For advisors at the three midsize broker-dealers formerly owned by Ladenburg Thalmann and now being merged under Advisor Group ownership, what’s most difficult as they look ahead is that their BD ties are relationship-driven, and the BD culture matters to them.
Those advisors with KMS Financial Services, Securities Service Network and Investacorp who are largely self-sufficient and don’t use the back office very often may not feel much impact from these changes. But for advisors who use the back office on a regular basis and have easy access to key staffers whom they rely on, their world will be changing greatly.
(KMS, SSN and Investacorp will become part of Securities America by year-end, while Triad Advisors will remain a standalone BD; Advisor Group’s BDs, FSC Securities, Royal Alliance, SagePoint Financial and Woodbury Financial, stay the same.)
Ladenburg’s scale has helped with costs for items like Envestnet SMA/UMA expenses. However, shared services between broker-dealers that bring substantial cost savings to the firm are not always a positive development for an advisor at a midsize BD.
It’s my understanding that there’s a staffing rift between the former Ladenburg BDs and the current Advisor Group BDs, with Ladenburg at about 5:1 and Advisor Group at around 9:1.
We knew the ex-Ladenburg firms’ 5:1 ratio had to go. We just thought it would take six months to a year before that would happen — not three months after the deal closed.
There are layers of questions that now come up, such as costs and compliance policies that have been unique to each of the ex-Ladenburg broker-dealers. For instance, will those policies be standardized with what all the Advisor Group BDs are subject to?
An advisor at KMS, for example, could have a large percentage of investable assets in variable annuities, as long as the products were being sold properly. Will advisors now have a restriction on the percentage of investable assets in these products imposed on them?