LPL Financial, the big independent broker/dealer, stamped its seal even more emphatically on the independent B/D universe, and ended speculation over the future of Pacific Life Insurance Co’s broker/dealers, by announcing a deal in early March under which LPL would acquire three of PacLife’s five B/Ds. The three, part of the Pacific Select Group, are Mutual Service Corp., based in West Palm Beach, Florida; Associated Securities of Los Angeles, and Waterstone Financial Group, based in Itasca, Illinois. LPL did not release the financial terms of the acquisition, but did say through a spokesman that it was expected to close by June of this year. The jewel in the acquisition is Mutual Service Corp. (whose president and CEO, John Poff, retired the week before the LPL deal was announced) which alone accounts for about 1,500 reps and $200 million in revenue.
LPL’s Bill Dwyer, who in his newly created position as president, independent advisor services, will oversee the 8,600 independent B/D representatives at LPL (a separate organization headed by Dan Arnold will include an additional 1,300 advisors who serve financial institutions like credit unions and banks), said the deal makes LPL the fourth or fifth largest broker/dealer in the industry, which is a “powerful statement of the success of the independent business model,” and reflects LPL’s “total commitment to the advice model.” He said that since LPL went the self-clearing route several years ago, “we started talks with many broker/dealers.” The deal with Pacific Life made sense, he said, because the insurer wanted to separate its manufacturing from its distribution arms, and focus on manufacturing. Since LPL is focused solely on distribution, “it became a natural fit.”
The “2,200 licenses” from the acquired B/Ds will add $350 million in revenue, Dwyer said. When asked whether those reps would be a good cultural match with LPL, Dwyer offered that the PacLife reps already “look like LPL advisors,” and are “full-service in nature.”
One way they’ll try to keep them, however, is in allowing the former PacLife B/Ds to clear through Pershing–since UVest is also on the Pershing platform, he noted, “we’ll be one of their biggest customers, again,” with about 3,000 reps on the Pershing platform. An LPL spokesman also confirmed that Pacific Life will provide “a bonus of sorts” to reps of the three broker/dealers who remain on board after a 12-month period.