Advisor Group considering brokerage consolidation

Advisor Group considering brokerage consolidation

Advisor Group’s management is weighing whether or not to mix its community of brokerages into just one entity, a reversal of its “multi-manufacturer” system.

CEO Jamie Cost and other executives at the Phoenix-dependent unbiased prosperity management company with 8 brokerages and 11,200 economical advisors have not spoken publicly about a array of possible shifts that could involve changing the company’s name. Advisor Group issued a statement this 7 days from Jen Roche, the firm’s govt vice president of marketing and communications, leaving open the probability it will consolidate the brokerages.

As the No. 3 business on Monetary Setting up‘s IBD Elite rankings of the impartial brokerages, private equity-backed Advisor Team grew even greater very last year with the acquisitions of midsize opponents American Portfolios Fiscal Solutions and Infinex Financial Holdings. Recent and former advisors have expressed concern about erosion in consumer expert services at the company office, and alterations to the structure of impartial brokerages in the wake of M&A bargains typically provoke large recruiting fights. For now, the business just isn’t revealing its plans. 

“As we mentioned publicly all through our Related Conference final calendar year and not too long ago talked about with our community of advisors, we are taking into consideration alternatives to travel bigger performance and leverage our scale to enrich the knowledge and advancement of affiliated fiscal professionals, like bringing our wealth administration firms with each other,” Roche claimed in the assertion. “We will transfer in this path only when we are specified this would be purely effective to our advisors and would not be a repapering function.”

InvestmentNews very first documented the possible rollup and speculation about the firm’s name and possible aspiration to undertake an original community offering of its inventory. Like most brokerage business conferences, Advisor Group’s Related Convention was not open to the push or community, so it can be not crystal clear what any executives with the firm may have stated at the event.

In 2020, Advisor Group obtained five brokerages that experienced been a rival network known as Ladenburg Thalmann for $1.3 billion. It later on merged the three smallest of individuals firms into the most significant, Securities America. Right after the Ladenburg deal, which Advisor Team introduced roughly 3 months following Reverence Cash Associates ordered a the vast majority stake in the company, Cost and other executives pledged to preserve the ex-Ladenburg firms separate from Advisor Group’s four other brokerages. That construction mirrored “the two companies’ motivation to a multi-model community model,” in accordance to a push release about the offer.

In the months afterward, the company’s executives said they seen its stated commitment to offering many brokerages, custodians and clearing corporations as important to its tradition. Selling price mentioned as a lot in a Might 2020 job interview with FP. 

Advisors “choose a husband or wife because they assume it can be a excellent cultural healthy for them,” Selling price said at the time. “On the floor, we function multi-brand organizations with a minimal little bit far more intimacy, so you’re not dropped in a sea of people.”

Representatives for Advisor Group didn’t respond to a request to know when and why the company’s plans started altering. They also failed to reply when requested about the assistance fears of two former Securities America advisors, Michael Tashjian and David O’Donnell of Westborough, Massachusetts-primarily based Patriot Money Group, who moved a branch of almost 70 advisors and $2.5 billion in shopper assets to Cetera Fiscal Professionals final December.

Tashjian and O’Donnell started out suspecting a little something was heading on a pair of many years back, when Securities The usa executives ended up leaving the business and remaining changed by Advisor Group staff, they said in an job interview. Inevitably, e mail addresses that used to include “Securities The usa” acquired switched to ones that reported “Advisor Group,” and the department struggled to get exact calculations of its pay back from the corporate business office. The brokerage rollup now below consideration appeared inevitable to them by very last yr, they explained.

“The consolidation is coming, it is really going on. That’s what they are on the lookout to do,” Tashjian claimed in an job interview. “We did experience the soreness on the services finish.”

“Mike and I come to feel very strongly that we owe it to our reps to guide,” O’Donnell said. “To knowingly just get washed up in a full mess is not leadership. We have got to direct our organization to in which our reps can get paid accurately. Four months later on, I’m pretty joyful we did it.”

Others expressed guidance for the thought of consolidation and rebranding. Apple’s iPhones, Subway sandwich franchises and Pepsi each signify businesses that adopted new monikers, according to Brian Holmes, the CEO of Los Angeles-centered Signature Estate and Investment Advisors. Holmes’ firm, which has 160 advisors and personnel and $16 billion in shopper belongings, acquired an expense from Advisor Team and Reverence previous 12 months.

Some advisors may possibly not realize how major Advisor Group has turn into and how that could be an edge in a time when selected broker-dealers could be ripe for order amid the disaster in the banking sector, Holmes mentioned in an e-mail.

“I truly imagine probably combining BDs and a name alter are a terrific thought for AG,” he reported. “The added benefits of economies of scale, technologies streamlining and collaboration amongst BDs are obvious. … This would be an fantastic opportunity to carry awareness to their size and power all through unsure occasions in the regional bank-owned BD place.”