The groups work, respectively, with about 1,700 and 600 advisors. “The announced transaction puts us over the 2,000 mark in the aggregate,” said Kestra CEO James Poer in an interview.
In terms of assets under management at its RIAs, Kestra has $21 billion, while H. Beck has about $2.5 billion. (These figures do not include assets under administration.)
“We approached Securian about the organization, and they liked our ideas …,” Poer explained. “We explained that we could provide a great home to and a bright future for H. Beck.”
The firm has other changes in store.
“Kestra is rolling out a robo [advisor] and an investor-portal capability in the fourth quarter [of 2017] and in the first quarter [of 2018],” the CEO said. “We hope to add similar capabilities for H. Beck in short order,” depending on the date the purchase closes and related issues.
(The robo offering for clients includes advisor participation.)
H. Beck has been owned by Securian for the past nine years and will keep doing business as its own RIA and broker-dealer with its own management team based in Bethesda, Maryland. Securian’s history dates to 1880, when its predecessors began work in the life insurance business in Minnesota.
For its part, Kestra did business as NFP Advisor Services until 2016. Insurance broker NFP Corp. sold the group to Stone Point Capital, and it was renamed Kestra. The firm is based in Austin.
“Separating from NFP last year really empowered us to look at the wealth management business,” the CEO said. “We are committed to growth in the space … and are having lots of talks in the marketplace. This is the fruit of that labor.”
Kestra works with Fidelity’s National Financial Services for its custody and clearing services, while H. Beck relies on Pershing.
“We see this as an opportunity, as it gives us entrée on to the Pershing platform,” Poer said. “We are committed to Fidelity as a partner but now have Pershing in our arsenal, too. No one has to repaper or move their business one way or another.”
One industry observer agrees.
“This purchase will be an improvement for H. Beck reps as Kestra shares their technologies and services giving them improvements long overdue,” said recruitier Jon Henschen in an interview.
“The adding of Pershing will also give Kestra additional recruiting leverage in the industry. Kestra is focused on high-end advisors and wealth management, so for middle of the road advisors or advisors wanting Pershing for clearing, they can now direct them to H. Beck,” said the head of Henschen & Associates.
As for what the deal says about insurance-focused firms exiting the broker-dealer space, Poer argues that the acquisition announced Tuesday should not be seen solely as part of a broader trend.
“Firms, including big ones like insurers, see their core competencies and look at the best way to focus on their business going forward. This is probably part of what is going on here [for Securian], and it’s a great opportunity for Kestra and Securian,” he said.
Poer adds that Securian owns another broker-dealer, “is not exiting the business and sees H. Beck as a better fit for us.”
But Henschen sees the latest developments as a strong indication that the days of insurance firms owning IBDs are numbered.
With talk that Jackson National Life may be moving to sell its BDs to LPL Financial or another large firm and Tuesday’s news of the H. Beck sale, “We’ll be down to five independent insurance-owned broker-dealers: Lincoln Financial, O.N. Equity, Equity Services, Questar Capital and Pro Equities,” said the recruiter.
— Check out Is Private Equity IBDs’ Savior or Sorcerer? on ThinkAdvisor.