CHICAGO – Stifel Financial's CEO says he acquired Sterne Agee earlier this year to expand his firm's footprint in the independent space, not just because advisors are moving into the channel, but because clients are too.

"The channel you have to embrace is the channel that investors want," Ron Kruszewski says, in an exclusive interview with On Wall Street.

He cites LPL and Raymond James as firms that have successfully built out their independent channels. When asked if he thought that the wealth management firm of the future would have both independent and employee channels, Kruszewski replied yes – but with limitations.

"The independent model is narrower," he says. "It's fee-based and fee-based is not everything."


While many industry insiders agree that having an independent channel would definitely appeal to advisors, particularly as many have left the large brokerage firms to join IBDs or RIAs, it's less clear how important it is to clients.

"I have yet to find the advisor who wants independence because his clients told him they want that," says recruiter Danny Sarch.

Sarch said that firms keep track of where they are winning and losing assets flows. Stifel's CEO may have statistics on flows showing the firm has been suffering a net loss of assets to the independents.

"I've not heard of anybody saying I'm going independent because my clients demanded it. But he could be right because he could be seeing this macro data I'm not aware of," Sarch said.

Industry observers agree that having an independent channel will appeal to many advisors.

"Every single advisor I talk to asks about independence," says Sarch.

Bill Butterfield, an analyst at research firm Aite Group, says it can also benefit the firm in terms of presenting current advisors a path to go independent without disassociating themselves from Stifel.

"It's a nice compliment for a firm to offer advisors choice. It allows flexibility for advisors to allow them to not make a 100% switch to a new firm," he says. "It's a different business arrangement with that firm."

Butterfield adds, however, that the two firms will likely have to do some integration work on their technology platforms before that choice for advisors can become a reality.

In the meantime, Stifel's CEO may have an appetite for further deals. When asked if more acquisitions in the independent space are in store for Stifel, Kruszewski replies, "The past is prologue."

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