How a midsize IBD beats the big firms on productivity

SFA Partners uses flexibility and intensive due diligence to power its niche in alternatives.

A 25-advisor firm that’s partly owned by its representatives is competing — and, in most cases, beating — its much larger rivals in terms of productivity. One factor is its openness to closed-end funds.

The 48th-largest firm, SFA Partners generated the fourth highest average payout per advisor among independent broker-dealers in 2018. Founder Clive Slovin (right) says he has no doubt advisors’ access to a wide range of products helped fuel the payout of $329,000.

The Atlanta-based firm has a niche focus in alternative investments while most IBDs are either shying away or declining to disclose the revenue made from them. And even as REITs, BDCs, interval funds and other alts make up about 20% of SFA’s revenue, it only has one regulatory disclosure on FINRA BrokerCheck after launching in 2003 as the Strategic Financial Alliance.

Interval products are growing more popular with IBDs and RIAs as they give more retail clients a way into alts with some limited liquidity, according to closed-end fund companies. SFA doesn’t sell a lot of them or other closed-end products, but the firm accommodates them in its lineup of funds.

The firm offers robust due diligence and flexibility to fully examine advisors’ suggestions on new products without strict restrictions above existing rules. For example, while SFA advisors place about 20% of client assets in alts on average, the firm doesn’t cap them at 20%, Slovin says.

“It is a much more expensive way of doing business than having immutable rules that result in the transaction just being rejected; that also gives us the opportunity,” he says. “In order to get productivity, you must be able to provide the products that people need. So we do that. It's not the short-term profitability of the company that matters.” To read more of this article, please click here.

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SFA Partners is a family of companies focused exclusively on empowering independent financial advisors. SFA Partners includes The Strategic Financial Alliance (SFA), member FINRA/SIPC, a broker-dealer and investment adviser; Strategic Blueprint, a registered investment adviser; and SFA Insurance Services. Our wide breadth of services enables us to support a variety of advisor business models. Parent company, SFA Holdings, Inc. is owned by advisors, employees, and individual investors.