LPL Financial to Acquire Alternative Investment Firm Fortigent

Acquisition will expand LPL Financial’s presence in RIA and high-net-worth markets

LPL's Robert Moore (left) and CEO Mark Casady in Times Square after their IPO in 2010. LPL's Robert Moore (left) and CEO Mark Casady in Times Square after their IPO in 2010.

Broker-dealer behemoth LPL Financial announced Tuesday that it would acquire Fortigent LLC, an alternative investment and reporting firm.

According to the companies, Fortigent will continue to operate autonomously from its Rockville, Md., headquarters and its existing management team will remain in place. Andrew Putterman will continue to lead Fortigent, reporting directly to Robert Moore, chief financial officer of LPL Financial. Financial terms of the deal were not disclosed. The transaction is expected to close in the first quarter of 2012.

Robert Moore of LPL“For us, if you look at some of the acquisitions we’re recently made with Concord Capital Partners and National Retirement Partners, we have the organic growth, but we also now have the scale to offer a wide swath of products and solutions to our advisor partners,” Moore (right) told AdvisorOne in a telephone interview that included Putterman. “The cultural fit between the two companies is excellent. We’re both committed to customer success and delivering the capabilities they need.”

“We are the leader in delivering solutions to advisors in the high-net-worth space,” Putterman added. “But what excites us is the high level of innovation that can now occur at an accelerated pace. LPL Financial has the scale, intellectual capital and presence in the space to take us to that next level. We’ll be able to widen our client base and deepen those relationships. We couldn’t do this without a partner that has that scale and experience.”

Andrew Putterman of FortigentPutterman (left) also emphasized the importance of the cultural fit between the two firms, noting both are committed to the independent space and doing right by their clients.

“We’re not debating the opportunity,” he said. “With LPL Financial, we’re executing on the opportunity, which is very refreshing.”

“LPL's acquisition of Fortigent provides several strategic benefits to the company,” said David DeVoe, managing partner with DeVoe & Co.  “It will help strengthen the company's position in the large advisor market space, as well as enable LPL to better support advisors who are focused on the ultra-high net worth. Both of these are core client segments for Fortigent. Fortigent's best-in-class research and reporting capabilities also have the potential to be modified to support LPL's broader client base, enhancing LPL's product set.”

Devoe also noted the importance of culture to the success of the transaction, and claims there are several indications that it will be a good fit.

“Both organizations take an especially analytical and strategic approach to planning, and both are very client-centric,” he explained.  “Culturally, the potential challenge they face is the lens

that each sees the world through: LPL's strength is providing scaled solutions to thousands of advisors; Fortigent is more accustomed to tailoring their services to the individual needs of few clients.”  

Other factors made the deal attractive. “The crux of this is an effort by LPL to expand its channel distribution strategy further into the RIA market,” added Chip Roame, managing partner with Tiburon Strategic Advisors. "LPL has done a terrific job over the past five to seven years of moving from being a one-dimensional firm serving about 2,000 IBD reps, to one serving about 12,000 of those same IBD reps, plus RIAs, retirement plan advisors, banks, clearing clients, and other channels. This spreads LPL's bets across many business models, which is a solid strategy for a public company."

Roame noted Fortigent is one of three or four vendors that has earned a strong reputation in the upscale RIA market. 

“Andy Putterman, Scott Welch and other Fortigent executives have been in their roles for many years and know the market,” he said. "Fortigent got its start as the back office of what is now Convergent Wealth Advisors (then called CMS Cos. and later Lydian Wealth Advisors). This was the basis of its strengths in portfolio consulting, research, alternative investments and performance reporting.”

Putterman counted 90 clients with $50 billion of assets running through Fortigent’s platform. The company currently has 150 employees.

See AdvisorOne's video interview with Scott Welch, senior managing director at Fortigent.

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