After wading through a host of legal problems and its sale, Securities America Inc. is back on the offense. Last Tuesday, 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 representative 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 in-creased 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.
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 in 2009 alleged 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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