Broker-dealer recruiters are getting set for a big year of advisor movement off the back of last year’s mega-mergers.
The last quarter of 2019 rounded up with the announcement of two mega-mergers — Charles Schwab’s acquisition of TD Ameritrade and the Ladenburg Thalmann-Advisor Group deal. At that time, many recruiters considered those announcements opportunities for competitors to lure any unhappy advisors left in the wake of those unions. And some broker-dealer recruitment bosses agree.
The Ladenburg Thalmann-Advisor Group deal
LPL Financial’s managing director and divisional president of business development Rich Steinmeier is confident of the firm’s chances of nabbing independent advisors, especially in the aftermath of the Ladenburg Thalmann and Advisor Group deal.
“Traditionally, when you see a firm change hands, there usually is an increased number of advisors that leave that firm, in almost any transaction. And for us, we capture more independent advisors than any other firm. So, when you see changes in ownership, I would expect that there will likely be more movement of the advisors from that firm and the number one firm that’s going to capture flows into independence is more likely than not going to be us,” says Steinmeier.
LPL is not the only one looking at this opportunity.
“Certainly, whenever an advisor is told that their ownership structure or their affiliation structure has changed, that’s a change event not of their decision frame. And, therein lies, I think, some opportunity for advisors who may not be feeling like those decisions are in congruence with their business goals, their vision, or their values. If it is, it’s great. If it’s not, then I think that becomes a change event where they can seek alternatives,” says Ameriprise Financial’s senior vice president of business development Manish Dave.
Some recruiters had predicted this soon after the deal was made public.
“Obviously, there’s going to be aggressive recruiting calling from firms trying to attract the Ladenburg reps over,” St. Croix, Minn.-based recruiter Jon Henschen of Henschen & Associates told FA-IQ in a prior interview. “It’s going to be a bit of a feeding frenzy.”
Henschen had warned that the merged entity would have to go a long way to keep potentially disgruntled FAs happy.
In an initial filing with the SEC, Ladenburg Thalmann announced it would not be offering any transaction-related retention bonuses. But in subsequent filings the firm says it is considering offering limited partnership interests in the parent entity to Ladenburg employees as well as advisors.
The Charles Schwab and TD Ameritrade integration
The $26 billion ‘Schwabitrade’ deal doesn’t just have a hefty price tag: it would also create an RIA custodial behemoth, raising quite a few eyebrows and a number of concerns among advisors about the impact on their business in the aftermath of this disruption.
And while other custodial competitors are making a play for unhappy advisors, broker-dealers are not far behind. They too are taking the line that Schwab competes with advisors.
“Certain advisors may feel like if those organizations are going direct to clients and soliciting clients for business, that creates an opportunity for Raymond James, because we don’t have a direct-to-consumer business. And we don’t compete with advisors for their clients,” says Scott Curtis, president of Raymond James’ Private Client Group.
Steinmeier agrees, but says it's still early days and the opportunity in the case of the Schwab-TD deal will ripen over time.
“Unlike Ladenburg, where there is a discrete event that’s going to occur inside a number of months, the Schwab-TD integration, I think, is more longer-term, and over a longer period of time. So I would expect that to be an opportunity where advisors would explore their options as they begin to understand a little bit more. I still think there’s quite a bit of ambiguity. It’s not that we haven’t seen anything, it’s just that the opportunity has a longer lead time and a longer duration,” says Steinmeier.