One of the broker-dealers in the ING Advisors Network Inc. is on the brink of losing representatives and advisers who generate $21 million in fees and commissions to rival firms.
Multi-Financial Securities Corp. of Denver this summer has seen the departure of advisers who produced $12 million in gross dealer concession, industry sources said.
The lead broker of that group, John Fenwick, left Multi-Financial on June 26 to join Cambridge Investment Re-search Inc. of Fairfield, Iowa.
Rival firms are pursuing Multi-Financial reps who generated $9 million in GDC, industry executives and recruiters said.
Securities America Inc. of Omaha, Neb., is aggressively pursuing those reps, sources said.
The staggering amount of revenue that is in play — about 11% of Multi-Financial's total last year — comes on the heels of months of speculation by some reps in the ING network that LPL Financial of Boston was in the hunt to buy their broker-dealer. After completing five acquisitions last year, LPL, the biggest independent broker-dealer, has made no secret of its desire to buy more broker-dealers.
In May, LPL, which had $3 billion in gross revenue last year, said in its quarterly report that it is seeking to buy firms and outlined the company's plans to focus on "strategic acquisitions."
"We intend to strengthen our position in the industry through additional strategic acquisitions, and we believe that these acquisitions will enhance our ability to increase the number of [financial advisers], as well as broaden our portfolio of products and services," the company said in the report.
William Dwyer III, president of independent-adviser services for LPL, later downplayed that report, saying that acquisitions are not the firm's first priority.
Making the firm stronger by concentrating on its established advisers is LPL's premier task, Mr. Dwyer said, followed by recruitment and then acquisitions.
Mr. Fenwick and his group appreciated the smaller, entrepreneurial atmosphere of Cambridge Investment Research, with its open architecture and its emphasis on advisers' fee business, said chief executive Eric Schwartz.
"Multi-Financial has always been a good firm, but this particular group's business model is a better fit for Cambridge, so we are very pleased they decided to join us," Mr. Schwartz said.
Mr. Fenwick did not return phone calls seeking comment. A spokesman for the ING Advisors Network, Dana Ripley, did not return phone calls.
The other broker-dealers in the ING network are: Financial Network Investment Corp. of El Segundo, Calif., ING Financial Partners Inc. of Des Moines, Iowa, and PrimeVest Financial Services Inc. of St. Cloud, Minn.
One industry observer said management needs to work to quell advisers' anxiety when rumors rise about the potential sale of their broker-dealer.
"There are a lot of advisers in motion right now," said Elizabeth Nesvold, managing partner for Silver Lane Advisors LLC of New York. "With this level of activity, you have to be more proactive with advisers who control the relationships and revenues."
"The biggest challenge is keeping people in their seats," Ms. Nesvold said. Management should develop both a public posture and internal communication when facing substantial speculation about an acquisition, she said.
E-mail Bruce Kelly at [email protected].
