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Roundup: Advisor Group Has New Owner; Firms' Q1 2019 Results

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Advisor Group After several months of intense industry speculation, Advisor Group said it is being acquired by the private-equity firm Reverence Capital Partners. The firms did not disclose a price for the deal, but a report from Bloomberg said Centerbridge Partners had offered Advisor Group more than $2 billion about two weeks ago.

Advisor Group’s independent broker-dealers have about 7,000 advisors. The company had $1.7 billion in gross revenue and $268 billion in assets under administration in 2018. As part of the deal, which should close in the third quarter, Reverence will buy 75% of Advisor Group from Lightyear Capital, PSP Investments and others shareholders, who will keep a 25% stake.

Jamie Price will remain CEO of Advisor Group, an IBD network, which includes FSC, Royal Alliance, SagePoint and Woodbury. Valerie Brown, will leave her role as executive chair. Advisor Group says it is working with Reverence on an advisor recognition and retention program.

Ameriprise Financial In the first quarter of 2019, the firm’s Advice and Wealth Management unit had revenues of $1.59 billion, pre-tax earnings of $350 million and assets of $588 billion. Its 9,979 advisors have average yearly fees and commissions (or production) of $628,000 — up from $590,000 a year ago. There are 2,190 advisors in its employee channel and 7,789 in its franchise group.

Baird The employee-owned firm says its Private Wealth Management unit worked with about $137 billion in client assets as of Dec. 31, 2018. Hilliard Lyons, joining Baird this year, should add roughly $50 billion in assets. The firm had 937 financial advisors at year-end, up from 858 in late 2017.

Bank of America-Merrill The Global Wealth & Investment Management unit improved net income 14% from last year to $1.05 billion. Revenue for the group, which includes Merrill Lynch, weakened about 1% to $4.82 billion.

While the full unit has about 17,534 financial advisors, the number for Merrill Lynch is 14,761 — down eight from the prior quarter and 68 from a year ago. Average yearly fees and commissions for the quarter across the GWIM unit are $1.039 million. Among veteran Merrill FAs, this figure is about $1.350 million as of the first quarter.

Some 300 Merrill Edge advisors (referred to as Financial Solution Advisors), who work with clients on digital-based plans, will be placed in Merrill branches — up from 25. GWIM had total assets of $2.84 trillion as of March 31.

Cetera Financial Group Cetera says it will work to find buyers, finance deals or buy practices owned by advisors who have to leave the job due to an accident or other unforeseen problem. The firm has seen “the value of an advisory practice decrease by as much as 75% within the first 60 days of an unplanned exit, if no executable continuity plan is in place,” according to Richard Whitworth, head of Business Consulting for Cetera.

LPL Financial The firm improved profits 66% from last year, reporting net income of $155 million in Q1 ’19. Net new advisory asset inflows were $4.6 billion, while net new brokerage assets outflows were $0.7 billion — translating into an overall 2.5% annualized inflow rate. Recruited assets were $7.1 billion.

On a call with analysts, President & CEO Dan Arnold said that over the past 12 months, the IBD has had “a little over $30 billion in recruited AUM. It’s the first time we’ve ever had that.” The IBD ended the first quarter with 16,187 advisors vs. 16,109 in the prior quarter.

LPL advisors have average yearly fees and commissions of $227,000 and average assets of $42 million. The firm has a total of $684 billion of assets; it grew revenues 10% from last year to $1.37 billion.

Morgan Stanley The bank’s wealth management revenue grew slightly to $4.39 million, and the unit’s profits improved 1% to $924 million in Q1 ’19 from Q1 ’18. It now has 15,708 registered reps — up 26 from a year ago and 14 from the prior quarter.

These advisors have an average of $158 million in client assets and $1.12 million of yearly fees and commissions (vs. $1.06 million in the year-ago quarter). Total wealth assets at Morgan Stanley are $2.48 trillion — a jump from $2.37 trillion a year ago and $2.30 trillion in the fourth quarter of 2018.

Morgan Stanley CEO James Gorman recently assigned Shelley O’Connor, who co-led wealth management with Andy Saperstein, to two regulated bank businesses.

Raymond James The firm named a chief operating officer for its Private Client Group: Kim Jenson, who has been COO of the firm’s employee channel, Raymond James & Associates, for the past two years. She was recruited from UBS in 2017 as a 30-year industry veteran.

Also, PCG has total client assets under administration of $760 billion as of March 31, up 9% from last year; close to 50% of these assets are in fee-based accounts. Quarterly net revenues of $1.27 billion were flat with the prior year’s results. Plus, pre-tax income of $132 million, fell 16% from a year ago.

With 7,862 advisors, its headcount is up 258 from March 2018 and up 47 from December 2018. This figure includes 4,670 independent contractors and 3,192 employee advisors.

Stifel The firm’s wealth management unit had revenues of $510.6 million in Q1 ’19, up 5% from a year ago; pre-tax profits grew 10% to $194.5 million.

The business has 2,160 advisors (99 of whom are independent contractors), up eight from the prior quarter and 43 from a year ago. Clients assets grew 9% year over year to about $300 billion, $100 billion of which is fee based.

UBS In the Americas, pre-tax profits and operating income fell 6% from last year to $328 million and $2.17 billion, respectively, in Q1 ’19. Recurring fees declined 7% to about $1.4 billion, but net interest income rose 6% to $464 million.

In the United States, average yearly fees and commissions stand at $1.26 million vs $1.35 million in Q4’ 18. UBS Americas has 6,790 advisors — down 60 from the prior quarter and 166 from last year; they work with about $1.3 trillion in client assets.

Wells Fargo The bank, now being led by interim CEO Allen Parker, says its Wealth & Investment Management unit had 13,828 advisors as of March 31, down 140 from the prior quarter and 571 from a year ago. Since the bank’s fake-accounts scandal erupted in the fall of 2016 — when it had 15,086 registered reps — the wealth unit has lost 1,258 advisors.

The unit recently agreed to sell its retirement-plan services business to Principal Financial Group for $1.2 billion. Its net income dropped by nearly 20% from last year to $577 million in Q1 ’19. Wells Fargo attributed this decline to “lower asset-based fees and higher seasonal personnel expenses.”

Revenue declined year over year to $4.08 billion from $4.42 billion. Assets also weakened; they stand at $1.8 trillion — down 2% from last year and 1% from the earlier period. The bank said this drop was mainly caused by net outflows.

Janet Levaux is editor-in-chief of Investment Advisor. She can be reached at [email protected].


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