Securities America today announced it is a partner in a novel corporate RIA that will allow affiliated advisors to pick their own custodian for their fee business.
The La Vista, Neb.-based independent broker-dealer and NorthStar Financial Services Group, which owns Orion Advisor Services, formed a joint venture that allows advisors who do commission and fee business to choose their own custodian. The joint venture, an SEC-registered RIA named Arbor Point Advisors, offers an integrated platform that allows hybrid advisors to work with major custodians such as TD Ameritrade, Schwab and Fidelity Institutional. The advisors will do their commission business through Securities America, which also will provide overall compliance and supervision, as well as practice management and retirement income distribution services.
“The challenge advisors face in running their own RIA is the significant time spent on compliance, technology and administration – time they aren’t spending with clients,” said Jim Nagengast, CEO and president of Securities America. “We saw a need in the market for a turnkey RIA with a custodian-agnostic platform, and we partnered with another Omaha-based industry leader, NorthStar, to create an innovative and compelling solution.”
Securities America will continue to operate its existing corporate RIA, Securities America Advisors, which uses National Financial and Pershing as custodians, said Natalie Hadley, a Securities America spokeswoman.
She said Orion, which provides back-office services for RIAs, approached Securities America about the joint venture. Orion saw a need for a custodian-agnostic RIA because many of its advisory clients had asked the firm if it could also serve as their RIA, she added.
Advisors with $50 million to $250 million in assets who want to custody at one of the major firms is where Arbor Point expects to make its mark, according to its president, Curtis Reed, CFP.
“For every advisor with $1 billion in assets looking to form or join an RIA, there are hundreds of firms with $100 million who need the same support to serve their clients,” Reed said. “We’re not an RIA consolidator. We’re a support platform – an RIA ‘easy button,’ so to speak – for independent advisors who want the freedom to choose a custodial firm and serve their clients the way they want.”
Because its platform is so flexible and open, Arbor Point can appeal to advisors no matter what their business model, Reed said. "Some advisors are fully fee based, but some have legacy commission relationships that are signficant and they don't want to leave that behind. Other advisors are on the path to being fully fee only. We're a good solution, regardliess of the stage of an advisory firm's life cycle," he said. Also, Reed adds, many advisors will want to choose their own custodian because they like a particular firm's products and services or may already have a relationship there.
Reed said Arbor Point hopes to attract hundreds of RIAs to the firm from around the country in the next few years. "One of points that makes us different, because of the size and scale of Securities America and its infrastructure, we can compete on a national stage. There are other smaller providers who have taken a foothold in certain areas, but we're interested in building a national registered investment advisor."
Previously, Reed worked with advisors at Schwab Institutional before starting his own RIA. "I did run my own registered investment advisory firm, and had I had a partner like Arbor Point, my experience would have been totally different. I spent an exorbitant amout of time on noncore functions; I spent a ton of time on data, billing and reconciliation. It took me away from my highest and best use, time with clients."