Lockwood Financial Services is forming a joint venture with Wheat First Butcher Singer to create The Consulting Alliance, an investment management consulting service.
Malvern, Pa.-based Lockwood provides investment management consulting services such as private manager searches and due diligence to independent advisers and institutions. Wheat First, a regional based in Richmond, Va., will lend marketing, administrative and technology services to the alliance.
Meanwhile, sources say that Lockwood also is negotiating to run programs for Charles Schwab & Co. and Fidelity Investments.
A Lockwood spokesperson declined to comment.
Sources say that Lockwood also will sign on as a Turn-Key Asset Management Provider (TAMP) at Schwab, and will run a private label, separately managed account program for Fidelity, much like the Wheat First deal.
The Consulting Alliance deal at Wheat First pays out to reps between 60% and 90% of the average 150 basis point fee charged to customers. That fee is separate from the firm's base charges, including transaction costs, trading, custody, clearing and management. Lockwood's usual "all-in" fee structure to institutions is 125 basis points. But where Wheat First conducts its own trading, clearing and manages other associated costs, its fee arrangement is reduced from Lockwood's normal 125 basis point take.
Lockwood also recently announced that it has relationships with advisers who consult on more than $1 billion of assets under management. The firm has been in operation just over a year. Leonard Reinhart, Lockwood's chief executive and a Registered Representative columnist, says the Wheat First deal should "attract the top managed money consultants. We are combining the strengths of both organizations." The venture should help foster a "consulting culture at both firms."
After being acquired by First Union Corp., Wheat First has 2,900 reps in 125 offices throughout the United States.
Marshall Wishnack, chief executive of Wheat First says, "With The Consulting Alliance, we will be able to leverage Lockwood's outstanding consulting services program with the Wheat First expertise of running full-service offices."
The relationship between the two firms has been in the works for a long time, according to industry sources. The official announcement, sources said, was no surprise.