In what could be further evidence of consolidation in the independent broker/dealer space–or of the enhanced value that winning Investment Advisor’s Broker/Dealer of the Year brings to honorees–another mid-sized independent B/D has been acquired by one of its larger brethren.
Securian Financial Group, the St. Paul, Minnesota-based insurance and financial services firm which is the parent company of Minnesota Life Insurance Co., said September 10 that it had signed a definitive agreement to acquire independent broker/dealer Capital Financial Group/H. Beck. When combined with Securian’s broker/dealer, Securian Financial Services, the combined B/D will have about 2,000 representatives operating in all 50 states. In its announcement, Securian said CFG’s senior management, which would include president and CEO Eric Meyers, will “remain in place,” that it will “continue to operate independently in Maryland,” and that it did not anticipate making any layoffs at either firm. In Investment Advisor’s 2008 broker/dealer survey, with data as of April 1, CFG/H. Beck reported 2007 revenue of $77.3 million produced by 680 reps. At the same time, Securian reported 2007 revenue of $118.5 million produced by 1,170 reps.
Meyers said in the announcement that Securian’s private, mutual governance structure, which allowed the firm to follow a “thoughtful, long-term approach when making strategic decisions,” matched well with CFG’s culture. That concern with culture is nothing new for Meyers, whose firm won Investment Advisor Broker/Dealer of the Year honors in 2007. In an interview in April with the leaders of the other winners, Meyers answered a question about recruiting by saying that the firm’s biggest challenge was “keeping a high level of advisor service and staying relationship-oriented as we continue to grow.”
This is the second of the four winning 2007 Broker/Dealers of the Year to be acquired in recent months; in August, Securities America said it would acquire independent B/D Brecek & Young, creating a firm that in 2007 would have had combined revenues of about $550 million and slightly more than 2,000 reps.
In an interview with Investment Advisor’s Melanie Waddell at the time of the announcement, Brecek & Young president, chairman, and CEO Chris Ranney said that Brecek’s parent, Security Benefit Corp., “decided it was in the best interest of all parties” to find a new owner for B&Y, one “with a core competency in the B/D and investment advisor marketplace.”
Ranney says he’s been witnessing consolidation in the independent B/D market for the past number of years, with “dual registrant broker/dealers and RIAs aligning themselves with larger firms who have more expertise, technology, resources, capital, and so on to be able to provide more and better services to their representatives.”