Independent broker Kevin Phillips felt like he was being punished for someone else's sins.
With Bernard Madoff's ripoffs still fresh in people's minds, Phillips' broker-dealer, Woodbury Financial Services Inc., demanded that he cough up personal financial records going back six months.
It wasn't that Phillips, then one of Woodbury's top producers, was under suspicion. The broker-dealer had simply decided that affiliated brokers needed to show they were on the up-and-up — a policy the firm maintains.
"They wanted me to fax it all to them," said Phillips, in Phoenix.
"I said they were welcome to come down here and examine everything, but I wasn't going to send it to them."
J.R. Robinson, an independent broker and an author in Honolulu, felt stifled as a member of an independent brokerage team affiliated with Wells Fargo & Co.
Robinson has written for industry publications and peer-review journals and has won awards for white papers on life-cycle funds and retirement-income strategies. "I write because I enjoy it," he said. "I think it gives me credibility with clients, and it separates me from my peers in the business. It's how I brand myself."
Robinson said, however, that his former brokerage, worried about the compliance implications of his articles, asked him not to publish.
It is natural, he said, for brokerages to get nervous when employees or affiliates write about their products and services. But Robinson objects to "a blanket refusal" to make exceptions. "It's a freedom-of-expression issue," he said.
A spokesman for Wells Fargo did not comment on Robinson's statements, but he added that the bank has "other advisers who write and publish extensively."
Independent brokers such as Phillips and Robinson are feeling spied on, muzzled and flat-out disrespected as brokerages struggle to keep regulators happy and brands intact. That said, broker-dealers may be have a point; a clutch of them have been sued or fined into oblivion for selling products that were, at best, too risky for their buyers.
Phillips and Robinson know there is no getting around compliance. But Phillips wanted an open dialogue with his broker-dealer's compliance team. Robinson wanted a broker-dealer that would let him write, within reasonable bounds.
Phillips conducted a detailed search for a new broker-dealer before he hit on a small company called Financial Advisers of America LLC. He joined about a year ago.
Robinson was several years into his search when another Hawaiian adviser recommended FAA, of Carlsbad, Calif. He joined last summer.
The company was formed in 2007 to capture "reps with broker-dealers that have grown too large," according to its president, Jodi Johnston.
For Robinson, a broker-dealer with a few thousand brokers is too big. "At 3,000 to 4,000 brokers, the compliance people can't know everyone," he said. "At that point it's hard to stay true to your independent roots."
Johnston agrees. She said FAA, now with about 200 brokers, is determined not to grow past 350 or so. "That's if we can handle it; if we get feedback from advisers to back off on growth, we'll back off."
This collaborative approach appeals to Phillips. "The people at FAA are working with me to position my business to help my clients," he said. "The usual feeling you get [from a broker-dealer] is that you're a number."
And Robinson no longer feels he's writing under a cloud. In fact, his writing commands an entire section of FAA's website.
