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Broker Protocol growth slowing; is the list reaching critical mass?

Fewer wirehouse brokers are fleeing for their own firms, but recruitment-minded RIAs are still joining the list

Friday, September 24, 2010 – 3:50 AM by Matt Robinson
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Marc Thomas: The former Schwab investment consultant joined the Protocol to lay the groundwork for recruiting to his startup RIA.

The pace at which companies are joining the Protocol for Broker Recruiting has slowed markedly this year compared with last year, in another sign that fewer brokers are breaking away from wirehouses to establish their own RIAs.

Through Sept. 23, 144 companies have joined the Protocol in 2010, compared with 279 during the same time period in 2009.

Because the markets and the wirehouse world are calmer than they were two years ago, brokers aren’t taking the risk of starting their own firm, says Patrick Burns, of his eponymous law firm based in Beverly Hills, Calif. “[Advisors] aren’t running out of a burning building anymore.”

“I think there maybe fewer representatives, but larger teams,” Burns added, confirming a trend reported by the large custodians earlier this year. They reported fewer breakaways but broke records on AUM recruitment totals. See: Fidelity weighs in with breakaway results reinforcing the big-advisor trend and Both Schwab and TD Ameritrade smash breakaway recruiting marks from last year.

RIABiz maintains the list of companies on the Protocol on the RIABiz Directory page, www.riabiz.com/d. It’s in the upper right corner.

Critical mass?

Existing RIAs that want to recruit wirehouse brokers also join the Protocol. But many of the expansionist advisors that wanted to join the Protocol likely already have, Burns says. The list might be reaching critical mass.

He suspects that the pace will continue to slow – with around 600 listed by the end of this year and 700 in 2011.

Marc Thomas, founder of Thomas Investment Management, is one of those existing RIAs looking to recruit for his new business. With $3.5 million in AUM, the former Charles Schwab investment consultant is looking to hire 1 to 2 more advisors. The Los Angeles-based entrepreneur learned about the Protocol through some internet reading.

“Actually, I found out about the protocol through your website,” he says. Thomas wanted to be sure he was prepared to move quickly if he found the right candidates. So he joined the Protocol.

His is one of 14 companies that joined between mid-August, when RIABiz last reported the number, and Sept. 23. That brings the total number of companies listed to 550. During roughly the same time period last year, 13 companies joined. To see the full list, click here.

SIFMA as hub

The Securities Industry and Financial Markets Association maintains the list, which allows a broker to take his or her clients to a new firm – if the broker abides by the Protocol’s rules. For information about how to joint the protocol, see: SIFMA will take over administration of Broker Protocol list.

The companies that joined in the last month are:

Sanner Financial Services

Questis Advisor Partners, LLC

NPA Financial Services, Inc

Nationwide Planning Associates, Inc.

Cambridge Wealth Management, LLC

Landvik Financial

Investment Partners Of Acadiana

Signature Estate and Investment Advisors, LLC (“SEIA”)

Nova Financial LLC

Thomas Investment Management

Cascade Financial Management Inc.

The Driscoll Group Inc.

LTC Financial Services Ltd.

Grand Strategy Capital LLC

Arsenal Investment Advisors LLC

Capital Management Partners LLC

Pure Wealth Management, Inc.

Retirement Wealth Strategies LLC

B.C. Ziegler and Company

TWM Group LLC d/b/a Tower Financial

Mentioned in this article:

The Law Offices of Patrick J. Burns, Jr., P.C.
Specialized Breakaway Service
Top Executive: Patrick J. Burns, Jr., Esq.

Advanced Regulatory Compliance, LLC
Compliance Expert
Top Executive: Patrick J. Burns, Jr., J.D.

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