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Two years ago, Smith Barney branch office manager Glenn Fischer was downsized. In January 2009, after spending 18 years as a non-producing branch manager of then Smith Barney’s Garden City, NY branch, which consistently ranked in the firm’s top quintile, Fischer was asked to step down and move back into production. Soon thereafter, the office became part of a larger complex now run by his former regional director.

Nine months later, in September, 2009, Fischer became the CEO and non-producing branch manager of Garden City-based New York Wealth Management Group, an independent firm affiliated with Raymond James Financial Services. Today, he has a staff of 13, eight of whom are financial advisors, and he oversees a combined total of more than $400 million in client assets.

Fischer’s story is not uncommon. Mass industry consolidation has left a large number of wirehouse BOMs without a seat in an ongoing game of musical chairs. But as the independent broker/dealer (IBD) and RIA channels grow, they are creating a viable market for those displaced managers, say industry sources.

“They always love a producing manager, because they like to make money from every seat. Yet, there is a market for non-producers, too, particularly in large branches,” says Mindy Diamond, who heads Chester, NJ-based Diamond Consultants, an industry consulting and recruiting firm. “There is also the hope that non-producing BOMs have a devoted cadre of top notch reps who would follow them anywhere.” While the hard numbers of brokers moving from wirehouse world to the independent space pales in comparison of those who go from one wire to another, it's still significant, Diamond says, “and much more than we've ever seen in this industry.”

Indeed, the numbers bear this out. A May 2009 study by the Tower Group found that between 2002 and 2009, wirehouse and bank-based b/ds each lost 20 percent of their advisors; the majority of them moved into the independent channel; IBD headcount grew by 21.4 percent; and independent RIA headcount grew by 66 percent.

“I believe you’ll ultimately be seeing more branch managers doing what I did,” says Fischer. “We’ve only begun to see the fallout from recent industry consolidation—like the mergers between Morgan Stanley and Smith Barney, Bank of America and Merrill and even Wells Fargo and Wachovia,” he adds. “I think we’ll see the full results by later 2011—and more branch managers will be out of work.” There’s also a compensation adjustment coming in the middle to the end of this month, he says, which he thinks will have a negative effect on managers.

The challenges for managers wishing not produce remain steeper. “They need to have a successful enough branch to support it,” says Waldert. That was certainly the case in the much publicized formation of U.S. Capital Advisors (USCA), he says. U.S. Capital Advisors is a relatively new full-service wealth management firm based in Houston, founded by former Houston UBS branch manager Pat Mendenhall. Mendehall ended up bringing seven of UBS’ top producers with him. “But, that’s far from the norm,” Waldert says.

Another potential challenge: former wirehouse reps tend to want to work with other advisors who are at their level, says Waldert. “A wirehouse rep with $40 million in assets is different than an independent rep with $4 million. His needs are more sophisticated. “A rep who’s been forced out of a wirehouse for not producing enough is often still a higher-than-average producer in the independent world.”

While Fischer and his partner Joseph Scotto put up 100 percent of the start-up costs, they are only keeping a 65 percent ownership stake. “We want to give a piece of the business to my advisors, based on their production,” says Fischer. Fischer admits his earnings took a hit when he initially went independent, but things are starting to turn around as his firm continues its steady growth.

Scotto, who joined Fischer from the Smith Barney branch, continues to produce. Advisor Vincent Lopes also came from Fischer’s former SB branch. And Fischer is back to doing what he loves best: coaching and recruiting. “I truly love doing what I’m doing now,” he says. “Joe, Vincent and I now look forward to coming in to work again. When I fill this office, I plan to open more.”