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Industry Spotlight > Mergers and Acquisitions

LPL to Buy a $40B Branch Office With 800 Advisors

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LPL Financial says it is buying one of its largest branch offices: Financial Resources Group Investment Services, which has 800 advisors working with 85 financial institutions and $40 billion of advisory and brokerage assets. Based in Fort Mill, South Carolina, FRGIS operates as an affiliated office of supervisory jurisdiction with LPL.

The deal, which LPL expects to close in 2023, is structured as an equity purchase and includes $140 million to be paid at closing, with “additional earn-out payments” to be made over the following three years, according to a press release. 

“We are excited to embark on this new phase of our relationship with our deeply respected, long-standing partner, FRGIS,” said Rich Steinmeier, LPL Financial managing director and divisional president, Business Development, in a statement. 

“This acquisition strengthens our relationship with a strategically important client and provides a foundation on which to accelerate expansion of several strategic growth areas, particularly in the financial institution space,” he explained. “FRGIS is an industry leader of managed programs for banks and credit unions and provides a strategic complement to LPL’s existing enterprise offering.”

Financial Resources Group will continue to operate independently within LPL after the deal closes and will keep its brand and leadership team.

As for FRGIS, “We couldn’t be more pleased to join forces with LPL,” according to CEO Bruce Miller. “We look forward to leveraging LPL’s financial strength and resources to enhance our support of existing client relationships and to attract new ones, enabling our continued strong growth trajectory. 

As of Sept. 30, LPL worked with close to 21,000 financial advisors, about 1,100 institution-based investment programs and some 500 RIA firms. 

Its total advisory and brokerage assets fell 8% year over year to $1.04 trillion, as advisory assets dropped 9% year over year to $543 billion. But its third-quarter earnings were $232 million (or $2.86 per share) vs. $103 million (or $1.26 per share) in the year-ago quarter and $161 million (or $1.97) per share in the prior quarter.

More Views on the Channel

On LPL’s Oct. 27 earnings call with equity analysts, President & CEO Dan Arnold emphasized the growth of assets tied to clients like banks and credit unions: The firm has “collectively added roughly between $65 billion and $70 billion in large financial institution assets over the last couple of years and continue to see strong momentum in the demand for the solution or the offering, which really … introduced a new concept into an outsourcing model … into the marketplace.”

As the firm has “added these larger institutions, we continue to innovate both in terms of how we support them day in and day out, and also just as importantly, how you transition them over. That’s a pretty big change-management effort, as you could imagine,” he explained. Over the past few years, LPL continues “to make our model more and more appealing.”

As for recent momentum with large financial institutions, Arnold said, “over the past two quarters, we onboarded two new clients, CUNA and People’s United Bank.”

The firm is “still very optimistic [about the] growing durability around the growth opportunity” in the institutional channel and has “a good solid pipeline. And though these deals are a little bit harder to predict in terms of the timing because they’re a longer sales cycle, [we] feel good that we have [an] opportunity to continue the momentum,” Arnold added.


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