Vorpahl Wing Securities Inc., a 14-year-old investment broker-dealer here, has hired three investment advisers recently and is looking to add more by intensifying its focus on creating a cost-saving niche environment for brokers working as sole proprietors, or independent contractors, says Tim Vorpahl, its founder and CEO.
That anticipated growth likely will necessitate the firm's relocation to a larger downtown space later this year, Vorpahl says. It currently leases about 1,500 square feet of space on the second floor of the Fernwell Building, at 505 W. Riverside, but it's running out of space there and its lease there expires in September, he says.
The company is negotiating to lease 3,000 to 4,000 square feet of space on the ninth or 10th floor of the Paulsen Center, at 421 W. Riverside, which would give it space for adding perhaps another four or five brokers, all or most of whom would be independent contractors, he says.
Vorpahl Wing currently has five brokers, including Vorpahl, plus several support staff employees, and manages about $70 million in assets, mostly for individual clients, Vorphal says. It helps clients invest in stocks, bonds, mutual funds, annuities, and other investment options.
Vorpahl says he thinks the independent-contractor niche business approach he's pursuing has appeal at a time of greater scrutiny of the financial services market, with a lot of small firms finding it difficult to survive amid increasing regulations and regulatory-related costs.
For the brokers, "the idea is they're completely independent, but they get to utilize a team approach" in a collaborative investment-firm-like office environment, which they wouldn't have if operating entirely on their own, he says.
Federal law requires that all stockbrokers be affiliated with a firm that's a member of the Financial Industry Regulatory Authority (FINRA), Vorpahl says. That affiliation can be either as what are called captive brokers, who are employed fully by the firm, or as independent contractors, who receive certain brokerage services from the firm but operate mostly on their own, Vorpahl says.
Captive brokers aren't responsible for business overhead costs and typically are paid 25 percent to 40 percent of commissions they earn for the firm on the products they sell, he says. In contrast, independent contractors pay rent and share in other costs of operating the office, but also keep a larger percentage of commissions they generate.
"The niche we're trying to achieve is working on an independent basis where all the advisers I hire are independent contractors," and receive 70 percent to 80 percent of their commissions, depending on their level of production, Vorphal says.
"It will operate exactly like an executive-suite type of office," with advisers having their own offices, but paying rent, paying for their own copies of documents, sharing the cost of a common receptionist, and so on, he says.
Vorpahl Wing Securities has been moving somewhat in that direction already. Two of the brokers currently at the firm, Dennis Roginski and Jon Strine, are independent contractors, as are two of the three new "hires," Lee Nordstrom and Jeff Taylor.
The latter two have about 50 years of investment industry experience between them, Vorpahl says. The third, Matt Hunt, is a recent Whitworth University graduate who interned with the firm for several months, Vorpahl says.
Taylor most recently was with Wells Fargo, and Nordstrom formerly was with Partners Investment Network Inc., a Spokane-based securities broker-dealer founded here in 1988 that dissolved late last month.
Hunt will join the firm formally as a captive adviser this fall, Vorpahl says, after he's passed the FINRA exam to earn his Series 7 license, which enables its holders to communicate with retail investors and conduct various types of transactions.
Vorpahl says the advisers at Vorphal Wing meet every Monday morning to talk about the latest economic news as well as sales ideas for the week. The firm also has an investment policy committee that meets every two weeks to discuss what factors appear to be driving market movement, among other topics, he says.
Vorpahl Wing embraces a conservative investment approach that focuses on high-quality investments and avoids riskier plays, Vorphal says. It uses a diversified asset-allocation model and has developed its own portfolio that follows nine of the major recognized asset classes, he says. However, independent contractors who work at the firm aren't bound to follow investment recommendations or strategies formulated there, he says.
Vorphal is a Spokane native and 1984 business graduate of Eastern Washington University who's worked in securities since shortly after earning his degree. He launched his own firm, originally under the name Spokane Investment Services, in 1996 after working for IDS Financial Services and Murphey Favre Inc. and changed the name to Vorpahl Wing Securities three years later when he became a broker-dealer.
The term broker-dealer is used in U.S. securities regulatory parlance to describe stock brokerages, since most brokerages act both as brokers, or agents, and dealers, or principals, depending on the transaction. While buying and selling securities, they operate as brokers when executing orders on behalf of clients, and as dealers when engaging in trading for their own accounts.
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