'Stay bonus' be damned: LPL's gain is Securities America's loss as two top producers depart
Two of Securities America Inc.'s top advisers, including the head of its largest financial adviser group, walked out the door this week to join rival LPL Financial LLC.
Donald Patrick, president of Integrated Financial Group of Atlanta, joined LPL yesterday. His group has about 50 brokers and annually produces about $10 million in fees and commissions, according to industry executives and recruiters.
A day earlier, Bobby White left Securities America to join LPL. He is chief executive of Reliance Financial Group LLC, which is based in Birmingham, Ala., and produces about $6 million in fees and commissions each year, according to industry executives and recruiters.
Securities America spokeswoman Janine Wertheim declined to comment about the brokers' production of fees and commission.
The moves by Mr. Patrick and Mr. White occur against the backdrop of Securities America's continued attempts to find a buyer. Ameriprise Financial Inc., the independent broker-dealer's parent, put the firm up for sale in April, days after reaching an agreement to settle about $150 million in claims and lawsuits stemming from the sale of private placements that went bust.
Although Securities America has been in negotiations with several potential suitors, the firm has seen a slow but steady stream of brokers depart. Losing a star such as Mr. Patrick, however, is a more significant blow.
“When the No. 1 guy in a group of 1,800 advisers goes, if I'm an adviser in the top 10 or top 20, I'd start asking questions,” said Phillip Flakes, managing partner at StarPoint Consulting Group LLC, an industry recruiter that has recently moved brokers from Securities America to other positions.
Representatives and advisers at Integrated Financial Group who generate close to 25% of the group's annual production — or about $2.5 million — won't move to LPL but stay with the firm, Ms. Wertheim said.
“Securities America has had a great relationship with Don Patrick and the advisers in his branch. We're happy to have been a part of their success and wish them all the best,” Ms. Wertheim said.
“We wish Bobby White and the advisers who are leaving with him the best,” she said. “The advisers that are staying say they don't want to give up the tremendous value they receive from Securities America.”
Mr. Patrick is traveling and couldn't be reached for comment.
"We had made the decision to make a change within the next couple of years. The bad press around Securities America sped that up," said Mr. White. He said his firm had started its own RIA, and that LPL's hybrid business model for both brokers and investment advisers supports that kind of business nicely.
Competing broker-dealers have had some success picking off brokers from Securities America.
For example, Commonwealth Financial Network recently landed three practices of Securities America reps that annually generate $4.2 million in fees and commissions, and Cambridge Investment Research Inc. recruited reps who produce $3.8 million in fees and commissions. Both firms expect to land reps who produce millions more in fees and commissions by the end of next month.
Many reps, however, are sitting tight until the firm finds a new buyer with the hopes of winning a “stay bonus,” industry executives and recruiters said. Such a bonus is standard in the industry when one firm buys another in order to keep the brokers in their seats.
A spokesman for LPL did not return a call by press time.
