Former LPL execs reunite to compete for big hybrid RIAs -- this time with a smaller IBD

First Allied Securities is finding an advantage to being based in San Diego besides the perfect weather – nabbing experienced ex-executives of LPL Financial Services from down the street.

The broker-dealer with 1,077 reps announced Wednesday that it had hired Matthew McGinness as a ringer to help attract top talent, bolster existing advisors and forge relationships with top custodians for hybrid RIAs that want to hold assets away. His title is managing director, advisory consulting services.

Until 2007, he held a similar position as vice president of business consulting for LPL, which is also San Diego-based.

McGinness, 36, was hired to First Allied by J. Vere Reynolds-Hale, national sales manager of First Allied — who headed sponsor relations at LPL until 2006.

In that job, he was responsible for negotiating with companies that wanted to make their investment products available to LPL’s advisors. LPL currently supports about 12,000 reps plus an additional 4,000 advisors affiliated with insurance companies. It is preparing for initial public offering. See: 10 reasons LPL could pull off a hot IPO in a cold market.

Side by side desks

Hale and McGinness overlapped during a few years at LPL. Their desks were side by side, which made Reynolds-Hale certain of what he was getting for talent.

“I went to Adam [Antoniades, First Allied’s President] and said: we need someone like Matt so we spent six months selling Matt” on joining, Reynolds-Hale says.

Since departing LPL in 2007, McGinness has run his own consulting practice, Best Practice Research, where he authored the 2009 Moss Adams/Investment News Advisor Compensation and Staffing Study and co-authored research reports for Pershing LLC on transitioning to fee-based pricing and the development of advisory program capabilities.

First Allied has consistently been among the top five broker-dealers in terms of average gross dealer concessions for its reps – typically $300,000 to $345,000, Hale says.

With McGinness on board First Allied can better fulfill its mission to recruit and train bigger advisors who serve high net worth and ultra-affluent investors.

In-house consulting

Increasingly custodians and broker-dealers are finding that they want a strong consulting capability in house. Pershing’s hire of Mark Tibergien is an example of that. Cetera Financial Group hired consulting-minded Barnaby Grist from Schwab earlier this year. Schwab, TD Ameritrade and Fidelity all have professionals devoted to providing high-end consulting. First Allied may be one of the smaller custodian/IBDs to make such a hire.

With McGinness, First Allied execs believe they can press an advantage over other broker-dealers — including ones they’ve worked for in the past.

“What resounds with First Allied is that we say: We’ll grow your business,” Reynolds-Hale says. “Some of [our competitors] get lost in what their value proposition is.”

LPL Financial has not yet responded to a query about this point but I’ll add it if they do. The company has made significant strides in improving its own platform for high-end hybrid RIAs. See: LPL’s hybrid platform is fast off the mark and names new leaders for 2010.

Add more held-away custodian choices

One of the ways that First Allied plans to build value – and make immediate use of McGinness — is to add more RIA custodians to its roster of choices for hybrid RIAs. Currently RIAs can technically chose to park their assets where they please.

But First Allied’s technology is only well-integrated with Pershing Advisor Solutions. See: Two broker-dealers pick Pershing for hybrid tech after HybridOne comparison. The company plans to announce two more custodians within about the next six weeks to better connect with Guided Portfolio Solutions, its fee-based platform.

“Matt will be a huge part of that process,” Reynolds-Hale says.

Aside from making arrangement with custodians on behalf of First Allied, McGinness will be working on a more personal basis with some of his new broker-dealer’s top reps to make them into stronger businesses.

“It’s amazing how many advisors – even top producers at First Allied – are cash poor,” Reynolds-Hale says.

Get the pricing right

McGinness will hone in on aligning overhead at practices with production. In addition, he’ll work closely with them to be sure they are pricing their services properly.

He has prior experience with executing those duties.

When McGinness was with LPL, he directed the delivery of business analysis and practice management consulting services to its top financial advisors, focusing on actionable recommendations to improve both bottom-line profitability and gross revenue growth rate. He also managed the firm’s advisor survey initiatives, including benchmark satisfaction surveys and research to support strategic initiatives.

He also held management roles in LPL’s product marketing and advisory consulting services departments. In these roles, he developed and executed marketing and training programs to drive managed account asset growth, directed the firm’s third-party managed accounts business and led a broad range of strategic initiatives for the firm’s executive management team.

Before joining LPL, he served as associate director at Cerulli Associates and managed the firm’s intermediary research practice, focusing on the distribution of advice and products in the U.S. financial services industry. At the Boston-based research company he authored numerous studies in the Cerulli ReportTM series, including reports on advisor adoption of fee-based pricing, the RIA market, wholesaling, and alternative investments.