Broker-dealer Janney Montgomery Scott plans to boost its manager due diligence team by 20% over the next two years in an effort to keep pace with its advisor recruitment ambitions.
Janney head of wealth management Kevin Reed told Citywire new advisors joining the firm may arrive with different strategies, which Janney would need to assess before adding to its platform.
'These financial advisors are coming in at a pretty big clip, some of them are bringing in managers or solutions that may not be on our practice’s platform,’ he said. ‘We have to do a due diligence and make a decision to see if we want to add them to our platform and that requires human capital.'
‘I’m saying that based upon what I believe is an increased luster of third-party managers and alternative solutions. I base that purely on our financial advisor recruiting plans and our successes to-date.’
Janney has hired 38 financial advisors year-to-date and added $3.2 billion in assets under management, compared to a total of 46 financial advisors who joined in 2016 and $4 billion in assets added.
The due diligence team is officially called the wealth management product and research group. It currently consists of head of product research Rob Battista and investment analysts Nick Herbert, Ryan Shugrue and Mike LoCasale.
David Gross, who used to be an investment analyst in the group responsible for covering international, global and emerging market equity products, left in July to attend Cornell Law School.
The team publishes strategy recommendations on a quarterly basis through four lists that cover mutual funds, exchange-traded funds, separately managed accounts and alternatives respectively.
‘When we present them to advisors, we encourage them to utilize the resources but they are free to select products from the vast menu of approved options too,’ said Reed.
In June, Citywire reported Janney had added new due diligence criteria for the 3,400 funds on its platform to ensure they met a minimum fiduciary standard.
The data-driven process saw around 400 funds, or 12% of the 3,400 funds on the firm’s platform, shut to new investment.
In order for funds to receive new money they must now be either approved by Janney’s manager research team, be rated neutral or higher by Morningstar, or have a score of 75 or better from Fi360.
Reed said the process had been well-received by financial advisors and would begin its second phase in October.
The biannual process could lead some funds to added, removed or re-invited back to Janney’s platform.