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OSJ under pressure to do more

Historically, the Office of Supervisory Jurisdiction, or OSJ, provided registered representative office space and compliance oversight for independent broker/dealers, handles their licensing and registration, acted as a go-to with the brokerage firm and Meet regulatory requirements—all the dry, boring, bureaucratic stuff that most independent representatives shove away.

Many advisors felt that if they banded together to form a larger OSJ, they could take advantage of that scale to work out better deals for each of them with their broker/dealer, custodian or other vendors.

But the OSJ space is now split, stakeholders say, between those going for pure scale—those with $10 billion or more in assets and more than 100 consultants—and those who have built national brands and significant amounts. Provide infrastructure and support. Advisors, including holding a registered investment advisory firm in some cases, may employ these advisors.

Nate Lenzo, founder of Competitive Advisors

Take San Diego-based OSJ Concurrent Advisors of Raymond James Financial Services, which admitted $3.5 billion in assets under management in 2021 and is likely to add another $4 billion in 2022. Thirty-two-year-old Nate Lenz built the firm about five years ago with a group of eight consultants who pooled their resources, starting out as his consulting clients.

The firm got off to a bad start. Lenz and his partner, Scott Steele, began with a 45-day drive in a 1999 Ford Class C RV to pitch their vision to potential consultant customers on East Beach, even in a Walmart parking lot. I was sleeping too.

OSJ now has 130 productive consultants, not including the 25 support staff employed by the firm, nearly half of whom were hired in the past year, totaling $13.5 billion in assets. Teams that have been with the firm for at least one year have added $807 million in net new assets, of which 14 teams have added $20 million or more in new assets.

Lenz says the main idea is to take off a lot of non-differential, non-revenue-generating tasks from the advisor. This includes transition support, digital marketing, practice management, technology assistance, oversight, HR, legal and virtual administration.


RV Nate Lenz and his partner, Scott Steele, headed to the East Coast to launch Concurrent Advisors.

The network is billed as a way to participate in the collective knowledge of its advisors, who collaborate on best practices and share their M&A expertise, something that is only available for wirehouse breakaways to get into independent business. can be useful for.

The firm started with operational and middle-office services, and then began moving into areas that touch the end customer, Lenz says, such as virtual administration and digital marketing, which were white-labeled by consultants at OSJ. can go. The firm also has five certified financial planners on staff, available for the use of advisors on a per-family basis.

He argues that the infrastructure is what sets concurrency apart.

“I think there are what I would call ‘worthy competitors,'” Lenz says. “They are the firms that have really built the infrastructure. And then there are the many firms that I categorized as ‘pretenders.’ And generally, those firms are the existing productive teams. So with assets of $500 million. Choose a productive team they have on staff, maybe two sales assistants, maybe a financial planner, someone who is trading for their model,” he says. Those consultants also often try to leverage that business as back-office support for recruiters.

“What What happens in the end is that people who focus on those core tasks become their value proposition, who may work on a limited basis, but they are not able to actually grow that business,” they it is said.

Last July, Concurrent sold a minority stake to Merchant Investment Management, a New York-based private partnership that provides growth capital and other support to independent financial services firms. The deal allowed Concurrent to offer a capital solution to its underlying advisors, in which the advisors sell a minority stake in their practice in exchange for cash proceeds and an equity stake in Concurrent. Advisors who choose that capital program have access to working capital, which they can use however they see fit, whether for acquisitions and recruitment or to invest back into their business. 55 of its total 70 teams have so far chosen that program, which has caused some stickiness for the firm.

Morristown, NJ-based Super OSJ of LPL Financial, a private advisory group, did something similar when it sold a minority stake in December to Merchant, its first outside investor. The move paves the way for the firm to offer some sort of equity to its advisors.

“These OSJs are like, ‘Okay, while my underlying advisor is 1099 independent, how can I create more stickiness for my enterprise? How do I create more dependency on my enterprise?’ So now there is a race to make,” says Paul Lally, chief and national leader of the wealth and asset management industry at Vipli, which provides industry-focused assurance, accounting, tax and consulting services.

Partnership programs allow both OSJs and mentors to benefit from each other’s success, says Lally.

“You want everyone in the canoe rowing in the same direction,” he says. “You still operate your own business, your own underlying practice that serves customers, generates a decent income for you, but we want you to be part of something bigger as our enterprise to encourage you, Inspire and keep up.”

The Good Life Companies, a Reading, Pa.-based network of independent advisors that includes a large enterprise affiliated with LPL Financial, has built something close to a nationally recognized brand with over 200 advisors and $$ in assets this year. The target has been set to cross 10 billion. Conor Delaney, founder and CEO of Good Life.


Conor Delaney, Founder and CEO of The Good Life

Good Life has a long-standing turnkey service model, providing real estate, infrastructure, technology, training and support to help consultants become independent. Last summer, OSJ launched a new RIA and joined broker recruitment protocols to attract advisors who want independence but may have lived off the good life because they are reluctant to work with LPL . At the same time, Delaney says he was working with LPL to develop the firm’s strategic funding services offering, which was its affiliation model for individual advisors.

Delaney argues that OSJ’s model for better pricing no longer works because many IBDs and mentors have begun to claim their own value for advisors, in similar service offerings used by OSJ. Tilt.

“So, now these people are saying, ‘What do I do? Because I can’t get out of business because my advisor will leave. And so my assets have no value, because there’s no value for the advisor to be with us. And I can’t stay in business because all these people are coming in with a more compelling value proposition,'” he says.

David Wood, founder of Gateway Financial Partners, a Glastonbury, Conn.-based LPL at larger OSJs, sees an opportunity to acquire those types of OSJs. His firm recently announced its first major deal, acquiring partner LPL OSJ Advisors Pride, which he says was a traditional or facilitator-type OSJ, a group that deals with broker/dealer economics. Came together to take advantage and did not offer. much further than that. The deal more than doubled Gateway’s number of advisors, with the firm now serving 170 advisors in 26 states and a combined $7 billion in assets under management.

Gateway is like “business-builder OSJs,” which are large organizations that provide advisors with the infrastructure beyond trying to leverage economics. Gateway provides leadership, operations, marketing and technology support.

“This one isn’t done,” Wood says. “I think we are really well positioned to take our value proposition, which is strong, introducing the proud people of advisors to help them grow faster, just the way they are. And then we’re actively looking for others. We have a great value proposition, but I don’t think we had enough advisor base to take advantage of it.

Last year, Gateway’s average advisor grew its revenue by 40%, and Wood expects Pride of Advisors advisors to tap into that growth support.

As Gateway looks to make more acquisitions, the firm can bring in a capital partner such as Merchant, says Wood, who has taken a stake in other LPL OSJs, not only to help finance other deals in the future, but also to lead and intellectualize. also for the capital that the RIA can obtain from these firms.

“I think there’s a bunch of firms like Merchant that are really trying to help their partners now that they have an equity stake in growing, so that becomes another growth strategy for us,” Wood says.

“There are little OSJs that I think are going to come under pressure because the advisor sits back and says, ‘Hey, this other firm is doing all these things, and I don’t get it from my current firm. And I think it will be more relevant when the market doesn’t grow 30% a year,” Wood says.

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