Updated March 29, 2010.

(Dow Jones) People like to keep their options open. Brokers are no exception.

Firms with multiple brokerage channels are seeing notable success in both recruiting and retaining U.S. advisors, analysts say. Wells Fargo & Co., LPL Financial, Raymond James Financial Inc. and Ameriprise Financial Inc. each offer options such as a traditional brokerage and an independent platform.

"These firms can use it to their advantage when recruiting, and that could be why they are seeing so much success," said Bing Waldert, brokerage analyst with Cerulli Associates.

Wells Fargo Advisors offers a traditional employee channel, bank brokerage, independent group called Wells Fargo Financial Network, or FiNet, and quasi-independent channel, called Profit Formula, in which brokers pay a pro-rata share of expenses in return for a higher payout, but are still employees of the company and receive benefits.

Overall, Wells Fargo Advisors hired about 1,300 experienced advisors and 400 rookies in 2009. This year, it plans to bring in another 1,000 experienced brokers and 400 novices, with nearly three-fourths coming from wirehouses, according to Chief Executive Danny Ludeman.

John Peluso, president of FiNet, says offering multiple channels "is hugely beneficial to the overall attractiveness of Wells Fargo Advisors, because it all goes back to [having] choices." FiNet has grown its head count to about 825 advisors, which is up 120 since September.

Scott Calvert, an Atlanta-based advisor, left UBS AG (UBS) to go independent with FiNet about a year ago. He says he was nervous about running his own shop, but chose FiNet because he felt more comfortable with the backing of Well Fargo's multiple channels than an exclusively indendent model.

Ameriprise offers both an employee and an independent option. Patrick O'Connell, co-head of Ameriprise Advisor Group, said the employee channel hired 550 advisors in 2009, and he has similar goals for recruiting this year.

He says having options, even if brokers don't take advantage of them, is comforting and sometimes seen as a "safety net" by advisors going independent.

"If they don't like it, they can unwind it and go to the employee channel without having to move their clients," he says. The company's two channels operate under a single broker-dealer, making it relatively easy to move from one to the other.

Ameriprise boasted a 73.7% retention rate in its employee channel in 2009, up from 68.2% in 2008, while its independent channel retained 91.4% of its advisors, according to its earnings release.

Chet Helck, chief operating officer and head of Raymond James' private client group, says not many advisors move among channels, but there is the occasional case of independent advisors no longer wanting that responsibility, or employee advisors who are ready to take on the burden. Most often, Helck says, movement comes when brokers near retirement.

"They want to go independent because it gives them more control for an exit strategy, and there will be less people competing for their book when they leave, which makes it more valuable," Helck said.

Raymond James offers the option of being a bank broker, registered investment advisor, traditional employee, independent, or quasi-independent through its Advisor Select channel.

The firm hired about 750 advisors last year, with a combined $35 billion in client assets, and plans to boost advisor head count by 7% to 10% this year, according to Helck. Raymond James' independent channel alone has grown by about 200 advisors since November.

LPL Financial, which is primarily known for its independent platform, allows advisors to have their own independent practice, operate an RIA or hybrid RIA business, be employed by a local bank branch or credit union, or be an employee of one of its independent branch offices. These employees are not employed directly by LPL Financial, but by the local institutions.

LPL's advisors have many different backgrounds, from insurance brokerage to RIAs.

"We have to be able to support everyone, so we have to be experts in all the different areas," said Bill Dwyer, president of national sales and marketing.

Dwyer says he thinks the broad range of knowledge offers advisors more support, and in turn, increases retention.

In 2009, the firm had a 96% retention rate, excluding anticipated attrition from the integration of three affiliated broker-dealers. It also added a net 750 advisors last year and grew its assets under management to $279.4 billion from $233.9 billion, according to its earnings release. The Hybrid RIA platform, specifically, has grown its assets under custody to $7.3 billion as of Dec. 31, 2009, encompassing 92 RIA firms, since the platform's inception in the fourth quarter of 2008.

Total Advisors      Independents      Employees
Wells Fargo Advisors        15,000              1,200          13,800
Ameriprise Financial        12,100              9,700           2,400
LPL Financial               12,000             10,000           2,000
Raymond James Financial      4,660              3,400           1,260

 

 

 

 

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