A diversified financial services firm, Next Financial Group is a full-service broker-dealer registered with the Financial Industry Regulatory Authority, Inc. and an investment advisor registered with the U.S. Securities and Exchange Commission (SEC). Additionally, it’s a licensed insurance agency in all 50 states.
Next Financial Group is headquartered in Houston with 25 affiliate offices across the country. The team of 451 investment advisory representatives (IARs), many of whom are broker representatives and insurance agents, oversees more than $1.65 billion in assets.
Next Financial Group Background
Next Financial was founded in 1999. It’s a wholly owned subsidiary of Next Financial Holdings, Inc., which is, in turn, an indirect wholly-owned subsidiary of Atria Wealth Solutions, Inc. Four employees and two board directors have small stakes.
One of the employees who have is a stakeholder is President Barry Knight, who has led the company since 2006. Before coming to Next Financial, Knight was a senior vice president and director of sales development at Pioneer Investments.
What Types of Clients Does Next Financial Group Accept?
Next Financial Group Minimum Account Sizes
Minimums vary, depending on the program and IAR. Generally, they range from $5,000 to $100,000, though they can be negotiated or waived at the firm’s discretion.
Services Offered by Next Financial Group
Next Financial offers investment programs and advisory services. It also provides brokerage services and insurance products.
Its investment programs include:
- Next Advisor Account (NAA)
- Next Advisor Account II (NAA II)
- Next Advisor Managed Portfolio (AMP) 1
- Next AMP 2
- Next AMP 3
- Next Select Platform
- Visionary Multi-Manager Program
- Variable Annuity Model Portfolios Program (VAMPP)
- Investment Fiduciary & Retirement Plan Consulting
- Plan Participant Investment Advice Services
- Recommendation of third party money managers
- Educational workshops/seminars
- Consulting Services Program
The firm recommends its “unbundled” programs - NAA and AMP 1 - to investors who will trade infrequently. For more active investors, its wrap fee programs - NAA II, AMP 2 and AMP 3 - where brokerage, advisory and other fees are bundled into one fee, may be more cost effective. The Next Select Platform, managed by Lockwood Advisors, also has a wrap fee structure, but its investing options are more limited, primarily to certain mutual funds, exchange-traded funds (ETFs) and model portfolios. The Visionary Program uses selected sub-managers and/or model providers’ investment models and is managed by Envestnet. Finally, VAMPP is for sub-accounts within selected variable annuity contracts using model portfolios.
Next Financial Group Investing Philosophy
To select investment strategies, Next Financial’s IARs primarily apply charting, fundamental and technical methods of analysis. The strategies they may use include long-term purchases, short-term purchases, asset allocation and rebalancing, dollar cost averaging, trading, short sales, margin and options.
With the Next Select Platform, investment decisions are determined by Next Financial’s investment committee, which uses both quantitative and qualitative analyses to construct its ETF and mutual fund allocation models. It also applies Modern Portfolio Theory and Monte Carlo simulations to test its models and to evaluate performance relative to risk.
Fees Under Next Financial Group
Like most, if not all, firms, Next Financial collects management fees based on a percentage of the client’s assets under management (AUM). Annual fees for an NAA or NAA II account are negotiable up to a maximum of 2.50%. They’re also negotiable for AMP 1, 2 and 3, with the maximums provided in this tiered schedule:
|AMP 1||AMP 2 & 3|
|Next $1.5 million||1.50%||1.75%|
|Next $2.5 million||1.25%||1.50%|
|Assets more than $5 million||1.00%||1.25%|
Annual fees for the Next Select Platform include the advisory fee, program fee and manager fee (if applicable). Annual allowed maximums follow this tiered schedule:
|Platform Assets||Max Allowed Advisory Fee||Program Fee|
|Representative Managed Program||ETF and Mutual Fund Program||Separately Managed Program||Multi-manager Program|
|Next $1 million||1.50%||1.00%||0.175%||0.25%||0.30%|
|Next $1 million||1.50%||0.80%||0.15%||0.20%||0.25%|
|Assets more than $3 million 1.00%||1.00%||0.80%||0.15%||0.20%||0.25%|
|Manager Fee||N/A||0.10%||0 to 0.50%||0 to 0.50%|
For the Visionary program, the annual program fee includes the advisory fee, platform fee, sponsor fee and manager fee (if applicable). They follow this tiered schedule:
|Program Assets||Max Allowed Advisory Fee||Platform Fee (Equity & Balanced Strats.)||Platform Fee (Mut Fund and ETF Strats)||Sponsor Fee||Manager(s) Fee|
|First $250,000||1.50%||0.13%||0.08%||0.25%||0 to 0.55%|
|Next $250,000||1.50%||0.13%||0.08%||0.25%||0 to 0.55%|
|Next $500,000||1.50%||0.13%||0.07%||0.25%||0 to 0.55%|
|Next $1 million||1.50%||0.11%||0.07%||0.25%||0 to 0.55%|
|Next $3 million||1.50%||0.11%||0.06%||0.25%||0 to 0.55%|
|Assets more than $5 million||1.50%||0.09%||0.06%||0.25%||0 to 0.55%|
For VAMPP accounts, the maximum annual total fee is 2.0% of variable annuity contract assets. It is made up of a program fee that will not exceed 0.50%, and the negotiated IAR may not exceed 1.0% (except for certain grandfathered accounts that are charged up to 1.5%).
Next Financial Group Awards and Recognition
Next Financial is an eight-time winner of Investment Advisor Magazine’s Broker Dealer of the Year award, most recently in 2012.
Also, in 2016, WealthManagement.com gave the firm its Best-in-Class Service Award and, in 2017, its Industry Award for Transition Support.
What to Watch Out For
As noted earlier, most IARs are also insurance agents and broker representatives. So though they charge fees for their advisory services, they do receive commissions from third parties in their other roles.
In its most recent SEC filings, Next Financial had 23 disclosures within the past 10 years, with fines ranging from $250 to $750,000. Seven involved its IARs, seven were related to the broker-dealer side of its business, eight involved various state regulatory authorities and one, which was the most recent, was a disciplinary action that the SEC brought. In this most recent SEC order, which was resolved in March 2019, the SEC alleged that from January 2014 to December 2016, the firm received 12b-1 fees in connection to certain mutual funds that it purchased for, or recommended to, clients without disclosing the conflict of interest (there were share classes of the same funds at a lower cost). The firm agreed to a censure and cease-and-desist order and paid restitution to clients of $1,241,907.77 and prejudgment interest of $163,442.12.
Opening an Account With Next Financial Group
To contact Next Financial, call its toll-free number, (877) 876-6398. Alternately, you can send a message on its site at https://www.nextfinancial.com/contact-us/.
Where Is Next Financial Group Located?
The firm’s main office is located at 2500 Wilcrest Drive, Suite 620, Houston, Texas 77042.
All information was accurate as of the writing of this article.
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