Specialized IBD to take on 50 reps and advisers from Veritrust

PlanMember Financial Corp., a 400-representative independent broker-dealer that works with reps and advisers who specialize in retirement plans of school districts and other nonprofit organizations, is expanding. The broker-dealer said today that it has agreed to become the broker-dealer and registered investment adviser for the 50 reps and advisers who have been affiliated with Veritrust Financial. That firm is scheduled to close after filing its broker-dealer withdrawal notice with regulators. Veritrust's advisers will begin under PlanMember Financial next month. Small broker-dealers such as Veritrust, which has fewer than 100 registered reps, have faced increasingly difficult business conditions since the financial crisis five years ago, forcing many to close their shutters. Compliance and technology costs have increased as regulators have put new rules on transactions in place. Record-low interest rates have crushed broker-dealer profit margins that formerly relied heavily on margin interest and spreads on money market funds. At the end of 2008, 4,895 broker-dealers were registered with Finra. By last month, that number had dropped to 4,218, a decrease of 13.8%. Many of those were small broker-dealers. The two firms will form a national marketing and distribution alliance, according to a joint statement. “We are excited to have Veritrust and their independent advisers as distribution partners,” Jon Ziehl, chief executive and founder of PlanMember Financial, said in the statement.