Stifel Offers Loans to Clients of Rival Broker-Dealers
If you’re a broker at a regional or independent firm that is not affiliated with a bank, the next loan you set up for clients may be funded by a unit of competitor Stifel Nicolaus & Co.
Supernova, the consulting firm established last year by former Morgan Stanley broker Tom Anderson to encourage advisors and their affluent clients to make debt a major part of their financial plan, has arranged to offer loans and lines of credit to them through Stifel Bank & Trust, according to a person with knowledge of the deal.
Anderson, who recently published a sequel to his book “The Value of Debt” that was widely distributed throughout Morgan Stanley, said that Stifel brokers are working with Supernova but did not address arrangements with the St. Louis-based firm’s bank affiliate.
“[W]e are thrilled for the opportunity to leverage our existing technology and work together to create a platform that helps Stifel’s advisors and clients better manage both sides of the balance sheet,” Anderson said in an e-mailed statement. “We look forward to identifying more ways to work together in the future.”
In an interview with x3mdot last year, Anderson said that Supernova had been aiming its sales efforts at regional and independent firms that are not owned by banks, such as Robert W. Baird, Edward Jones and LPL Financial.
Stifel itself has joined the burgeoning movement of brokerage firms urging clients to borrow against their securities portfolios for purposes other than margin loans to buy securities. Its Stifel Bank unit ended 2016 with $1.6 billion of securities-based loans, up 16% from 12 months earlier and 11% higher than at the end of of its third quarter.
Stifel Bank Chief Executive Christopher Reichert did not immediately respond to a comment on the arrangement with Anderson’s firm.
Brokerage firms and their parents have been encouraging brokers to add credit products to their armamentarium of stocks, bonds and investments because they provide stable sources of interest income regardless of investor interest in trading. Morgan Stanley has been sued by Massachusetts for running illegal sales contests to promote securities-backed credit lines, a charge the firm has denied.
Supernova is part of the founded by former Merrill Lynch broker Rob Knapp in 1995. Knapp’s gospel of improving productivity by limiting advisors’ book to a small group of wealthy clients has been credited with influencing policies at Merrill, UBS and Morgan Stanley that reduce or eliminate payouts on small accounts.