The recent news of Oppenheimer offering an independent channel to bolster its traditional wealth management business, by tasking Derek Bruton, the former head of LPL Financials National Sales team, may not have come as a big surprise. In late 2017 it was rumored that Oppenheimer was making a play to acquire Hightower Advisors. This was the first sign that Oppenheimer wasn’t going to sit idly by as the industry changed around them. This news is also clear evidence of the appeal of the independent entrepreneurial model to financial advisors and wealth management professionals, and that retail firms need to better prepare for this new level of competition, and that doesn’t mean pulling out of protocol.
Oppenheimer’s decision to get into the independent arena is a calculated, creative, and prudent business strategy to retain Oppenheimer advisors while also seeking to attract wire-house, breakaway, and regional advisors who are seeking greater autonomy, higher payouts, open architecture, control of their own destiny, and, in the case of Oppenheimer, affiliation with a firm possessing a true Wall Street pedigree.
By combining the Oppenheimer full-service boutique wealth management model with an independent (potentially hybrid RIA) offering, Oppenheimer will achieve what the admirable resurrection(s) of E.F. Hutton, Robinson Stephenson, and others have failed to accomplish; to modify their business model for they become a thing of the past.
Oppenheimer has survived and now re-positioned itself after being in the crosshairs of the SEC and FINRA for the last several years. However, in order to be truly successful with their independent model, Oppenheimer will need to operate the independent channel as truly independent and not simply a “halfway house” to independence or “independence on training wheels” such as Wells Fargo Financial Network (“FiNet”) or their “Profit Formula” option, which is not as “Profitable” as the advisors might think.
We have all heard rumors, speculated, and even suggested that wire-house and regional firms (outside of Wells) would and should launch/build out an independent channel or affiliated RIA. These rumors quickly get shot down by many of the biggest firms for fear that there would be a mass exodus of their advisors to the new independent channel. However, Oppenheimer has had the foresight and business acumen to actually go in this direction before anyone else.
It remains to be seen whether Oppenheimer’s telegraphed entry into the independent financial advisory space is a “me too”, convoluted version of their full service captive model, if you can’t beat them join them, or an enduring commitment to their advisor workforce by rolling out an independent advisory model.
If the latter, then Oppenheimer’s Independent channel will be appealing to its existing advisors, as well as potential new advisors, due to Oppenheimer’s pedigree, attractive economics, their appeal to HNW/UHNW investors, access to Capital Markets, Investment Banking, and Family Office services. In this scenario, what once was old is now new, not me too, and true.
