A person could be forgiven for not immediately connecting Ladenburg Thalmann to the independent space; the firm’s sea change in strategy occurred only a few years ago, after all. Even so, their outsized impact is already being felt.
“We feel very good about our decision in 2007 to focus on the independent broker and advisor spaces,” Richard (Dick) Lampen, president and CEO of Ladenburg Thalmann Financial Services, explains. “Our legacy business was as a traditional Wall Street investment bank and all that it entails. We focused on raising capital for small- and mid-cap companies, which is a volatile space. It can be great, but then of course it can shut down.”
As Lampen relates, the firm had a good 2007, but for the sustained value and growth it wanted, it decided to “foray into the independent space.” And foray the firm did, with high-profile acquisitions of Investacorp, Triad Advisors and, most recently, Securities America.
However, Lampen stresses that the firm is “keeping our foot on the investment side of the business” as well. It’s a boost to business when times are good, he notes, but the firm no longer has to “depend on the vagaries of the capital markets.”
“The greatest potential for growth in financial services is on the independent side,” Lampen adds. “With the demographics that will result from the ‘graying of America’ and baby boomer retirement, we’re seeing that growth on a parallel track with assets leaving wirehouses. The strong pickup in assets, plus 401(k) rollovers into IRAs, makes us very bullish on the independent advisor and brokerage businesses.”
One might wonder if the firm has exhausted itself of more acquisitions, or whether it will continue to be a growth strategy moving forward.
“We are certainly open to new acquisitions opportunities, but our objective is not scale for scale’s sake in order to grow large enough to self-clear,” he explains. “We get this question a lot from our advisors, and that is most definitely not our plan. We feel it’s not right for us or for our advisors.”
Attendees of January’s FSI OneVoice Conference in Orlando will most likely remember conference organizer Jim Nagengast’s opening remarks. In a nod to the importance of attending hosted networking events, Nagengast, president and CEO of Securities America, happened to mention that he first met Lampen at just such an event the previous year. Securities America was acquired by Ladenburg Thalmann soon after. A simple coincidence? Probably, but a great story nonetheless.
“Assets like Securities America almost never come on the market,” Lampen says. “I think the only comparable situation in recent years is when ING put three of its broker-dealers up for sale in 2009. I still remember within an hour of SA’s assets becoming available on April 23, 2011, I put a call into Ameriprise CEO James Cracchiolo to let him know that we were interested. Was it dramatic? Yes, but we never planned on a Securities America-type firm coming available.”
As for the issues that will most likely affect advisors in the near term, Lampen points to regulation and the type of SRO the industry will adopt, a discussion in which Ladenburg Thalmann is actively involved through its work with the Financial Services Institute. The firm is also keeping a close eye on the Department of Labor’s proposed rules for retirement plans.
“The other issue I see is the transition period the industry currently finds itself in as it relates to the convergence of certain products it recommends,” he concludes. “Non-traded products have been somewhat unique to the independent channel. I think that you’ll see more of the traditional IPO products, typically reserved for wirehouses, become more prevalent in the independent space, and that represents opportunity.”
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