Advisor Group said Monday that three of the five independent broker-dealers it bought recently from Ladenburg Thalmann will be merged into Securities America, the largest BD in this network.
Industry watchers reacted to the news with a bit of a shrug, seeing it as part of the consolidation overall across the advisor landscape. Data compiled by the Financial Industry Regulatory Authority puts the latest BD tally at about 3,500, down from roughly 4,700 a decade ago.
“This consolidation in the IBD space is another sign of the times,” said Tim Welsh, head of the consultancy Nexus Strategy. “With zero commissions, cash spreads at micro-levels and market lows, it is an incredibly challenging operating environment for broker-dealers, so the race to scale is on.”
Advisor Group, led by Jamie Price, says 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.
“It comes as no surprise that following the merger they are consolidating five LTS broker-dealers to two,” explained Gavin Spitzner, president of Wealth Consulting Partners. “Given IBD market dynamics and the need to drive efficiency combined with the fact that they have made great strides in effecting common technology infrastructure, the table was set to do this in a way that didn’t negatively impact advisors or their clients.”
Price told ThinkAdvisor that Advisor Group made the move to avoid spending as long as two years to launch straight-through processing, digital signature and related technology for onboarding and client service across 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. After the BD closings and mergers, Securities America — led by Jim Nagengast — could have about 3,600 registered reps.
“Jim Nagengast is a personable guy, and under his watch [Securities America] has been well managed, compliance clutter has been kept to a minimum, and advisors have been very happy with back-office staff,” said Jon Henschen, head of the recruiting group Henschen & Associates.
Looking ahead though, Henschen adds, advisors may grumble if their current staffing level of about five advisors to one employee rises to, say, nine or 10 advisors per staff member.