Brokerage firm Wunderlich Securities Inc. plans to buy five RBC (U.S.) Wealth Management offices in Michigan and Ohio with 21 retail brokers and about $700 million in client assets under administration, the firms said.
An unusual aspect of the deal is that the offices will continue to clear client trades through RBC Correspondent Services, while Wunderlich's other retail branches will maintain their clearing relationship with
Wells Fargo & Co.'s First Clearing LLC.
“It helps make this a seamless transaction for the financial advisers and their clients, and RBC gets a new client out of the transaction,” said Philip Zanone, president of Wunderlich,
He declined to discuss terms of the acquisition, which took about a year to negotiate and is expected to close in the middle of next month.
The offices were formerly part of broker-dealer Ferris Baker Watts Inc., which had 40 branches when it was bought by RBC in 2008. Wunderlich in 2008 and 2009 purchased four other former Ferris Baker offices, including two retail branches in Michigan and institutional equity offices in Denver and Baltimore.
Mr. Zanone said that the RBC deal likely ends his firm's involvement with Ferris alumni.
RBC closed several smaller branches last summer, including some acquired in the Ferris transaction, but said that the five-branch deal is unrelated to that cost-cutting effort.
“The arrangement with Wunderlich is one of a kind,” said John Taft, chief executive of RBC (U.S.) Wealth Management, noting that the brokers were more comfortable operating in a small-firm environment. “It doesn't represent a change in strategy for us nor is it the tip of the iceberg for closing smaller offices.”
RBC (U.S.) Wealth Management has about 2,200 retail brokers in more than 200 offices across 42 states. Wunderlich employs about 400 retail and capital markets professionals in 21 offices in 12 states.
The brokers moving to Wunderlich have average annual production of about $330,000, and will probably receive a slightly higher payout than at the bigger brokerage, Mr. Zanone said. The largest of the new offices is a 10-broker branch in Beechwood, Ohio, supplemented by a six-broker branch in Plymouth, Mich., and three smaller Michigan outlets in Flint, East Lansing and Brighton.
Dan O'Neil, who managed the complex for Ferris Baker and RBC from Beechwood, will continue in that role at Wunderlich.
The deal comes as RBC is modifying a discount-sharing penalty that has irked some brokers at the firm and that was a factor in the move to Wunderlich, some say.
In an effort to curb brokers' penchant for charging some clients less than published commission rates, RBC last November cut their full-production credits for trades that generated less than $500 in revenue. That was double the $250 threshold that previously applied before their discounts were penalized.
RBC has decided to compromise by lowering the ticket size at which brokers can discount without affecting their payouts to $400. The change becomes effective in November.
