Beleagured Securities America continued to lose key people this week, with two advisors, representing a combined $18 million in annual production, jumping ship to LPL Financial.
The latest defectors from the La Vista, Neb.-based brokerage firm were Donald Patrick, president of Atlanta-based Integrated Financial Group, and Bobby White, chief executive of Birmingham, Ala.-based Reliance Financial Group LLC.
Patrick's group has about 40 brokers and pulls in an estimated $12 million in annual fees and commissions, while White generates an estimated $6 million, according to industry executives.
Patrick and White were "independent contractors-branch managers" at Securities America and not executives of the company.
Patrick said he made the decision to switch to LPL Financial after evaluating the market and considering the advantages LPL may have over Securities America.
"We as independent advisors have free choice out there and we have lots of strategic partners, whether it's money management firm, or broker-dealers, or insurance companies," said Patrick in an interview with Financial Advisor Magazine on Friday. "It's really one of our obligations as independent advisors to us and our clients to re-evaluate them all on a periodic basis."
Patrick said his group Integrated Financial Group of America two yeas ago put together an advisory committee to consider and make "big decisions" about the company. "Part of our decision was that we wanted more control over our lives," he said.
"We spent a year and a half just re-evaluating the independent B-D (broker-dealer) landscape," Patrick said. "We were looking for a firm where we would be for the next ten years. We really wanted to be a place where we wouldn't have to make a change."
Patrick said LPL Financial's size and financial strength were pivotal factors in deciding to make the move there.
"The perception out there is that LPL is so big that you can get lost," Patrick said. "In fact, the opposite is true. They have something that they employ called "Service 360. "We actually have a dedicated pod of ten (LPL) folks that are just dedicated to serving our group."Securities America executives commended both Patrick and White and wished them well.
"Securities America has had a great relationship with Don Patrick and the advisors in his branch," said Janine Wertheim, Securities America senior vice president and chief marketing officer in a prepared statement. "They have more than doubled their production since joining us and have been active participants and advocates of our extensive business growth, technology and practice management tools. We're happy to have been a part of their success and wish them all the best."
About 25% of their combined production is staying with Securities America, she said.The latest Securities America defections comes on the heels of other departures over the past five months in the wake of a scandal in which clients of the broker-dealer lost about $400 million. The alleged Ponzi scheme involved private placements in Medical Capital securities. Securities America's parent company, Ameriprise Financial in Minneapolis, agreed in April to pay $150 million to settle the claims. At the time of the settlement, Ameriprise said it would be searching for a buyer for Securities America.
In June, LPL recruited Securities America brokers Robert Hapanowicz and Lori Price, who followed in the footsteps of Securities America's broker Sue Ricker, who left in April.
In July, Securities America lost Tonkinson Financial, Capital Wealth Management and Smallwood Capital Management to Boston-based Commonwealth Financial Network. The three firms had a combined $400 million in assets under management. At the time of Tonkinson's departure, the firm's founder, Richard Tonkinson, cited Securities America's scandals as a reason for the change. "After a while, you just kinda after a while lose confidence that they could move on," he said.
"It's tough for Securities America; these things take so much time that they were dealing with," said Patrick. "I know they're trying to identify a buyer very quickly, and I think they probably will, but those things just don't happen overnight."