‘Significant’ rep exits at Securities America

The bleeding has started at Securities America Inc., as competitors are successfully recruiting reps from the beleaguered broker-dealer.
Commonwealth Financial Network recently landed three practices run by former Securities America reps. Combined, those newly recruited reps generate $4.2 million in fees and commissions. Commonwealth also forecasts that Securities America brokers producing another $9 million in fees and commissions will join it by the end of September. (See more details on the three teams joining Commonwealth.)
Since April, when parent Ameriprise Financial Inc. put Securities America up for sale, Cambridge Investment Research Inc. has recruited Securities America reps with $3.8 million in production. And Cambridge says it has commitments from other Securities America reps producing a combined $7.2 million to come aboard by the end of the third quarter.
Between the two broker-dealers, that totals $24.2 million in fees and commissions, commonly referred to as “gross dealer concession.” That amount represents more than 5% of Securities America’s 2010 gross revenue of $466 million.
“There has clearly been, to us and other firms, an erosion of their adviser base as a result of the trials and tribulations they’ve been through,” said Andrew Daniels, managing principal of field development for Commonwealth.
“None have moved with extreme urgency but simply have decided they are going,” said Cambridge chief executive Eric Schwartz. “It’s not a mass exodus, but it’s starting to get significant.”
Ameriprise put Securities America on the block days after the two had reached terms of a $160 million settlement with investors who had bought failed private placements from Securities America brokers from 2003 to 2008.
The departures come at a time when Securities America management is trying to keep reps in place. Ladenburg Thalmann Financial Services Inc. and Cetera Financial Group have emerged as potential buyers, with negotiations ongoing. (Read more here.)
“Despite the aggressive recruiting, the majority of our advisers remains focused on their business and clients and anticipate a timely positive outcome to our announcement of a new owner,” said Janine Wertheim, a spokeswoman for Securities America.
She added that the GDC numbers for defecting Securities America brokers cited by executives from Commonwealth and Cambridge were “not even close.” The actual amount was “far less,” she said.
The brokers who left Securities America to join Commonwealth include Richard Tonkinson of Miami, Thomas Hine of Glastonbury, Conn., and John Smallwood of Shrewsbury, N.J. , all of whom have come aboard since May.
A spokesman for LPL Financial LLC, which also has successfully recruited brokers recently from Securities America, declined to comment. LPL tomorrow reports its second quarter results, which include information about the firm’s recruiting.

Related Topics: Advisers On The Move, Ameriprise Financial, Securities America Inc.