealers are high, some have noted, raising questions about the COMBAT FROM A RECRUITING STANDPOINT,” amounts of debt used to finance the deals. Genstar Capital, a private equi- LARRY ROTH, MANAGING PARTNER, RLR STRATEGIC PARTNERS ty manager that focuses on midsized companies, brought the issue to the fore when it said success for such firms.” ner of RLR Strategic Partners, a consultant and invest- in 2018 it planned to finance a majority of its $1.7 bil- Meanwhile, if megamergers falter this year, that ment banking boutique. Mr. Roth has run both of the lion acquisition of Cetera Financial Group through means 2020 will turn into a recruiting knife fight predecessor organizations of Advisor Group and Cet- the sale of $1 billion in below investment-grade debt. among IBDs looking for growth, with rising costs to era Financial. “It’s going to be difficult [for broker-deal- And when Reverence Capital, in August, complet- pay brokers and advisers to leave one firm to work ers] to grow. Picking up 200 to 1,000 advisers will be ed its purchase of Advisor Group, it issued $1.6 bil- at another. very tough because there’s not much for sale.” lion in junk bonds to finance the deal. After Advisor “There will be a lot of hand-to-hand combat from Group said in November it was acquiring Ladenburg a recruiting standpoint, and it’s hard to grow if equity [email protected] Thalmann, S&P Global Ratings placed the company’s markets are choppy,” said Larry Roth, managing part- Twitter: @bdnewsguy debt on a “negative” credit outlook, or CreditWatch, meaning its B+ rating could be lowered. things people say to their financial advisors WEAKENED CREDIT METRICS “The CreditWatch placement reflects our expectation that Advisor Group’s mostly debt-financed acquisition of Ladenburg Thalmann could potentially weaken the company’s credit metrics, particularly its debt service capability,” according to S&P Global Ratings. “i want to go big, Advisor Group is not sweating its current debt levels. “We are extremely comfortable with our capital structure,” wrote its CEO, Jamie Price, in an email. He added that the firm’s expectation is that the combined Advisor Group and Lad- enburg organization, on a pro forma basis, will have lower leverage levels compared to the close of the network’s most recent financing in August. Financial advisers need to keep a careful eye on the amount of debt i just don’t want private equity managers use to buy broker-dealers, according to executives and analysts. All they must do is think back to the example of Nicholas Schorsch’s RCS Capital Corp., which spent $1.1 billion in mostly borrowed cash, in 2014, to buy Cetera. When Mr. Schorsch’s nontraded real estate investment trust business fell apart, his brokerage network slid into bank- ruptcy because the cash flow wasn’t available to cover the debt payments. Advisers who bought stock in the com- to go broke.” pany saw their investments wiped out. But rewards for private equity investors can be substantial. For evidence of that, all they have to do is look to the history of LPL Financial. After a majority of LPL was acquired by two private equity managers in 2005, LPL had its initial public offering in late 2010 at $30 per share. Last Thursday, LPL shares closed at $97.05 per share, an increase of more than 300% in a little less than 10 years. Presenting the Lifetime Check. It’s money your clients can receive Frothy valuations of broker-dealers every month in retirement for as long as they live. should concern advisers, particularly if the broad stock market takes a turn for the worse, noted Steven Chubak, To learn more about the Lifetime Check, go to jackson.com/lifetimecheck senior analyst, diversified banks & brokers, Wolfe Research. Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company® or Jackson National Life Insurance Firms with lower levels of debt to Company of New York® and do not apply to the investment performance of the separate account or its underlying investments. EBITDA could take advantage of the Annuities are issued by Jackson National Life Insurance Company (Home office: Lansing, Michigan) and in New York by Jackson Life Insurance move to megamergers, Mr. Chubak Company of New York (Home Office: Purchase, New York). Variable annuities are distributed by Jackson National Life Distributors noted. LLC. These products have limitations and restrictions. Contact the Company for more information. Jackson is the marketing name for “For example, LPL is going to Jackson National Life Insurance Company and Jackson National Life Insurance Company of New York. grow organically and also benefit from IBD mergers and acquisitions Not FDIC/NCUA insured • May lose value • Not bank/CU guaranteed • Not a deposit • Not insured by any federal agency by recruiting out of those firms,” he said. “That has been a good recipe of CNC21908LTADB 12/19

InvestmentNews.com January 27, 2020 InvestmentNews | 19 AMOUNT HELD IN 403(B) PLANS AT THE END OF Q3 2019 Planning $1.1T SOURCE: INVESTMENT COMPANY INSTITUTE RETIREMENT / SOCIAL SECURITY / INSURANCE / TAX / MEDICARE / COLLEGE / TRUST & ESTATE / PHILANTHROPY A vacation-home sale can raise Medicare premiums

nancial adviser reached out to or reduced work hours for one or both me the other day regarding a “cu- spouses; loss of income-producing prop- A rious conversation” she had with erty due to natural disaster; or loss of a a married couple regarding the sale of pension. their vacation home and its subsequent However, a one-time boost in income impact on their Social Security bene ts. as the result of the sale of a vacation “A husband and wife, currently age home, a large portfolio distribution or a 73 and 69, respectively, sold a vacation Roth IRA conversion would not qualify property in 2018,” the adviser wrote in an as a life-changing event and would boost email. They are the clients’ Medicare premiums for at both collecting least a year. If the clients’ income subse- Social Security quently declined, so would their Medi- bene ts. “The care premiums two years later. MARY BETH Social Security In most cases, the sale of a primary FRANKLIN Administration residence would not impact Medicare sent them a let- premiums of up to $250,000 of net pro t ter saying their for a single homeowner or up to $500,000 ONRETIREMENT income was of net pro t for married couples are ex- too high and cluded form taxable income. that their Social Security bene ts would Clients can also make a case that be reduced in 2020 for one year,” the ad- may pay a monthly high-in- The income thresholds Social Security used outdated or incor- viser wrote. come surcharge, of cially KEY POINTS that determine who pays the rect information when calculating their “I’ve never heard of this before,” she known as an Income-related • The sale of Medicare surcharges had been Medicare premium surcharge if they said. “What is the basis for this reduction monthly adjustment amount, a property is xed since 2011. As a result, led an amended tax return with the IRS and is there a way to avoid it in the future?” or IRMAA. Medicare uses the viewed by a growing share of bene cia- or have a more recent tax return that Technically, their Social Security income reported on your fed- the IRS as a ries had been subject to the shows they are receiving a lower income bene ts were not reduced. But their eral tax return from two years boost in annual income-related premiums over than previously reported. Medicare premiums, which are deducted ago, which is the most recent income. this time period. To request a new initial determina- directly from their monthly Social Secu- tax return information provid- But in 2020 and subsequent tion, clients must submit a Medicare IR- rity bene ts, were increased because of ed to Social Security by the • Medicare pre- years, the income thresholds MAA life-changing event form or sched- their higher income. That resulted in a IRS. MAGI consists of your miums increase will be indexed to general ule an appointment with Social Security. smaller net Social Security bene t. adjusted gross income plus according to price in ation, except for the They will need to provide documenta- any tax-exempt interest. income. top-level income thresholds of tion of either their correct income or the COVERAGE IN PARTS Individuals with a MAGI $500,000 for individuals and life-changing event that caused their in- Medicare has several parts. Part A covers of $87,000 or less, and mar- $750,000 for married couples come to decline. hospitalization and is premium-free for ried couples with a MAGI of $174,000 or ling jointly that were added in 2019. Instructions on how to appeal are list- most bene ciaries who paid FICA pay- less in 2018 pay the standard monthly Those top tiers will be indexed to in a- ed on the IRMAA determination letter. roll taxes throughout their careers. Part Medicare Part B premium of $144.60 per tion starting in 2028. The nonpro t Medicare Rights Center B covers doctors’ fees and outpatient ser- month per person in 2020. People with offers a free downloadable guide that vices and has a premium that is deduct- incomes above those thresholds pay the WHEN TO APPEAL SURCHARGE helps nancial advisers assist their cli- ed directly from monthly Social Security standard monthly Part B premium plus In some cases, clients can appeal a Medi- ents to appeal Medicare premium sur- bene ts for those who have led for ben- a high-income surcharge, ranging from care premium surcharge if they have charges. e ts, or paid directly to Medicare each $57.80 per month to $347 per month. Pre- experienced a life-changing event that (Questions about new Social Security quarter for those not yet collecting Social miums and surcharges are applied per caused their income to decrease or if they rules? Find the answers in my ebook at Security. person, so married couples pay twice as can prove the income information that InvestmentNews.com/mbfebook.) Most retirees pay the standard Part B much based on their joint income. Social Security used to determine the IR- premium, which is $144.60 per month in IRMAA thresholds are “cliff brackets,” MAA premium is incorrect or outdated. Mary Beth Franklin, a certi ed nan- 2020. But about 5% of high-income retir- meaning that if a client’s income exceeds Social Security considers any of the cial planner, is a contributing editor for ees pay more. the income bracket by even one dollar, following situations to be life-chang- InvestmentNews. If your modi ed adjusted gross in- they would be pushed into the next-high- ing events: the death of a spouse; mar- [email protected] come is above a certain amount, you er surcharge level for the entire year. riage, divorce or annulment; retirement Twitter: @mbfretirepro

paying off debts (50%). Yet Worries about retirement span generations: NAPFA their priorities for planning differ by age and proximi- ty to retirement. INVESTMENTNEWS nancial health of Americans, found that nancial planning in the Millennials, for exam- stress around nances transcends gen- last two years. ple, put a higher empha- IT TURNS OUT that most everyone, re- erational differences. In fact, 74% of The different gen- sis on increased savings gardless of age — millennial, Gen Xer or respondents said they want a nancial erations are consistent (59%), with one in three baby boomer — is stressed out about re- planning do-over. in their goals regard- worried they will need to tirement, according to a survey from the More than half (59%) of millennials ing money, which in- support their parents - National Association of Personal Finan- haven’t considered their options for re- clude planning for re- nancially, while planning cial Advisors. tirement, the survey found, while one in tirement (61%), achieving for retirement is top of mind The survey, which assessed the - three baby boomers hasn’t done any - greater savings (52%) and for 69% of baby boomers.

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Pershing’s Mark Tibergien on what’s ahead for RIAs

One of the most knowledgeable If you find that your custodian is from direct custody relationships for a variety of business and respected observers of the being opaque in what they do with models that range in size to partnership opportunities with RIA business is Mark Tibergien, your clients’ cash, for example, ask platform providers—such as Advisory Services Network, CEO of Advisor Solutions at BNY whether that is what your clients AssetMark, Cambridge, and Shareholder Services Group— Mellon’s Pershing. Recently, have signed up for. that utilize our solutions. InvestmentNews Content Strategy Studio sat down with him to INVESTMENTNEWS: What INVESTMENTNEWS: What are the challenges for RIA discuss the changing landscape differentiates Pershing from firms in today’s market for financial advice? of the custodial business, what other large custodians? the changes mean for registered MARK TIBERGIEN: In a variety of ways, the market is investment advisory firms, and MARK TIBERGIEN: Pershing has more competitive. First, there are more RIAs than ever. what steps he sees as most seen its custodial assets in the RIA If being an RIA in your local community has been your important for RIAs to take as they MARK TIBERGIEN segment grow from $50 billion in unique competitive position, that’s probably not so unique prepare for the future. His edited CEO of Advisor Solutions 2009 to over $760 billion today. anymore. There’s also competition from digital providers, BNY Mellon’s Pershing comments appear below. One of the main ways we distinguish which have become a force, and from the large discount ourselves from competition is that brokerage firms with powerful brands that can essentially INVESTMENTNEWS: The landscape we are the only major custodian that do everything a financial advisor does. of the RIA custodian market is about to change does not have a retail brand, meaning we don’t compete dramatically. Should RIAs reassess their with advisors. Recent changes in the competitive There are several things advisors can do to differentiate custodial relationships? landscape make this value proposition more important themselves in this environment. First is to identify what than ever. Another is our high-touch client service they want to be known for. Look at your current clients MARK TIBERGIEN: Given the growth advisory firms supported by experienced and highly trained service and understand what makes you unique. You may find that have experienced in recent years and the merger of teams versus our competitors’ moves toward a call center your niche is closely held business owners or lawyers or two big custodians, which is a catalytic event, this is approach. Further, our parent BNY Mellon is one of only doctors, or specializing in retirement needs. Or perhaps probably a good time for RIAs to ask themselves if eight systemically important financial institutions in the it is a technical specialty, such as helping clients with they are working with the right partners for where they U.S., which means we must meet higher standards of philanthropy or tax planning. Whatever it is, it can’t be are now and where they want to go. There are four safety and liquidity than other large RIA custodians. We’re generic. Since you can’t compete on size, you need to things advisors should consider when assessing their also the only custodian offering bank and brokerage compete on specialty, or the type of client you serve, and relationship with a custodian. custody, which is important for multigenerational you need to be very clear about what that is. relationships and trust clients. First is cost versus value. There’s been a lot of INVESTMENTNEWS: What would be your takeaway as discussion around zero and free, but in my experience In addition, we continue to make significant investments we start 2020? no business offers something for nothing. Do you in our client experience—improving both our technology know what you are giving up by getting a zero platform as well as workflows that help clients and MARK TIBERGIEN: This is a good time for firms to take offering? How does that impact your value proposition advisors interact more easily and productively. We also stock of where they are and where they are going. We’ve to the end investor? Perhaps most importantly, how offer an open architecture platform which affords our seen 10 years of expansion in the markets and in the RIA does that fit in with your business model and fiduciary clients the choice and flexibility they need to build their business, and good times can often lead to complacency. duty? Second is channel conflict. For custodians unique client experience. Finally, we provide a number To assess where you are, a four-corner strategy can be driving the majority of their revenues from the of solutions and services—including our business helpful. First, assess what’s happening in the marketplace direct-to-retail channel, growing the consumer client consulting services—to help advisors grow from being a generally, and make sure what you’re doing is still relevant. base is a clear business priority. That can present practice to being a business. While our competitors are Second, take stock of the competition, both in your local channel conflict, especially if their brand trumps your increasingly doubling down on the retail channel, we are market and nationally. Third, determine what your core brand. The question is whether they support your doubling down on our commitment to the RIA business capabilities are. Finally, be clear about your own definition business or whether they are in conflict with it. Third by continuing to invest in initiatives that further align our of success. is choice and flexibility. As custody charges and fees business with theirs. come down, is your custodian offering proprietary The growth opportunity for RIAs has never been more approaches to products and technology to offset lower INVESTMENTNEWS: Many RIAs feel that Pershing is pronounced given the accelerating accumulation of revenue elsewhere, or are they offering the flexibility interested only in serving larger firms. Is that true? wealth among younger people and the oversupply of and choice that supports the fiduciary model? Last clients against the backdrop of undersupply of advisors. is transparency. The whole notion of the fiduciary MARK TIBERGIEN: We serve all sizes of RIAs. Our For advisors who can identify a strong value proposition model is to be as open and transparent as possible. offerings cover the entire range of the advice continuum, and build a consistent, high-touch client experience, the opportunity to stand out has hardly been better.

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IN012199.indd 1 1/22/20 2:47 PM THE PORTION OF ADVISERS WHO ARE INCORPORATING BEHAVIORAL FINANCE INTO PORTFOLIO CONSTRUCTION. YourPractice 58% SOURCE: BEFI BAROMETER 2019 SURVEY TECHNOLOGY / BUSINESS DEVELOPMENT / MARKETING / NEXT GEN / CLIENTS / EMPLOYEES

Fava found that the average account size he said in explaining why his videos are of podcasting advisers was 22% larger kept to less than two minutes. than that of nonpodcasting advisers. “Podcasting is a good tool for pros- ’RIGHT AND WRONG WAYS’ pecting and referrals, and you don’t Mr. Ahmed’s videos, which he posts on have to be [chairman of Edelman Finan- Twitter, cover a range of nancial plan- cial Services] Ric Edelman,” she said. ning and nancial literacy topics, and al- “Some advisers are thinking you have to ways close with his tagline, “make nance be nationally recognized and attracting great again.”“My whole take on voice ver- new clients all the time to do a podcast. sus video is that as humans, we tend to But podcasting is also another way to connect more with video,” he added. keep in touch with the clients you have.” April Rudin, president of nancial ser- Instead of viewing podcasting as vices marketing rm The Rudin Group, akin to launching a national radio pro- generally puts podcasts and various gram, Ms. Fava said advisers should forms of blogging in the same category think of it as another medium for client as client outreach and marketing, and she communications and referrals. believes there are right and wrong ways “The advisory business is to do it. Put podcasting on the probably one of the last busi- KEY POINTS “If advisers don’t have a nesses on earth that relies plan, then they shouldn’t start mainly on referrals, and a re- • Half the U.S. any marketing strategy,” she ferral is hard to come by, but population said. “Think about what you recommending a podcast is has listened to will talk about, what your tar- to-do list for 2020 easy,” she said. podcasts. get audience is, and how what Paul Schatz, president of • Podcast you talk about will move the BY JEFF BENJAMIN tion for advisers is how to stand out Heritage Capital, regularly listeners tend needle.” in a universe ooded with more than blogs and communicates with to be wealthier, Ms. Rudin said just be- PODCASTING AS A marketing and mes- 800,000 podcasts and 30 million individ- clients through emails and and 80% of cause the world is becoming saging strategy might not be right for ual episodes. newsletters, but he has never listeners stay ush with podcasts, there is every nancial adviser, but that doesn’t seriously considered podcast- tuned for the no reason to believe every ad- mean every adviser can’t give it a shot. PROSPECTING TOOL ing, until now. “I’d challenge entire episode. viser needs to follow suit. Dani Fava, director of product strat- Ms. Fava put those daunting numbers any adviser to write as much “If you don’t have the com- egy and development at TD Ameritrade into perspective with a survey of TD-af- as I do,” he said. “I’m overload- mitment or a quality podcast Institutional, sparked an enthusiastic so- liated advisers that showed that only ed with content, so I guess I’d just have and can’t do a good job, don’t do any- cial-media discussion earlier this month about 8% of advisers currently host their to sit down and learn the technology to thing,” she said. by sharing on Twitter her case for why ad- own podcasts. Those who are represent a create a podcast.” Along those same lines, Megan Car- visers should have podcasts. relative cross section of the industry. Kashif Ahmed, president of Ameri- penter, chief executive of FiComm Part- Key points included the fact that half Advisers with podcasts reported an can Private Wealth, doesn’t technical- ners, recommends advisers have a clear the U.S. population has listened to pod- average of 8% more clients than those ly podcast yet, but he does post short message they want to deliver because casts, and a third tunes in to one at least advisers without podcasts. video clips of him as the “explainer in “the medium lends itself to the adviser’s monthly. The total assets under management chief,” touching on general and speci c innate strengths” as a communicator. Also, podcast listeners tend to be of advisers with podcasts is 30% great- issues related to nancial services. wealthier, and 80% of listeners stay er, on average, than advisers without, the “I’m sure I’ve plenty to say but that [email protected] tuned for the entire episode. The ques- survey of 750 advisers found. Also, Ms. doesn’t mean people are ready to listen,” Twitter: @benjiwriter

With the SECURE Act, 2020 will see the development of pooled employer Jumping into pooled employer plans plans, or PEPs, where multiple employers can have employees participate in he new year brings with it a host of New rules come online this year that third-party plans. new opportunities for investment ad- will reset the lines between registered While some investment advisers may T visers and consultants working with investment advisers and broker-dealers. try to create their own PEPs, the real retirement plans and individuals saving In June, the Securities and Exchange opportunity will be pairing with other for retirement. Compliance with Form Commission’s Form CRS goes into ef- nancial institutions that sponsor PEPs CRS will create new branding opportuni- fect. As part of a package of rules that but do not want to make the investment ties. The SECURE Act’s “pooled employer primarily have initial compliance dates ferent. Many RIAs and brokers are pre- decisions for the investment options plans” provision will create a new market this year, the SEC clari ed that RIAs are paring to highlight the differences in 2020. made available to PEPs participants. As “ duciaries” and B-Ds generally are not. For advisers who focus on the retire- small employers offer retirement bene- GUESTBLOG The SEC noted that it would therefore ment plan market, 2020 is going to be the ts to employees through PEPs, advisers DAVID N. LEVINE be misleading for brokers to describe year where we see the development of a who provide advice or services to PEPs AND KEVIN L. WALSH their services as “ duciary” or to refer to new type of plan. Traditionally, any em- could see rapid growth of their assets un- themselves as “advisors” or “advisers.” To ployer that wanted to offer a retirement der management or advisement. make sure that retail customers are aware plan has had to adopt its own plan. Whether you work with individuals for investment advisory services. Addi- of the difference between brokerage ser- This has meant that most of the small- or institutions, regulatory changes make tionally, the elimination of stretch IRAs vices and advisory services, brokers and est employers (fewer than 50 employees) 2020 a year of opportunity. January is will create a need for more innovative RIAs will be required to provide an up- have not offered plans, and many small the time to develop a strategy to capital- one-on-one nancial planning. Whatever front and then an annual four-page sum- employers have offered plans where ize on these developments. market segment you work with, it’s im- mary describing the services the broker they have not retained outside assis- portant to understand the changes that or RIA is offering and explaining how tance from advisers to determine how to David N. Levine and Kevin L. Walsh are will impact your business this year. brokers and investment advisers are dif- invest the assets of their plans. principals at Groom Law Group.

22 | InvestmentNews January 27, 2020 InvestmentNews.com There’s still a critical need for adviser RFPs

ccepted practice is that defined drivers include increased awareness by According to Hugh O’Toole, CEO are service or fee issues.” contribution plans should peri- plan sponsors about their duty to mon- at Innovu, a data analytics company Regardless, many plan sponsors A odically benchmark their record itor, litigation, and the evolving role of focused on human capital risk man- have an unhealthy allegiance to their keeper’s fees and services going out the advisers who are branching out to agement, and former head of sales adviser out of loyalty or laziness. Re- to bid every three-to-five years. But 15 other services like 3(38) outsourcing.” for MassMutual’s retirement division, alistically, a surge of adviser RFPs in years ago, providers resisted question- Most DC plans under $500 million “There actually might be fewer plan ad- the $10 million to $500 million plan is ing why, if the services and fees were rely heavily on their adviser to conduct viser RFPs on traditional services like unlikely as most plan sponsors are just reasonable, it was necessary to go to due diligence on other service provid- fees, funds and fiduciary in the future. waking up about their retirement plan market or even benchmark. ers but logically cannot ask or rely on Plan sponsors looking to maximize hu- although they are increasing according the same adviser to fairly conduct due man capital while minimizing costs are to Greg Middleton, director of market- diligence on themselves or competitors. starting to look at how retirement and ing at Captrust. GUESTBLOG There are third parties like InHub as health care services affect performance But even if a plan adviser is doing FRED BARSTEIN well as advisers who can help but get- and the bottom line.” everything right at a reasonable cost, ting the word out is hard. Mr. O’Toole added: “Plan sponsors ERISA still requires the plan sponsor are ahead of plan advisers on the con- — the fiduciary with ultimate responsi- Many retirement plan advisers cre- PERFORMANCE COUNTS fluence of benefits and retirement and bility — to conduct periodic document- ated their businesses conducting due Relationships can get in the way. It’s may just engage plan advisers for de- ed due diligence on their adviser either diligence on funds and record-keepers. not hard for a plan sponsor and advis- finable services for a flat fee alleviating themselves or with the help of a qual- But most advisers, even the elite plan er to tell a provider that the plan needs the need for a traditional plan adviser ified third party. Adviser or consultant advisers, are reluctant to advocate that to conduct prudent due diligence — search or RFP.” RFPs are accepted practices by larger their clients or prospects conduct doc- it’s harder to tell that to a person with plan sponsors and there’s no doubt it umented due diligence on their adviser. whom the plan sponsors may have a RFP ORIGINS will move down market. The reasons are obvious. There’s close relationship and may be doing ev- According to InHub, 35% of the adviser Only when the tide turns on RFPs for risk that the adviser may lose the cli- erything asked. RFPS processed were for plans under advisers, like it did 15 years ago for re- ent and, more likely, that their fees will Brian Allen, founder of Pension Con- $35 million in assets with 62% under cord-keepers resulting in massive con- be reduced. What’s their upside? David sultants Inc., an elite advisory firm in $100 million. Ariana Amplo, founder solidation, will we know which advisers Levine of the Groom Law Group notes, Springfield, Mo., notes that, “Adviser of InHub, notes that 50% of the RFPs are swimming naked. “Advisers, like any other service pro- RFPs are the way that DC plans select came from companies who had con- vider, need to be reviewed periodically advisers based on performance rather ducted one in the past five years show- Fred Barstein is founder and CEO of even if they are doing a good job.” than brand or image.” The talk about im- ing that, “Many plan sponsors are em- The Retirement Advisor University Mr. Levine is seeing an increase in proving outcomes is just that — talk — bracing the advice of ERISA attorneys and The Plan Sponsor University. He is plan adviser requests for proposals in unless advisers are forced to prove they and running this type of project every also a contributing editor for Invest- the midmarket following the accepted are making an impact along with show- four-to-five years regardless of wheth- mentNews’ Retirement Plan Adviser trend in the institutional market. “The ing they have the required resources. er or not the committee thinks there newsletter.

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Wells Fargo Advisors to Raymond James. WELLS FARGO The firm declined to comment to Invest- CONTINUED FROM PAGE 5 mentNews. Investors in alleged Ponzi 2019, a system outage took the bank’s Wells Fargo Advisors hasn’t given an website, mobile apps and ATMs offline. update on its partnership with SigFig, a Though the outage apparently was caused startup it partnered with in 2016 to build to receive $63 million by a power shutdown at a server facility, a robo-advice platform. While SigFig Wells Fargo faced criticism for not having raised an additional $50 million in ven- INVESTMENTNEWS that their money would be used to a backup ready. ture capital in 2018, it recently laid off improve multifamily properties. In June 2018, regulators identified about 10% of its workforce, according THE SECURITIES AND Exchange Instead, according to the SEC problems across Wells Fargo’s technol- to a Business Insider report. SigFig did Commission has obtained a court complaint, the money, much of which ogy operations, including cybersecurity not respond to a request for comment. order authorizing the distribution came from investors’ retirement ac- vulnerabilities and risk-management in- It’s unclear what other technology of over $63 million to investors counts, was diverted to pay earlier consistencies. The Office of the Comptrol- projects the wealth and investment man- in connection with an allegedly investors. The agency also charged ler of the Currency included technology agement team could be reassessing. Wells fraudulent real estate investment that Mr. Morgan and his firms made systems when it told Wells Fargo in 2019 Fargo has been noticeably quiet about scheme. misrepresentations to later investors to improve its human resources functions. any other technology developments. The SEC’s complaint, which about prior fund performance. According to the Wall Street Journal, There’s no reason Wells Fargo was filed last May, alleged that Since the filing, Mr. Morgan vol- out-of-date systems have hampered Wells shouldn’t have best-in-class technology, Robert C. Morgan, a New York real untarily liquidated certain assets Fargo’s ability to meet regulator demands, Mr. Scharf said on the call, but he ad- estate developer, and two firms he to generate funds for collection by monitor employee pay and build a mod- mitted that he doesn’t yet have all the operated, Morgan Mezzanine Fund the receiver. The money returned to ern platform for financial advisers. answers. Which is fair considering he’s Manager and Morgan Acquisitions, harmed investors represents the full only been in charge of the beleaguered sold securities to more than 200 re- return of those funds, the SEC said SEARCH FOR BETTER TECH banking giant for three months. tail investors representing to them in a release. Though advisers are loath to go on the What Mr. Scharf does have is a plan, a record with complaints about their pre- “really clear list of the work that we have vious firms, technology is often cited by to do,” developed with Saul Van Beurden, former Wells Fargo advisers when going head of technology at Wells Fargo. The independent. For example, James Alioto team is actively putting time frames said. “That’s one of the narrow cir- mentioned “greater options and technolo- around its priorities, Mr. Scharf said. CARSON cumstances where an argument gy offerings for our clients” in a press re- CONTINUED FROM PAGE 4 could be made” in favor of clearing lease about moving his $325 million firm, [email protected] after a hearing in which neither the an incident from a broker’s record. Alioto Wealth Management Group, from Twitter: @ryanwneal customer nor LPL participated after A Finra spokeswoman said the being invited to attend. organization declines to comment “I don’t have confidence in this on individual arbitration cases. In [award] because nobody showed up October, the Finra board approved to oppose it,” said Lisa Braganca, some yoga in Mexico).” principal at Braganca Law. “If the EMONEY Mr. O’Brien denied the shake-up is arbitrator only heard one side of the “THIS IS A GOOD CONTINUED FROM PAGE 4 the result of slow growth or missed goals. story, why would he rule against the business development team have left the The changes are reflective of eMoney broker? That is the problem with this EXAMPLE OF company. moving away from a team-based ap- process.” Stephen Langlois, eMoney’s head of proach to sales in favor of an individual Ms. Braganca co-authored a Pub- WHAT’S WRONG business development and chief revenue sales manager strategy, he said. lic Investors Arbitration Bar Associ- officer, recently updated his “Folks at eMoney are tal- ation Foundation study that asserted WITH THE LinkedIn profile to indicate he ented and in demand,” he said. that Finra arbitrators grant expunge- left eMoney earlier in Janu- “Some of our very talented ment far too often and that it is under- EXPUNGEMENT ary. The profile says he is now people move on to some of our mining BrokerCheck, Finra’s online principal of a company called best clients. That’s not a bad database with background informa- PROCESS.” SRL Associates. 1M thing.” tion on registered representatives. JASON DOSS, THE DOSS FIRM Jeffery Schwantz, who There have been addition- The study’s other author, Jason most recently served as head PLANS CREATED al exits from the ranks of the Doss, owner of the Doss Firm, also of enterprise services, has BY ADVISERS business development team, criticized the expungement. He said sending the Securities and Ex- also left eMoney to return to as employees have either left the customer was notified of Mr. change Commission an arbitration Morningstar, according to ON EMONEY or were laid off, sources said. Carson’s request on Dec. 11, and the reform rule proposal that would sources. Mr. Langlois hired IN 2019 The departures total “less hearing was conducted Jan. 6, giving curtail claims for $1 in damages. Mr. Schwantz as head of en- than 10 — as the result of an the customer little time to respond. On another of Mr. Carson’s ex- terprise sales in 2017, as part updated sales model as Ed Mr. Doss said Mr. Carson’s re- pungement requests, the Finra Office of a push to expand eMoney’s presence mentioned — and some employees took quest for $1 in damages ensured the of Dispute Resolution determined with banks, insurance and large bro- on new roles within eMoney, so the num- hearing would be conducted by only last April that a 2002 customer dis- ker-dealers. ber is even less,” the eMoney spokes- one arbitrator rather than the usual pute over “failure to carry out an Mr. Schwantz did not respond to a re- woman said. three. He also asserted that given investment plan” was not eligible quest for comment. An eMoney spokes- Acknowledging that the company’s the lack of detail in the arbitration for arbitration because “it arises woman confirmed his departure. growth in 2019 wasn’t equal to previous award, it was difficult to determine from a previous adverse award.” In years, Mr. O’Brien said eMoney still end- the merits of the case. that case, the claimant was granted MOVING ON ed the year strong. “This is a good example of what’s $50,000 in damages. In an email, Mr. Langlois said he left “The best testimony to our growth is wrong with the expungement pro- Neither a spokesman for Mr. Car- for “personal reasons” and referred In- we still added 12,000 users to our platform cess,” he said. “There’s no evidence son nor his lawyer was immediately vestmentNews to a LinkedIn post he last year,” he said, adding that there are [expungement] was or was not war- available for comment. wrote earlier this month. In the post, he now more than 70,000 people using eMon- ranted.” Mr. Carson was affiliated with thanked colleagues at eMoney and Fidel- ey. Advisers also used eMoney to create 1 But Andrew Stoltmann, a Chica- LPL from 1989 to 2017 and then with ity, where he worked for more than five million new financial plans in 2019. go securities attorney and vocal crit- Cetera from 2017 until early 2019, ac- years before joining eMoney. “Don’t believe anyone for a second ic of expungement, said that in Mr. cording to his BrokerCheck profile. “As some of you know, I recently left that we’re not investing in the business,” Carson’s case, the fact that the com- He is the founder of Carson Group, eMoney and am embarking on a new Mr. O’Brien said. “But we’re investing plaint was withdrawn and that the a wealth management and adviser chapter in my professional life,” Mr. very deliberately and in a very narrow customer was not paid any money coaching firm with more than $11 Langlois wrote in the LinkedIn post. set of capabilities.” justified the outcome. billion in assets under management. “So what’s next? I look forward to kick- “I can’t take offense or umbrage ing-off a period of discovery and explo- [email protected] to an arbitrator granting expunge- [email protected] ration in this new year (starting with Twitter: @ryanwneal ment in this case,” Mr. Stoltmann Twitter: @markschoeff

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Everything you need to know PANELISTS about hybrid RIAs

Adam Roosevelt Head of Corporate and The financial advice model is constantly evolving. As a result, great advisers are adapting Hybrid Business Strategy BNY Mellon | Pershing and great firms are soaring. But what should you do in your practice and how can the hybrid RIA model take you to the next level?

In a riveting conversation, sponsored by BNY Mellon’s Pershing with business and thought leaders, advisers will: Chris Keller Executive Vice President and Director of Business Services • Examine the hybrid RIA model and see why it is gaining such momentum Benjamin F. Edwards & Co. • Discover some key trends shaping the model • See how real business leaders are using it to shape practices large and small • Learn actionable tips for how to use the model to grow their practice into a business Jay Hummel Partner and Co-founder Wealth Advisor Growth Network Register today for this free webcast. Go to www.investmentnews.com/hybrid_ria_webcast MODERATOR

Accepted for 1 CE Credit by the CFP Board and by Investments & Wealth Institute® for 1 hour of credit towards the CIMA®, CPWA®, CIMC®, and RMA® certifications.

Matt Ackermann Director of Multimedia SPONSORED BY InvestmentNews

IN012200.indd 1 1/23/20 12:10 PM This is about more than zero. This is about partnership.

Work with a partner that’s flexible, transparent, doesn’t compete with your business, and is aligned with your strategy.

Learn more at pershing.com/aligned

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