Ex-Waddell & Reed manager finds success recruiting advisers from old firm

80 advisers at Pennsylvania firm used to be with Waddell & Reed.

A former Waddell & Reed branch manager who left a few years ago to launch a hybrid firm has successfully been recruiting financial advisers from his old company as it continues to grapple with turnover in senior management, a shrinking number of advisers and the introduction of a new brokerage program in an attempt to move away from its history of selling proprietary mutual funds.

After six years at Waddell & Reed, Conor Delaney left the firm in 2012, moved his securities license to LPL and two years later started a registered investment adviser, Good Life Advisors, based in Wyomissing, Penn.

And Mr. Delaney’s new firm is clearly making the most of recruiting from Waddell & Reed.

Out of the nearly 200 advisers working under the hybrid roof of LPL and Good Life, about 40%, or 80, were formerly registered with Waddell & Reed, said Otis R. Jacobs, vice president, director of business development at Good Life.

“Our plan is to get more advisers to go independent,” Mr. Delaney told InvestmentNews last year when the CEO of Good Life was named a 2017 InvestmentNews 40 Under 40 winner. “We’re saying, ‘We’re going to change your lifestyle.””

Mr. Jacobs cited changes in Waddell & Reed’s compensation plan and executive turnover as two reasons for Waddell & Reed brokers moving to new employers.

“It’s been a feeding frenzy with advisers leaving,” Mr. Jacobs said. “We know their language.”

InvestmentNews independently verified 15 of those advisers leaving Waddell & Reed to work at Good Life by cross-checking advisers with firms listed on Good Life’s form ADV and their individual BrokerCheck profiles. Good Life has slightly more than $1 billion in client assets, according to its form ADV.

Mr. Jacobs said that Good Life was offering its recruits a highly enticing payout of 90% of annual fees and commissions plus a bonus.

A subsidiary of the publicly traded holding company, Waddell & Reed Financial Inc., the broker-dealer has seen a significant drop in the number of its brokers and advisers over the past year, with head count decreasing 29.6%. At the end of the first quarter of this year, the firm had 1,170 advisers, down 492 from the same time a year earlier.

When asked about Good Life and Mr. Delaney’s success in recruiting Waddell & Reed advisers, a spokesman for the company, Roger Hoadley, noted that the company has been cutting less profitable advisers and had a “proactive focus on higher producing advisers.”

Average annual fees and commissions of advisers who left Waddell & Reed over the past year was about $69,000, according to figures cited by Mr. Hoadley.

“We increased the minimum production requirement for advisers, ultimately leading to a reduction in the total number of affiliated advisers,” Mr. Hoadley wrote in an email.

Meanwhile, Waddell & Reed also is attempting to broaden the selection of products and funds it sells and lose its reputation as a seller of proprietary products, in particular the line of mutual funds known as Ivy Investments. Over the last two years, Waddell & Reed has opened up its brokerage platform, as well as built out new multi-manager advisory programs. The brokers and advisers now can sell funds of leading managers including T. Rowe Price and American Funds.

One recruiter wondered about the ultimate impact on advisers of such changes at Waddell & Reed.

“In today’s environment, advisers demand state of the art technology and unbiased product offerings,” said Jodie Papike, executive vice-president at Cross-Search. “What we continue to see is that the firms that don’t advance technologically and continue to push product not only struggle to attract new advisers, but they are losing advisers to more competitive platforms.”