Cambridge Investment Research: The Sell-Off Strategy

Cambridge Investment Research is an independent broker-dealer and asset management firm headquartered in Fairfield, Iowa. It was founded in 1981 by Eric Schwartz, who stepped down as CEO in 2017 and was replaced by Amy Webber. The company has no intention of being acquired and wants to maintain its independence. Cambridge Investment Research has been recognised multiple times as the Broker-Dealer of the Year by Investment Advisor magazine. It offers a range of financial solutions to independent financial advisors and their clients, with a focus on culture and values. The company has over 3,000 financial professionals and billions in assets under management.

Cambridge Investment Research's stance on acquisitions

Cambridge Investment Research Inc. is an independent broker-dealer and asset management firm headquartered in Fairfield, Iowa. It was founded in 1981 by Eric Schwartz, who stepped down as CEO in 2017, becoming Executive Chairman. The current CEO is Amy Webber, who also serves as President.

The company has stated that it has no intention of being acquired, with Webber emphasising that the firm is "in it for the long term". Cambridge's focus is on maintaining its independence and culture, treating people well, and staying true to its values. This has been a key to its success, allowing it to thrive for over 40 years.

However, Cambridge is open to acquiring smaller firms, with Schwartz stating that they have been in talks with some smaller companies with up to $100 million in annual revenue. While they do not plan to grow by buying huge competitors, they see potential in acquiring smaller firms as a form of recruiting engagement.

Cambridge's stance on acquisitions seems to be one of cautious expansion. They aim to maintain their independence and unique culture while recognising the benefits of strategic acquisitions that align with their values and long-term goals.

The company's history and structure

Cambridge Investment Research, Inc. is a United States-based broker-dealer and asset management firm. The company was founded in 1981 by Eric Schwartz, who remained in control of the company as of 2010. In 1985, four years after its inception, Cambridge Investment Research was founded.

The company is headquartered in Fairfield, Iowa, and is one of the largest independent broker-dealers in the United States. It has been recognised as "Broker-Dealer of the Year" 13 times by Investment Advisor magazine.

In 2005, Cambridge Investment Research Advisors was created as a sister firm to the broker-dealer business, Cambridge Investment Research, Inc. Both firms are under the parent company, Cambridge Investment Group, Inc. The Schwartz Family Trust is the majority owner of the company.

In January 2017, Eric Schwartz stepped down from his role as CEO and became Executive Chairman, with Amy Webber taking on the role of CEO in addition to her position as President.

As of 2020, Cambridge Investment Research had a total of $137 billion in assets under advisement, with 3,700 financial professionals. The company has clearing agreements with National Financial and Pershing and institutional relationships with Charles Schwab/TD Ameritrade and Fidelity's institutional platform.

Cambridge Investment Research Advisors, Inc. (CIRA) has advisors located across the country, but they are not employees of the firm. Instead, they are independent contractors offering services through CIRA. Many are also registered representatives of its broker-dealer affiliate and insurance agents.

CIRA oversees more than $82 billion in client assets, with the vast majority of its 315,000 clients being individuals with less than a high net worth. The company also works with affluent individuals, state and municipal government entities, pension and profit-sharing plans, and charitable organisations.

The company has no intention of being acquired and is committed to maintaining its independence.

Cambridge's regulatory challenges

Cambridge Investment Research has faced regulatory challenges in the past, including a charge by the U.S. Securities and Exchange Commission (SEC) in 2016 for failing to adequately supervise an employee who defrauded clients. The company settled the case by paying a $225,000 penalty. Additionally, Cambridge Investment Research Advisors, Inc. (CIRA), a sister firm to Cambridge Investment Research, reported 16 disciplinary actions in its most recent filings with the SEC, involving affiliated individuals, companies, and the firm itself. These regulatory issues have put pressure on the industry and created challenges for the company.

One of the main regulatory challenges for Cambridge Investment Research has been the increased scrutiny on the sale of high-commission products such as non-traded real estate investment trusts and variable annuities. New regulations have hampered the company's ability to sell these products, impacting their business model and finances. This is part of a broader trend in the brokerage industry, with independent brokers seeing margin compression due to record-low interest rates and the need to comply with increasingly complex and costly regulations.

The company has also faced challenges due to consolidation in the industry, making it harder to compete against larger rivals with significantly more financial resources. This has impacted their ability to attract and retain advisors, as larger firms can offer more competitive pay packages. Cambridge Investment Research has maintained its independence and commitment to its values, but the regulatory landscape has made it difficult to compete on a purely financial basis.

To address these regulatory challenges, Cambridge Investment Research has focused on its culture and values, treating people well, and providing value through financial advice. The company has also emphasized digital transformation and creating a share class with super voting rights to maintain private control of the company. Additionally, they have considered acquiring smaller firms or entering into recruiting engagements to bolster their position.

Overall, Cambridge Investment Research's regulatory challenges have been centered around increased scrutiny, industry consolidation, and the impact of new regulations on their business model. The company has implemented various strategies to navigate these challenges while remaining true to its values and commitment to independence.

The firm's investment philosophy

Cambridge Investment Research is an independent broker-dealer and asset management firm headquartered in Fairfield, Iowa. It was founded in 1981 by Eric Schwartz, who is now Executive Chairman, with Amy Webber serving as CEO. The firm is structured as a holding company, Cambridge Investment Group, Inc., which comprises multiple broker-dealers and investment adviser subsidiaries.

Cambridge Investment Research Advisors, Inc. (CIRA), the sister firm to the broker-dealer business, was established in 2005 to splinter the investment advisory business from the broker-dealer arm. CIRA oversees more than $82 billion in client assets, with the majority of its 315,000 clients being individuals with less than a high net worth.

CIRA's investment philosophy involves advisor representatives who may have specializations, often utilising their own specific strategies and methods of analysis. These advisors can offer guidance on most kinds of investments, except for futures and commodity contracts. While they can recommend outside money managers, these must be approved by CIRA and its parent company.

Fees for financial planning and consulting services can be fixed-fee, hourly, or based on a percentage of assets under management. Investment management services are offered through eight platforms, each with its own fee schedule, including flat-rate, tiered, or breakpoint fee structures.

Cambridge's philosophy emphasises doing the right thing for people and treating people well, which has been a key factor in the firm's success and recognition as "Broker-Dealer of the Year" by Investment Advisor magazine on multiple occasions.

Cambridge's financial planning services

Cambridge Investment Research is a United States-based broker-dealer and asset management firm headquartered in Fairfield, Iowa. The company was founded in 1981 and has, for over 40 years, helped independent financial professionals serve clients and build their businesses.

Cambridge Investment Research Advisors (CIRA), the sister firm to broker-dealer Cambridge Investment Research, Inc., was founded in 2005 by parent company Cambridge Investment Group, Inc. CIRA provides financial planning and consulting services, as well as investment management, either on a discretionary or non-discretionary basis. The firm also sponsors and manages a wrap fee program for discretionary accounts.

CIRA's account requirements vary by program. The WealthPort Program requires a minimum of $5,000, while for other accounts, the minimum is typically $25,000. Due to these relatively low minimums, most of CIRA's 315,000 clients are non-high-net-worth individuals. However, the company also works with affluent individuals, state and municipal government entities, pension and profit-sharing plans, and charitable organizations.

CIRA's fees for financial planning and consulting can be charged at a fixed rate, typically not exceeding $25,000 for individuals, or on an hourly basis of up to $500 per hour. Fees can also be based on a percentage of the client's assets under management. For investment management services, CIRA offers eight platforms, each with different fee schedules.

In addition to its financial planning and investment management services, Cambridge Investment Research also provides business innovation, wealth advisory, business building, retirement planning, visioning, succession planning, and entrepreneurial services. The company believes in putting clients first and allowing them the freedom to customize their businesses to best serve their clients.

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