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Advisors, Others Weigh In on LPL's Waddell & Reed Deal

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With M&A in the financial sector happening at frenzied pace, financial advisors and industry watchers took to social media to comment on LPL Financial’s announcement Wednesday that it had agreed to buy Waddell & Reed’s wealth management unit from Macquarie Group for $300 million.

This business has 921 independent advisors and $63 billion of assets. LPL has 17,168 financial advisors; thus, if most Waddell & Reed advisors join and stay with it, that headcount figure could top 18,000.

“Congrats LPL. I had my money on RJ [Raymond James] to land this but very nice. Amazing the turns and changes for Waddell & Reed. Not a huge surprise overall,” said Jamie Hopkins, director of Retirement Research at Carson Group, on Twitter.

When asked if the deal is tied to accelerating consolidation in the business, Hopkins explained: “I don’t view this as a biproduct of that but yes clearly it is consolidating. More so LPL is in a strong position. Acquiring assets. W&R (from an outsiders’ perspective) losing advisors and just a lot of change there  was one of the premier firms for a long time.”

LPL says it will complete the transaction after Macquarie Group has acquired all common shares of parent company Waddell & Reed Financial for $1.7 billion. Also, LPL and Australia-based Macquarie — which is acquiring Ivy Investments — say they are forming a long-term partnership.

Speaking about Waddell & Reed, Morningstar’s management research chief Jeffrey Ptak tweeted: “As part of deal they’ve agreed to sell their wealth management platform to LPL. Interesting as I thought having product/ advisory under same roof was one of WDR’s more distinctive traits, esp[ecially] w[ith] so much emphasis these days on ‘owning the relationship’, ‘winning the last mile’, etc.”

Advisors’ Views

Financial advisors affiliated with LPL seem to be pretty upbeat on the deal, judging from their reactions.

“Great news & showcases @LPL’s strength. Even better, my partner is bringing their Midwest hub to my backyard!!!” said James C. Knapp on Twitter.

“The footprint expands,” tweeted Jamie Cox, a longtime LPL advisor who shared more views about the deal with ThinkAdvisor in a phone interview.

“I’m glad to see LPL grow during this time. It demonstrates the strength of the company … to expand market share by adding advisors and assets,” said Cox. 

He too is excited to see LPL bring on a firm that has a base in Overland Park, Kansas. “It’s … a fourth center,” the advisor explained, along with others in Boston; San Diego; and Fort Mill, South Caroline ”This [deal] gives LPL a solid Midwest presence.”

LPL also is setting up a technology base soon in Austin, Texas, he notes.

Overall, the move to buy Waddell & Reed” shows the independent broker-dealer knows how to “take advantage of their strategic position in the marketplace. It’s good for advisors and clients,” Cox added. 

The advisor also praised LPL President & CEO Dan Arnold. “He’s a seasoned executive with lots of acquisition experience.”

The deal comes amidst a series of M&As in the financial industry and about six weeks after rumors circulated that JPMorgan and possibly Lazard were considering Waddell & Reed as an acquisition target.

This industry chatter circulated just days after Morgan Stanley said it was buying Eaton Vance for $7 billion and Charles Schwab wrapped up its $22 billion purchase of TD Ameritrade.

For more details, see: LPL Set to Buy Waddell & Reed Unit for $300M


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