NFP Securities casting wider net to bring in RIAs, hybrid advisers

NFP Securities Inc., which in the past has targeted its brokerage services to the insurance agencies and financial planning firms owned by its parent, National Financial Partners Corp., is re-branding itself to attract a broader base of hybrid advisers and registered investment advisers.

The broker-dealer will begin marketing itself next quarter as NFP Advisor Services in its first broad advertising campaign aimed at both independent advisers and full-service brokers who are thinking about independence, executives said.

“The word “securities’ is basically synonymous with a broker-dealer, and that’s not the only way that advisers serve clients,” said James Poer, president of NFP Securities. “We’re moving beyond our traditional channel-only approach and have made substantial investments in technology that have really deepened the proposition.”

The firm ranked as the 13th-largest independent broker-dealer by gross revenue at the end of last year, with $325.9 million of revenue and 1,750 registered representatives, according to an InvestmentNews ranking. That was down from fifth place with gross revenue of $1 billion two years ago. (Click here for the firm’s profile.)

After 18 months of retrenchment in which National Financial Partners ended acquisitions, sold scores of unprofitable affiliates and recapitalized its balance sheet, the company is “back in a position to reinvest” across its three core sectors of corporate benefits, brokerage and, to a lesser extent, insurance, sectors, NFP chairman and chief executive Jessica Bibliowicz said last week at an investors’ conference in New York.

NFP Securities, which provided 23% of its parent’s revenue last quarter, is the firm’s lowest-margin business because of typically high payouts to independent registered representatives that reach up to 95% on securities products and 96% on insurance. But Ms. Bibliowicz suggested that the unit is central to the company’s new plan to market its three business lines of corporate benefits, insurance and brokerage as a single brand, as well as NFP’s leading edge into the independent advisory channel.

“For the first time we are becoming more active recruiters,” she said of NFP Securities. It is “a very appealing broker-dealer in its own right.”

A key part of Mr. Poer’s growth strategy is the IndeSuite platform unveiled last summer for hybrid advisers and RIAs who don’t necessarily want to use NFP Securities to hold custody of client assets.

The Charles Schwab Corp.’s Advisor Services unit is the first custodian to link to the platform, and he said that he expects that a second large custodian will embellish the open-architecture approach early next year. Mr. Poer had told reporters earlier that a second custodian would likely be on board by the end of this year.

IN DISCUSSIONS

Mr. Poer, who ran two RIAs affiliated with AIG Advisor Group before joining NFP in 2003, declined to discuss the financial arrangements with rival custodians and their clients.

No advisers have signed on to IndeSuite to date, but NFP Securities’ recruiters — led by Ken Jones, the firm’s senior vice president of growth — is in discussion with a full pipeline of highly qualified advisers, according to Mr. Poer.

“In our soft-launch approach, we’ve had quite a bit of success, and we’ll be taking it more aggressively to the market in the fourth quarter and the first part of next year,” he said.

Mr. Jones’ team also has had “some success” recently in terms of luring brokers from full-service firms to NFP Securities by promoting the firm’s unique “insurance and benefits tool chests,” Mr. Poer said. He declined to provide specifics about such breakaway brokers.

The ideal adviser for NFP and the new platform is one with $50 million or more of client assets under management who generates $500,000 or more in annual insurance premiums, Mr. Poer said.

Despite the branding change and the outreach to fee-based advisers, the executive insisted that NFP isn’t abandoning its core constituency of insurance-affiliated brokers.

“We’re casting a wider net into the marketplace that will benefit NFP and its traditional channel partners,” Mr. Poer said.

Dan Inveen, a principal of FA Insight, said that the new strategy illustrates a continuing trend by roll-up firms such as National Financial Partners to broaden their core constituencies.

“All these players in the consolidator market are re-examining and retooling their business models,” he said. “Advisers are clearly interested in moving toward a more fee-based business model, and that’s where many of these consolidators are focusing.”

E-mail Jed Horowitz at [email protected].

Related Topics: NFP Securities Inc.