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Securities America is back on track

Dec 11, 2012 @ 3:46 pm

By Bruce Kelly

securities america, independent broker-dealer
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After wading through a host of legal problems and its sale, Securities America Inc. is back on the offense. Today, it announced that a heretofore independent broker-dealer with 130 affiliated reps and advisers is joining the firm as a superbranch.

The new branch, until now the broker-dealer Investors Security Co. Inc. of Suffolk, Va., is a large producer of revenue, totaling $7.4 million for the fiscal year that ended in August. However, that translates into annual production of roughly $57,000 in fees and commissions per rep and adviser. And that's a level the clear majority of independent broker-dealers believe to be insufficient.

Over the past decade, most independent broker-dealers have increased production requirements for advisers to at least $100,000 in fees and commissions annually, if not more. The national wirehouse firms, meanwhile, have the largest producers in the retail-securities industry, with minimum-production levels close to $500,000.

The low level of average production per rep was offset somewhat by several factors, said Gregg Johnson, senior vice president of branch office development and acquisitions at Securities America.

Investors Security is known as a “pretty good insurance shop,” and those sales don't appear in broker-dealer revenue, Mr. Johnson said. The reps are older and looking at offerings such as succession planning, doing more fee-based investment advisory business and using Securities America's coaching programs.

The Investors Security announcement caps a year of other high-profile recruitments into the firm, Mr. Johnson said.

Securities America has been in transition the past couple of years. Last year, it was acquired by Ladenburg Thalmann Financial Services Inc., which bought the firm for $150 million from Ameriprise Financial Inc.

Ameriprise sold the firm after reaching a wide-ranging settlement with Securities America investors who had sued the firm for sales of private-placement securities that the SEC alleged in 2009 were fraudulent.

“We've gotten back to the volume and recruitment pipeline of before the market crash and the turmoil of 2008 and 2009,” Mr. Johnson said. In 2013, he said he expects other small broker-dealers such as Investors Security to be on the block.

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