Morristown Financial Group, the largest branch of LPL Financial in gross production, hopes a planned hybrid registered investment adviser will help it continue its heady expansion.
The New Jersey advisory firm added 70 financial advisers in 2010 to bring its head count to around 170, and plans to add another 70 this year, said Patrick Sullivan, a founding partner. It brought on 10 advisers in the first two months of this year, he said.
Recruits are coming from wire houses, banks and other independent broker-dealers, according to Sullivan. "There's still a trend toward going independent," he said. "We're not seeing anything on the competitive landscape from the other firms that's going to change the game."
Morristown Financial, which was founded in 1997 and has $3.8 billion of assets under management, now has advisers as far south as Virginia and recently added a team in Minnesota. Its advisers are registered with LPL Financial, a unit of LPL Investment Holdings Inc., which became a publicly held corporation in November.
Morristown Financial boosted its gross production to $25.1 million in 2010 from $13 million the previous year, and most of its advisers generate between $250,000 and $500,000 in fees and commissions a year, Sullivan said.
Alois Pirker, an analyst at Aite Group LLC, said that as some of the wire houses move more upmarket, focusing on advisers that produce $600,000 to $800,000 a year, they're driving away smaller advisers, creating an opportunity for LPL.
In an effort to boost its recruiting allure, Morristown Financial filed with the Securities and Exchange Commission in January to launch a hybrid registered investment adviser, which it plans to ramp up this quarter. The hybrid RIA's assets will be custodied with LPL.
Hybrid models, which permit advisers to conduct fee-based and commission business, have become increasingly popular. Bing Waldert, an analyst at Cerulli Associates, said that's partly because certain products are not widely available on a fee-only basis. In addition, some advisers do not want to engage in a fee-only relationship with smaller clients and working in the fee and commission worlds permits an adviser to diversify his revenue base, Waldert said.
LPL launched an integrated platform to support advisory firms that want to work with both models in October 2008. Last year, Morristown Financial began looking at what other advisory firms were offering and saw that it needed to offer a hybrid model, Sullivan said.
"In the last three months, existing advisers and prospective advisers have shown more of an interest in it," he said.
Pirker said a hybrid model is crucial for those attempting to attract advisers today.
"When you hire an adviser, the chances are they have a mix between fee- and commission-based assets," he said. "You have to have both to get a lot of advisers."
