Stifel Financial Corp., which has been expanding its
Stifel Nicolaus & Co. retail- brokerage business aggressively, is about to make a push into serving registered investment advisers.
The firm has hired David Akellian, a veteran of Merrill Lynch & Co. Inc. and Pershing LLC, to run its Century Securities Associates independent-broker-dealer affiliate and add a custodial unit for RIAs.
The venture, likely to be called Century Advisor Services, will be marketed to fee-only RIAs and “hybrid” advisers who want to supplement their fee-based practices with commissions.
“We are a competitor to Fidelity, Schwab and TD Ameritrade, and the distinguishing factor, aside from being able to offer the core capabilities embedded in
Stifel Nicolaus, is that we have a solution for individuals or firms looking for a broker to carry their securities licenses,” Mr. Akellian said.
The
Charles Schwab Corp. and TD Ameritrade Holding Inc. typically refer their hybrid RIA clients to small broker-dealers that don't compete with their discount-brokerage operations.
Fidelity Investments and Pershing direct advisers to selected firms in their correspondent clearing networks.
Stifel's plan “validates the model we established more than 15 years ago to serve dually registered firms,” Fidelity spokesman Stephen Austin wrote in an e-mail.
TD Ameritrade's “solid platform” includes external broker-dealers, spokeswoman Kristin Petrick wrote in an e-mail.
A spokesman at Pershing declined to comment, and a spokeswoman at Schwab did not respond to requests for comment.
Mr. Akellian, who aims to launch Century Advisors in the first quarter of next year, said he'll tout the operational advantage of a single platform for advisers that pairs Stifel's brokerage technology and products with “bolt-on” wealth management tools.
The platform is being developed in-house and with outside vendors, he said, though he declined to provide details. Century also will be hiring relationship managers to ensure solid service to advisers, he said.
Stifel's venture is the latest attempt by broker-dealers to profit from the rapid growth of independent fee-based advisers who have been migrating away from selling investment products. In addition to working with independent advisers, Mr. Akellian said he hopes to capitalize on the trend by encouraging Century Securities' 185 independent contractors to embrace fee-based client relationships.
Ron Kruszewski, the chairman and chief executive of St. Louis-based Stifel Financial, said that while he has not been enthusiastic about the independent- brokerage business — Century Securities' 180 contractors sometimes compete with Stifel Nicolaus's 1,712 brokers in 294 offices — he is embracing the burgeoning RIA channel.
The research, trading and support services of Stifel's institutional businesses, coupled with its retail-marketing know-how, will be a major selling point, he said.
Century, to be sure, is not alone in chasing RIAs.
LPL Financial, the largest broker by number of independent contractors with about 12,500, launched a hybrid platform last year to retain the advisory business of its brokers, and of outside RIAs.
The unit has 97 clients, representing 418 individual advisers and $6.1 billion of end-client assets, according to LPL spokesman Joseph Kuo. Schwab, the largest custodian, boasts about 6,000 RIA firms and $481 billion of client assets, according to Cerulli Associates Inc.
Raymond James Financial Inc.'s independent broker-dealer,
Raymond James Financial Services Inc., offers custody services to about 100 RIA teams with an average of about $60 million of assets under management.
“We're flattered by them copying our model,” Mike Di Girolamo, managing director of the custody unit, said of Stifel's plans.
The regional brokers not only covet the trades and investment product purchases that RIAs make for their wealthy clients, but also are looking to prolong the windfall they've been reaping from investors and brokers fleeing Merrill Lynch & Co Inc., Morgan Stanley Smith Barney,
UBS Wealth Management and other faltering giants.
The breakaway broker boom, however, appears to be ending.
It's settled down in part because wirehouses are locking in brokers with deferred-payout packages, said John Taft, the co-chairman and head of RBC Wealth Management, the Royal Bank of Canada's U.S. brokerage division. Instead of hiring experienced brokers, which Mr. Taft said remains an expensive proposition, his firm is buying JPMorgan Chase & Co.'s RIA custody unit and targeting advisers with $100 million or more of assets.
The new business also may help the bank retain assets managed by RBC brokers who go independent, he said.
Mr. Akellian, who is chief executive of Century Securities and senior vice president of Stifel Nicolaus, said the new unit is focusing on RIAs with a minimum of about $50 million of client assets. The hurdles for new custodians are high, he acknowledged, but said the company expects, over time, to win ancillary business from large RIAs and, eventually, become their primary custodian.
Mr. Akellian, who is 49, left Merrill Lynch in May after almost nine years in which he headed a variety of clearing, commission recapture and trade execution businesses for the firm's professional clients. From 1984 to 2000, he worked at Pershing, where he helped launch what is now the Pershing Advisor Solutions LLC custody platform for RIAs and hybrid brokers.
Terry Frank, Mr. Akellian's predecessor at Century Securities, re-mains a sales executive at the firm.
E-mail Jed Horowitz at [email protected].
