One of the fastest-growing hybrid registered investment advisors has recruited a large southern California affiliate from the independent channel, continuing its rapid expansion.
Beachwood, Ohio-based Stratos Wealth Advisors announced the addition of San Diego-based Brown Wealth Management on Tuesday.
As of Sept. 15, Brown’s advisors served $525 million in client assets.
Stratos, an independent advisor network on LPL’s hybrid RIA platform, has nearly 200 advisors in more than 60 offices in 22 states.
“That number grows every day,” says Charles Shapiro, cofounder and managing partner at Stratos. “We have around $7 billion in assets under management.”
The Beachwood home office has 75 professionals in place to support the satellite firms.
Stratos’ history is an unlikely one. In 2008, founder Jeffrey Concepcion was forced to go it alone after a dispute with his former employer, Lincoln Financial Advisors.
That dispute hinged on a white paper from Concepcion proposing a new model for recruiting representatives and delivering advice. Lincoln fired him after 23 years of service, leading to a $2 million arbitration decision in Concepcion’s favor.
While the Financial Industry Regulatory Authority (Finra) sorted out his dispute, Concepcion put ideas from his white paper to work for his new firm, Stratos Wealth Partners, co-founded with three former wirehouse managers, including Shapiro.
“We were all advisors, we all went into management and were a part of the branch system for those firms,” Shaprio says. “In 2008 and 2009, when the debacle took place, we all realized the industry needed to change its direction.”
In the beginning, they had a top-heavy firm with a staff sized in anticipation of growth. For two years, Stratos operated at a loss, and with no private financing. The founders had no safety net should the experiment fail.
But the gamble paid off. As brokerages experienced attrition during the financial crisis, Stratos began to grow.
“Most of the advisors, the ones who were client-facing, were put in a tough position,” Shapiro says. “The things that had gone wrong with the business were largely out of their control. The advisors themselves wanted to go independent.”
In 2012, Stratos took off, adding 40 advisors to its network and increasing AUM from $3.2 billion to $5 billion.