Sterne Agee’s Name Fossilizes, Turns to Stone
Sterne Agee Financial Service’s independent broker-dealer arm has changed its name to SA Stone Wealth Management, Inc. to reflect its new ownership, with just an initial hint of its past, as it embarks on a broad plan to upgrade the organization.
Stifel Financial bought Sterne Agee Group for $150 million in June 2015 but a year later walked away from the independent contractor and clearing part of the Birmingham, Alabama-based firm. It sold the businesses to INTL FCStone, a clearing and execution specialist with a rooting in commodities trading that also agreed to hire the retail broker’s support staff who were redundant at Stifel.
“The rebranding and renaming is part of a technology overhaul and right-sizing,” said Matthew Kelley, head of business development at SA Stone. “We want to be a niche kind of boutique player, but with a pretty powerful parent.”
The independent firm that had about 600 brokers at the time of the Stifel transaction is now down to about 460 following culling of some people who “weren’t focused on the business” but is intent on building the force with more productive brokers, Kelley said.
His target hires are so-called hybrid brokers with a bent toward fee-based accounts who generate $400,000 to $600,000 of annual revenue. The hybrid term refers to brokers who are registered with both the Financial Industry Regulatory Authority and as registered investment advisors with the Securities and Exchange Commission or state regulators.
“Just like there’s a mass-affluent client space, there’s a mass-affluent advisor space,” Kelley said. “The $400,000 to $500,000 advisor needs some help, and he or she also needs a very nimble platform where you can move to hybrid seamlessly.”
The past few years were tumultuous ones for Sterne, Agee. The company fired former chief executive James S. Holbrook, Jr., in 2014 after he was accused of charging jet, yacht and condominium purchases to his company expense account. Finra fined Holbrook, the company’s largest individual shareholder $25,000 for, among other allegations, making pay-to-play political contributions.
Stifel CEO Ron Kruszewski has long eschewed the independent contractor model, despite owning a small unit called Century Securities, citing narrow profit margins and the potential to cannibalize the firm’s conventional wealth management business.
Kelley conceded that SA Stone is still not hitting the profit goals set by its new parent but noted that its self-clearing capabilities and upwardly mobile broker hiring have kept the business in the black.
SA Stone is offering payouts between 85% and 95%, depending on a broker’s business mix and production, said Kelley, who held senior recruiting roles at Ameriprise Financial Services and a forerunner of Cetera Advisor Networks before joining Stone in late 2014.