Co-founder of ING firm jumps to NFP

NEW YORK — One of the founders of Financial Network Investment Corp., the largest independent-contractor broker-dealer in the ING Advisors Network Inc., walked out the door last month and joined NFP Securities Inc., leaving some observers to wonder how many registered representatives affiliated with FNIC eventually could follow. Jerry Brown, one of the seven partners who started FNIC of El Segundo, Calif., more than 23 years ago with Miles Gordon, was a regional director in Seattle for FNIC and ran one of the firm’s largest group of producing brokers and advisers. At one time, he had as many as 100 reps and advisers in his shop, industry observer said, with an office that generated between $15 million and $20 million in gross dealer concession, or total fees and commissions. Mr. Brown’s move shocked some in the industry, while others wondered if the firm could see more defections. “The turnover [among advisers affiliated with FNIC] has been unusually low, but I think that’s beginning to change now,” said Jonathan Henschen, an industry recruiter in Marine on St. Croix, Minn. “More reps are making inquiries” about potentially leaving FNIC than in the past, he added. Although some industry executives agreed with Mr. Henschen, other recruiters and broker-dealer chiefs disagreed and characterized Mr. Brown’s leaving as a “one-off” with no great attrition of reps or regional directors likely to follow. Reps, advisers and executives with FNIC have been among the most loyal in the industry, industry observers said. ING Advisors Network is the largest network of independent-contractor reps, totaling 8,880. Extra layer Industry observers, including recruiters and executives at rival broker-dealers, questioned whether FNIC’s three-tiered structure could be pushing some reps and advisers to think about leaving the firm. At the highest level is the regional director, and underneath that executive is the branch manager, followed by the rep, they said. The extra layer of administration often results in a large-producing rep losing between 5% and 10% of payout, sources said, when compared with the potential payout at another broker-dealer with fewer layers of management. However, the structure often works to the advisers’ advantage, as the regional director is the direct go-between for the rep to the broker-dealer, sources noted. “You wonder why [the advisers] are so loyal in a structure like that, where the rep makes 10% less than other systems,” Mr. Henschen said. Mr. Brown did not return phone calls last week seeking comment on his departure. A spokesman for ING Advisors Network downplayed Mr. Brown’s departure. “Like all firms, we lose representatives, and we recruit representatives,” the spokesman, Phil Margolis, wrote in an e-mail. “In 2006, Financial Network had very strong recruiting results and a record retention year,” he added. “We are seeing strong sales to date this year, and our recruiting pipeline is bigger than it’s ever been.”