LPL Financial is going all out to retain Waddell & Reed’s 921 financial advisors as part of its $300 million purchase of the wealth business from Macquarie Group, which it announced Dec. 2.
The deal, according to several recruiters and other industry sources, is equal to between 30 to 50% of an advisor’s prior year fees & commissions (or production) and was reported last week by Investment News.
When asked if the retention package being offered to Waddell & Reed’s advisors is generous, recruiter Casey Knight of ESP Financial Search said: “It’s almost unprecedented. It’s a more than generous offer that should yield better results than LPL likely expects.”
What makes it so robust, according to the managing director, is that it’s above the historic average for acquisitions in the independent-advisor arena “and even in the full-service space.”
According to Casey, retention deals “were not this big with Morgan Stanley and Smith Barney, for instance, or with Bank of America and Merrill Lynch.”
The retention packages also “likely were smaller” than those tied to other acquisitions, such as Raymond James’ purchase of Morgan Keegan, Baird’s addition of Hilliard Lyons, and Advisor Group’s deal to buy the Ladenburg Thalmann broker-dealers.
As for the top level, “50% for any advisor is a really big number. At the bottom level, 30%, some lower producers probably think in general that they might not not do well [elsewhere] and need to transition [to LPL]. … 30% is already a good number,” Casey explained in an interview.
Other recruiters agree in their assessment of LPL’s offer to the W&R registered representatives.
“They are being very competitive in what they’re offering, which is like those they offer to advisors coming from another firm, with no discounting related to the acquisition of W&R,” said Jodie Papike, president of Cross-Search, an advisor and executive placement firm.
“It’s very generous and attractive. They’ve done a good job at rolling a competitive offer to folks,” Papike explained, adding that it’s similar and perhaps “a bit” higher than that offered to National Planning Holdings’ advisors acquired from Jackson National in 2017.
How will the retention of the W&R advisor go? “I predict more success on this transaction that with the Jackson National one, because the offering at LPL compared to that of Waddell & Reed looks pretty attractive — in terms of payouts, technology … and the platform,” she said.