Former independent brokerage industry veteran John Simmers is spearheading a group of industry executives that has acquired Calton & Associates Inc., a small sized broker-dealer and registered investment advisor it plans to use to corner the small- to middle-sized independent broker-dealer and hybrid investment advisor market.

Simmers says the group sees a business opportunity by zeroing in on smaller-sized firms whose profit margins are being sliced razor thin and who can't afford to hook up to use the platform of a larger sized company.           

"The focus for our expansion into the independent space is really going after that $20 million to $100 million broker-dealer or investment advisor that is struggling right now, but wants to keep its brand, has a company that it believes in and wants to stay in business and be competitive," Simmers says. "To do that, it has to reduce its risk profile and has to increase its margin for profit."      

Simmers, 61, co-founded and helped lead the independent broker-dealer known as Financial Network Investment Corp., which eventually became part of the ING Advisors Network. He has teamed up with Scott Sherwood, who will serve as co-chairman with Simmers, to help Calton & Associates Inc. become an independent broker-dealer and hybrid RIA offering an independent platform of services to outside firms. "We wanted to create a viable alternative for advisors to PE consolidators and serial acquirers," Simmers says.

Calton, which has been in business for more than 20 years, is managed by Dwayne Calton. The firm generates around $15 million in annual gross revenue and has $2 billion in assets under administration. Calton currently has about 180 advisors. After its acquisition, the group will change Calton's name to Innovation Equity Partners Financial.

In addition to Simmers and Sherwood, IEP Financial's management team will comprise Dwayne Calton; Randy Ciccati, former president and CEO of PrimeVest Financial Services; Keith Gregg, former president and CEO of First Allied Securities; and Ramu Singh, former chief operating officer of Rady Asset Management LLC.

Simmers said the group acquired Calton rather than start from scratch in order to cut down on costs, red tape and start-up time.

"We could start a broker-dealer; we all know how to do that," Simmers says. "But the process to get that is six to nine months minimum, and you get loaded with new restrictions and have higher capital.

"Calton is ideal from our perspective because it fits the mold of that smaller broker-dealer that can benefit from shared services and actually bringing services to it that it doesn't have today," Simmers says.

Simmers says the his group expected to complete a 50 percent transfer by the end of the month and, ultimately, 80 percent over time.

Simmers says IEP Financial is getting calls from both wirehouse brokers and fee-only advisors. "Growth will come on the Calton side not through an army of recruiters, but through relationships and word of mouth," he says. "We think that will produce great growth."       

The firm's key selling point is a new technology platform called iBITS, which stands for Innovative Business Intelligence Technology Solution. The platform also will also be available to outside, non-related broker-dealers that can benefit from improved access to top-shelf programs that many small-to-midsize firms can't afford, Simmers says.

-Jim McConville