With Ameriprise Financial poised to sell Securities America after a series of legal disputes and costly settlements associated with two sales of private placements, recruiters say that advisors now affiliated with the independent broker-dealer should proactively consider their options. And, for at least one veteran recruiter, this means moving quickly to a “safer, more secure” broker-dealer environment.
“I’d say run to the safest spot,” said Rick Peterson, a Houston-based recruiter, in a phone interview with AdvisorOne. “This could be to the largest IBD in the world, Linsco [LPL Financial], which has not had any of the issues” associated with private placement sales like Securities America.
The point, he says, is to be able to tell your client that you are moving to a larger BD to avoid potential problems that could occur when Securities America is sold. “And you want to go to a firm that has a larger presence in the market, like LPL, which just makes more sense,” Peterson said. “In the wirehouse channel, it would be like saying, ‘I’m leaving Morgan Keegan, for instance, to join Merrill Lynch or Morgan Stanley.”
While there is some speculation about LPL as a potential suitor, the fact that LPL, which includes about 12,550 advisors, is self-clearing could be a challenge for Securities America and its 1,840-plus advisors, who now clear through National Financial and Pershing.
"I don’t see LPL buying Securities America,” said recruiter Jon Henschen (left) of Marine on St. Croix, Minn. “When it bought the Pacific Life broker-dealers, which cleared through Pershing, things didn’t go well, and many reps left.”
Some potential buyers, he says, include the AIG-owned Advisor Group and its broker-dealers, Royal Alliance, FSC Securities and SagePoint Financial, which are “flush with money.”
“Also, Met Life is always looking … though it is quite frugal when it comes to acquisitions. And there’s Lincoln National, which clears through National Financial,” the recruiter explained.
There’s also the possibility that much larger firms with independent channels, such as Wells Fargo Advisors, or Raymond James Financial could bid for Securities America, says Peterson. And advisors could look to such companies as places to move to as well, he explains.
“Again, the idea for an advisor is to say to clients, ‘The independent channel is the right one for me and for you, but there is safety in numbers. And before my broker-dealer is sold by Ameriprise, I’d like to move my affiliation to this firm.’ Such a conversation would allow an advisor to have a better relationship going forward, I believe,” the recruiter said.
With a large firm, Peterson shares, advisors benefit from economies of scale. This is better for the business and the broker in the long run. “Financial advisors need be secure in their channel and the broker-dealer affiliation,” he said.
"Raymond James does not comment on rumor, speculation or any possible acquisitions but welcomes interest from high quality advisors at Securities America who seek an independent, conservatively managed firm, and who would appreciate our comprehensive platform and advisor-centric culture," said Chet Helck, the company's COO, left, in a statement.
LPL Financial and Wells Fargo said they do not comment on speculation of mergers and acquisitions.