Some of B. Riley Financial Inc.'s brokers aren't sticking around to see if the company's effort to raise cash by selling some of its core assets will include their segment of the money-losing investment firm.
At least two dozen brokers, almost half the roster at B. Riley Wealth's branch office in Boca Raton, Florida, moved this week to Kestra Advisory Services, according to records from the Financial Industry Regulatory Authority, or FINRA.
Those exits plus a spate of other departures in recent weeks would represent about 8% of B. Riley's brokerage force at the end of last year.
Other defections last month involved a group in Memphis that included Philip Wunderlich that went to Prospera Financial Services Inc. with $650 million in client assets, Prospera said in a Friday statement.
Wunderlich's brother, Gary, founded the self-named securities firm that B. Riley bought in 2017 for about $70 million, a deal that added about $10 billion in assets to the wealth unit.
Separately, Wedbush Securities last month said it added three brokers from B. Riley who ran MJB Wealth Management Group in suburban Philadelphia.
The recent departures could complicate B. Riley's efforts to attract buyers for the wealth unit as it seeks to cope with a $2 billion debt load, write-offs on soured investments and a U.S. Securities and Exchange Commission investigation into its business.
In one sign of stress, B. Riley renegotiated some of its loans last month and a credit line was terminated. The company said last month it had non-binding bids for some of its other crown jewels, but so far, no formal offers have been announced.
"B. Riley Wealth Management has a robust and talented team of financial advisers that continue to serve our clients," said a spokesman for the Los Angeles-based firm. "We wish the very best to a small group of advisers who recently left for personal reasons."
The company counted about 400 registered financial advisors as of last December, with the wealth unit contributing almost 12% of revenue from services and fees, according to a regulatory filing.
Sale Effort
People familiar with the matter said the office in affluent Boca Raton was one of the firm's top producers for B. Riley Wealth, which managed about $25 billion at the end of last year. Their exit threatens to set back a unit that almost tripled in size with B. Riley's 2021 purchase of National Holdings Corp., and then rebuilt "from the ground up," in the words of its leader.
Issues at National that pre-dated B. Riley's ownership led to a series of costly fines and settlements. The division "deliberately cut our headcount almost in half" and "significantly de-risked our business by closing out almost all the legacy National matters," Michael Mullen, the former CEO of National who now runs B. Riley Wealth, said in a presentation last December.
