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August 17, 2011 at 02:51 PM
With Ladenburg Thalmann’s planned purchase of Securities America for an initial cash payment of $150 million from Ameriprise Financial, some 1,700 independent financial advisors know a bit more about their future—and that’s it, says at least one recruiter.
“They can breathe a tiny sigh of relief, but—and I say that in capital letters—they have no idea what commitment Ladenburg has to this business financially,” said recruiter Rick Peterson of Peterson & Associates in an interview with AdvisorOne.
“The advisors don’t know if they can tell their clients that this is a permanent change involving better products and services, let alone whether or not they can tell themselves this means better technology, practice management and support for their businesses,” explained Peterson.
These issues need to be resolved fairly quickly for advisors, he says, “Otherwise, they could be saying, ‘It looks like this deal satisfies Ameriprise, but it doesn’t do anything for me.’ ”
The combined entity will include about 2,700 advisors in Securities America, Triad Advisors and Investacorp. “This makes Ladenburg a reasonably good-sized player in the independent broker-dealer field by giving them some critical mass,” said Bill McGovern, head of B/D Search, in an interview.
“Whether or not the firm can parlay that into more business development with some substance, like the technology, resources and other tools that allow reps to generally grow their businesses, is a good question.”
In an interview on Wednesday with AdvisorOne, Ladenburg President and CEO Richard Lampen said his firm was impressed by Securities America’s capabilities, particularly in technology and practice management, which could collectively benefit its other BDs, while Securities America President Jim Nagengast (left) said Securities America reps would be gaining access to Ladenburg’s and its existing BDs’ strengths in advisor-friendly trust services, investment products and asset-management expertise.
Financial Matters
Ladenburg’s purchase of Securities America is being financed by an affiliate of Dr. Phillip Frost, Ladenburg’s principal shareholder and chairman. Frost’s net worth is reported to be about $2.3 billion. He became chairman of Miami-based Ladenburg Thalmann in 2006 and co-chairman of Teva Pharmaceuticals, one of the world’s 15-biggest drug firms, that same year; he is now Teva’s chairman.
“It seems to me that this deal is a huge gamble for Ladenburg Thallmann,” said Peterson. “It’s a rich deal and doesn’t seem to take the real retention and growth potential into account.”
In the second quarter, Ladenburg reported net income of $200,000 on sales of $60.2 million. At the end of 2010, the company had about $7 million in cash and $28 million of notes payable.
