Hunting for hybrids: First Allied to offer platfor
The new platform, engineered by Pershing, will be unveiled next week at the annual Investment Management Consultants Association meeting
By Jed Horowitz
September 23, 2009, 2:29 PM EST
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In an effort to attract stockbrokers migrating to a fee-based advisory practice, First Allied Securities Inc., next week will introduce a “hybrid” operational platform that has been engineered by Pershing LLC.
The technology is aimed at drawing brokers from competing independent firms, as well as from full-service wirehouses, who expect to book the lion’s share of their revenue from fees rather than commissions, according to First Allied executives.
“This is a major strategic initiative because we see the hybrid, dually registered, adviser as a continually growing channel,” said Matthew Bassuk, senior vice president of business development at First Allied. “We want to be a major player there.”
First Allied has invited about 65 brokers from wirehouses and other large brokerage firms who are considering a jump to independence to meet with it next week at the annual meeting of the Investment Management Consultants Association in Atlanta, where the hybrid platform is being unveiled.
IMCA attracts substantial producers, he said, and First Allied will be entertaining some of the prospects at a Turner Field suite during the conference.
The firm also is courting brokers with a hybrid bent from competing independent firms and expects two teams to join from competitors within the next two months, Mr. Bassuk said. He declined to name the brokers or their firms but said that they will do the “hard, beta testing” of the new technology.
First Allied has worked with Pershing Advisor Solutions LLC on a customized version of the clearing firm’s NetX360 platform, which allows advisers to use a single sign-in to view integrated brokerage and advisory accounts and to enjoy consolidated reporting.
It also works with First Allied’s internal compliance system, allowing the firm to meet its regulatory requirement of monitoring pertinent client information to ensure that brokers are meeting suitability and other requirements for their registered investment advisory clients, said Anthony Ortale, who joined First Allied three months ago from The Charles Schwab Corp. as vice president of the hybrid platform.
He said that First Allied is launching its hybrid platform with Pershing because NetX360 provides dually registered advisers with “an integrated look and feel” and because many brokers are familiar with the firm’s technology. The deal isn’t exclusive, though, and over the next few years First Allied hopes to have arrangements with other providers as well.
Pershing, the biggest clearing firm for independent broker-dealers, has been trying to persuade those firms to provide homes to dually registered advisers. However, many are reluctant to embrace the model out of fear that their brokers will divert fee-based assets to outside broker-dealer custodians.
The concept has “the gestation period of an elephant,” Mark Tibergien, chief executive of Pershing Advisor Solutions, said in an interview this year.
First Allied is trying to distinguish itself from competitors by appealing to the growing number of independent brokers and advisers who are focusing on fees and want platforms with open architecture, Mr. Ortale said. First Allied, which clears through Pershing, has its own RIA that is used by about 80 of its clients but doesn’t require brokers to use the in-house platform.
Mr. Ortale also acknowledged that LPL Financial, the biggest independent firm, appears to have a robust platform for dually registered advisers. LPL, which is self-clearing, introduced its “integrated RIA” a year ago and now has custody of about $4 billion of assets from about 400 hybrid advisers at 100 of its firms.