Six months after it announced plans to buy five broker-dealers owned by Ladenburg Thalmann, Advisor Group says three of them will be merged into the largest BD in this network.
KMS Financial Services, Securities Service Network and Investacorp are set to become part of Securities America by year-end. RIA-focused Triad Advisors will remain a standalone BD.
“At the time of the announcement [in November], one thing we knew for sure was that we would deploy our shared services capability. This is how we efficiently run Advisor Group,” said CEO and President Jamie Price in an interview.
(Related: Ex-Ladenburg BDs May Face Culture Clash)
“We have a single [operations], finance and national sales departments and a single technology platform,” he added.
Over the past month, Price says, it became clear that Advisor Group would need as long as two years to launch straight-through processing, digital signature and related technology for onboarding and client service for the five separate firms.
Securities America currently has about 2,600 advisors, while Triad has nearly 650. KMS, SSN and Investacorp have a total of about 1,000 advisors. Thus, after the BD closings and mergers, Securities America — led by Jim Nagengast — could have about 3,600 registered reps.
“The Ladenburg Thalmann advisors have been clamoring for [this] equipment, the wealth management platform and the MyCMO digital platform,” he added.
Given that Securities America already handles many operating functions and that combining the four BDs would not entail client repapering, Advisor Group made the decision that it announced Monday, Price says.
“It’s a very easy way to bring the full set of capabilities that we promised … from day one” to these advisors, he explained.
(The Advisor Group broker-dealers not directly affected by Monday’s news, and that were in place before the merger, are FSC Securities, Royal Alliance, SagePoint Financial and Woodbury Financial; they have a total of about 7,000 advisors.)
Investacorp is led by Patrick Farrell, KMS by Erinn Ford and SSN by Wade Wilkinson. (Triad’s president and CEO is Jeffrey Rosenthal.)
“A month ago we went before them [with these plans] and they’ve been incredibly engaged in designing this,” Price said.
“And, yes, there are some brands that have been around a long time [so] if we can maintain a sense of community and culture …. with a seamless transition, this is the right thing to do,” he added.
But he acknowledged that it’s not definite that all the company presidents at the BDs set to shutter will stay on as leaders or that all three the leaders will depart.
“We will know more as time goes on and as more roles become available and apparent,” Price said.
“With the size of our organization today [at over 11,000 advisors] …, we’re hoping there are roles for them around the senior ranks,” he explained. “It may not be exactly what they are doing today, but there should be opportunities to remain in the organization.”
Also, a “significant portion” of the Ladenburg Thalmann employee base will remain in place, “given the normal turnover to backfill and the need for a certain number of employees to serve advisors.”
In a statement shared via email, Ford said: “Serving as CEO of KMS Financial over the past few years has been amazing for me, both personally and professionally. We appreciate the thoughtful and phased approach Advisor Group has adopted with this transition process … , and will use this time wisely to ensure our advisors … and are equipped with everything they need for continued growth and success.”
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