Jerry Murphy, Top Advisor Group Executive, Steps Down
(Updates with confirmation of the executive changes, and details throughout.)
Jerome “Jerry” Murphy, president and chief executive of independent broker-dealer FSC Securities Corp., resigned after five years in the position to become a manager of Legacy One Group, one of FSC’s affiliated firms, the company confirmed on Wednesday.
Murphy, who has been with FSC since 2005 when it was part of AIG Advisor Group, is being replaced by Derek Burke, who stepped down as president of competing independent firm Waddell and Reed in February.
The change continues a big shift at the former AIG broker-dealer franchise, which includes four firms with about 5,000 affiliated independent advisors that were purchased in May 2016 by former PaineWebber CEO Don Marron’s private equity firm Lightyear Capital and Canadian pension investment manager PSP Investments.
Renamed Advisor Group, the franchise appointed former UBS Wealth Management executive Jamie Price as its chief executive last November.
Murphy and Burke could not immediately be reached for comment.
FSC, which is based in Atlanta, sells investment products and financial services through about 970 independent contractors, including Houston-based Legacy One. That firm is led by managing partners Lea Goodman and Richard Ethum, and Murphy is expected to replace Goodman in a succession move as a partner, the sources said.
“It is with mixed feeling that I announce that Jerry Murphy is going to be leaving his position,” Price wrote in a memo to FSC brokers and staff on Wednesday that was read to AdvisorHub and that mentioned his continuing relationship with the firm through Legacy.
The average production of FSC-affiliated brokers is about $261,000 annually, according to a firm website, but a person at the firm said it attracts more $700,000-plus, fee-based advisors than its sister Advisor Group firms— Royal Alliance, SagePoint Financial and Woodbury Financial.
Burke is a 17-year insurance and brokerage industry veteran, having begun his career with Prudential Investment Management in 1996, according to his BrokerCheck history. He did a five-year stint with UBS Financial Services from 2004 to 2010 before joining independent firm First Investors in 2011 and signing on with Waddell & Reed in July 2014 for his two-and-a-half year term as president of the Kansas-based firm. At FSC, he will be based in Atlanta, reporting to Price, the company said in a news release.
Price said that Burke’s accomplishments at Waddell, including creation of a new advisor workstation and the launch of succession and business planning platforms for brokers, position the former SEC enforcement lawyer well for FSC’s development plans. “It’s crucial to stay ahead of the curve in this digital era, and to surpass client’s evolving expectations,” Price said in a prepared statement. “Derek’s skills position FSC to do just that.”
Murphy began his career in the brokerage industry in 1996 at Janney Montgomery Scott, where he worked for eight years. He joined the AIG broker-dealer network in May 2006, according to his BrokerCheck record, which betrays a feisty streak in the executive.
In his response to a disclosure that customers pressed a $1.45 million claim against him in 2013 over his and two other FSC executives’ alleged failure to supervise allegedly unsuitable investments, he wrote that he ended up paying $1 to each of the four customers solely because of his executive role.
“I was not in the line of supervision of the representative,” commented Murphy, who became FSC’s president and CEO in August 2011. “I was alleged to be a control person of FSC, and that is the apparent basis for this nonsensical award.”
The case, the only mark on Murphy’s BrokerCheck record, occurred as part of an arbitration award in which FSC was ordered to pay almost $844,000 in damages and attorneys’ fees to the customers in a 2-1 decision.
The Financial Industry Regulatory Authority Inc. last month fined FSC Securities $100,000 and ordered it to pay customers $492,000 for failing to reasonably supervise leveraged ETFs from January 2009 through September 2014.
Legacy One’s managing partners did not return requests for comment about Murphy’s new role at their firm, which was formerly known as Advantage Capital.