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Industry Spotlight > Broker Dealers

HD Vest-1st Global Deal: 'The Consolidation Continues'

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Industry watchers are labeling HD Vest owner Blucora’s planned acquisition of tax-focused broker-dealer 1st Global as “big news, but not at all surprising,” according to popular blogger and financial planner Michael Kitces.

“Blucora owns TaxAct [software] as well, and was already building synergies around HD Vest’s base of CPA-centric advisors,” Kitces said on Twitter. “1st Global was ‘the other’ big CPA-centric broker-dealer. Just merges together two already-strategically-well-aligned firms.”

The $180 million stock deal involving two Dallas-Fort Worth independent broker-dealers could results in a firm with close to 4,500 advisors and $60 billion in total assets.

And the consolidation continues!” tweeted Kyle Van Pelt, an executive at SS&C Advent and blogger. “Expect to read a bunch more of these over the next three to four years.”

Tuesday’s news of the IBD acquisition comes about 3 1/2 years after Blucora announced plans to buy HD Vest. It also takes place less than a week after wealth platform provider Envestnet said it was purchasing the parent of software maker MoneyGuide for $500 million.

The latter combo, according to Envestnet Chairman and CEO Jud Bergman, had been percolating in his head “for about as long as we’ve been a public company,” or nearly nine years. “We’ve been trying to get to it” for a while, he said, “and we were not the highest bidder.”

According to Todd Mackay, interim CEO of HD Vest, meetings with 1st Global leaders first took place more than a year ago. “It was evident right off the bat that the two companies had a strong alignment and a shared culture of empowering employees and advisors in the best possible way and looking at [the business] through the eyes of our advisors.”

The common vision, Mackay said, is focused on “truly serving clients with advisors focused on maximizing their after-tax returns. We believe the potential of the combined entities would significantly enhance opportunities for advisors to grow and better serve clients.”

Plus, the executive explained, both HD Vest and 1st Global clear through Fidelity’s National Financial Services. (Before Blucora, HD Vest used Wells Fargo.) “There is going to be minimal disruption across the networks and families,” he said. “Both companies run the NFS platform and use Envestnet for our trading systems.”

As for why HD Vest’s headcount appears to have dropped after it was bought by Blucora, MacKay points to a preference for some CPAs who are newly licensed as advisors to focus on their tax practices.

“Our focus is on growing the business of advisors we have today and bringing on advisors for future growth,” he said. “We expect to see strong growth in our advisor base over time.”

— Check out HD Vest Parent to Acquire 1st Global on ThinkAdvisor.


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