Erica McGinnis' big plans for Advisor Group are taking shape

New CEO charts an ambitious course for 2014 and beyond

Jan 19, 2014 @ 12:01 am

By Bruce Kelly

Erica McGinnis has had three and a half months to settle into her new role as chief executive of Advisor Group, and her plans for building out the network of four independent broker-dealers — and making it more accommodating to women — are taking shape.

Ms. McGinnis, 42, the former head of compliance at the firm, was named last October to replace Larry Roth, who left to join a broker-dealer controlled by real estate maven Nicholas Schorsch. She has an eye on growth for the network, where the adviser head count at each broker-dealer has been frozen of late. With the cost of recruiting on the rise, she is working to create a broker-dealer acquisition strategy.

While Ms. McGinnis acknowledges that the oft-touted industry goal of dramatically increasing the number of female advisers is a long shot, she does think male advisers could benefit from training or coaching in how to work with female clients — particularly those whose husbands have died. In fact, 70% of women fire their adviser within a year of being widowed or divorced, according to data cited by Pershing Advisor Solutions. Ms. McGinnis doesn't think that needs to be a fait accompli.


Advisor Group has 5,400 registered representatives and investment advisers under the roofs of its four broker-dealers: Royal Alliance Associates Inc., Woodbury Financial Services Inc., FSC Securities Corp. and SagePoint Financial Inc.

Ms. McGinnis “has an accessibility both as a professional and as a person that sets people at ease and lets people know that she wants to be productive, help the adviser and that she cares,” said Jeffrey Vahanian, an adviser with Royal Alliance who has $150 million in client assets. “You really can't ask for more than that. We're in a trust industry, and Erica has that good-egg vibe.”

InvestmentNews: Your predecessor, Larry Roth, oversaw the acquisition in 2012 of Woodbury Financial Services. What are you going to do about growth?

Ms. McGinnis: It's a priority. One side is recruiting. The cost is getting higher and the market is competitive. We will not abandon branch-by-branch recruiting or recruiting advisers one by one. That's important. But broker-dealer consolidation is happening; in the changing regulatory environment, it's becoming more costly to run a B-D. We will have an acquisition strategy. It won't involve a bunch more Woodbury-type acquisitions, but we will have an acquisition strategy and map it out in the first quarter. We are seeing other deals and scratching our heads [at the prices]. I don't envision throwing wild numbers around to acquire smaller broker-dealers.

InvestmentNews: Mr. Roth is one of the most highly respected executives in the industry. What is it like to take over for someone of his stature?

Ms. McGinnis: Larry was a mentor. He pushed me and opened doors, too. I owe a lot of my success to Larry. I had the opportunity to be on the senior-leadership team at Advisor Group and work closely with him, and we collaborated closely on the Advisor Group's women's initiative. I appreciate everything he's done for me.

But we are different leaders. I want to put focus on our employees, not just the advisers. I want to make sure their voices are heard and make sure our broker-dealers are the best places to work in the industry. We've always been adviser-focused, but we also want to focus on the 800 staff of the B-Ds. Right now, it's an opportunity to reconnect with the staff at those four firms. They are our future leaders and the first line to the adviser force. It's important for senior management not to be disconnected from the advisers, and also stay focused on the employees.

InvestmentNews: Will we see more women in the industry as leaders and financial advisers?

Ms. McGinnis: Advisor Group is 15% women. We launched our women's initiative in 2013. That was about taking care of the 15%, but it's also about helping 85% of our advisers who are men. We don't only need to hire more female FAs — men need the skills and tools to hang on to female clients, particularly when they become widows.

It's an aspirational goal to have a 50-50 male-to-female ratio of advisers. I started in the business 20 years ago, and it was a Type A personality, salesperson culture. It's a relationship business [now], not just a sales position, but barriers to entry are still steep [for women]. Being a financial adviser is not like being a real estate agent, where you can work as much as you want.

InvestmentNews: What are your plans for consolidation of services across the four broker-dealers?

Ms. McGinnis: The integration is 80% to 90% complete, and most of that was accomplished last year. [Ex-Woodbury CEO] Pat McEvoy and Larry did an amazing job with Woodbury.

As we move forward, people are asking whether we will consolidate the four brands. No. Each will continue as an independent broker-dealer. The culture of each is strong, and it's important to the advisers.

The annual meetings in 2012 and 2013 were held under one roof and received really well. But people like the commonality of a smaller broker-dealer. We got back comments that it was difficult to “find our own people.” We will continue to tweak things along the way and have portions of the program that are broker-dealer-specific.

InvestmentNews: An increasing number of compliance professionals and lawyers are in top positions at broker-dealers and around the industry. Why do you think that's happening, and what does that mean for a firm?

Ms. McGinnis: Compliance people can make great business leaders. That's not to say sales leaders should not be at the top of the heap. It's just a more diverse population. It's exciting to see lawyers and comparable professionals rise to the top of an organization. My first job in the industry was at a branch cold-calling.

My first taste of the industry was from an adviser's perspective. I've worked in training, supervision, branch management and most recently in compliance. The most important thing is to be well-rounded. I'm not certain if you were in compliance or legal your entire career that would make a great CEO. I'm not sure we had a compliance department 20 years ago. It was something called client relations. We've come a long way.


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