After a decade of building Benjamin F. Edwards & Co. into a 300-rep independent broker-dealer with $25 billion of assets under management, the firm's focus is now expanding to the independent advisory space.
The
St. Louis-based broker-dealer announced Monday that it is launching Edwards Wealth Management, a corporate registered investment adviser that will seek to bring independent-minded advisers into the fold.
"Using an old cliché, we're going to where the puck is heading," said Chris Keller, managing director at the new wealth management unit.
The cliché is somewhat appropriate considering that the first advisory firm to join the corporate RIA is the father-son duo of Blake and Connor Dunlop, two former professional hockey players.
Dunlop Investment Group, which manages $230 million in client assets, is moving from the Benjamin Edwards employee channel to the RIA.
"We've always operated as an entrepreneur within the Benjamin F. Edwards framework, and we do mostly advisory business," said Connor Dunlop.
"Our business is made for this space," he added. "All the stars aligned with the new RIA channel."
While Mr. Keller celebrated the Dunlop advisory firm as the first under the new corporate RIA, he said the channel is not designed to recruit advisers from the Benjamin Edwards employee channel but is meant to recruit from other brokerage firms.
"There are more and more employee advisers who have built successful practices breaking away from brokerage firms," he said. "And there are more and more independent advisers who need back-office and middle-office support."
David DeVoe, managing director at the investment bank DeVoe & Co., said expanding into the independent advisory space is a logical next step for IBDs.
"The RIA business model continues to thrive for good reason; it simply serves the U.S. investing public better than other models," he said. "Private equity, forward-thinking banks and other adjacent businesses continue to vote for the independent channel with their pocketbooks and business strategies, driving its accelerating growth and evolution."
The Benjamin Edwards broker-dealer custodies at Pershing, and any transactional business conducted by firms operating under the corporate RIA will use the broker-dealer.
For advisory business, the RIA uses Pershing Advisory Solutions as a custodian, but Mr. Keller said the RIA is "custodian-agnostic," which makes it easier for advisers to join the RIA without having to change custodians.
In exchange for middle- and back-office support, Edwards Wealth Management offers three potential financial arrangements.
"We can take an equity stake in them, they can take an equity stake in us, or there can be a simple affiliation agreement," Mr. Keller said.
Daniel Seivert, chief executive at the investment bank Echelon Partners, said even though Benjamin Edwards has been successful, the launching of the RIA underscores the challenges facing brokerage platforms.
"They've had great success on the broker-dealer side and they are definitely looking for a way to get into the RIA business model, as have most IBDs," he said. "I think they're just getting started with this platform but given their name and the network of contacts they have, I expect a lot of growth and success pretty quickly."
