LPL Financial appears to be the likely winner in the bidding for Jackson National's 3,500-rep, broker-dealer network, National Planning Holdings (NPH). Although no deal has been announced, sources in the insurance industry said a transaction could be finalized imminently.
LPL is seen as the most logical candidate to acquire the NPH network, given that both firms have a strong presence in the bank representative and credit union securities businesses. The NPH network includes two brokerages with a major presence in banks and credit unions, INVEST and ICA (Investment Centers Of America). NPH's other two firms, SII and National Planning Corp., are more traditional independent firms.
LPL launched its annual conference in Boston on Sunday. Were a transaction completed, it would give LPL an advisor network of more than 17,000 reps.
Jackson National, owned by Prudential PLC of the United Kingdom, apparently decided to explore selling the NPH network in the wake of the DOL rule. Jackson is one of the nation's leading issuers of annuities, and for years, owning a brokerage network gave it a base of reps who would give its investment vehicles a look.
But the DOL rule has left the broker-dealer business more challenged with administrative and compliance costs. With profit-margin challenges like these, Jackson apparently decided to examine strategic options for NPH, including a possible sale. Indeed, it remains to be seen if the DOL rule could prompt other owners of independent brokerages to consider divesting their B-D subsidiaries.
One reason sources said LPL appeared to be the winning bidder was that the four NPH firms clear through Fidelity and Pershing. Both these clearing firms reportedly have been notified that NPH is revisiting its clearing relationships.
LPL is self-clearing and could realize savings and efficiencies from moving NPH's clearing functions in-house. Other reported bidders include Raymond James and Ameriprise. Raymond James is also self-clearing, but historically it has focused on targeting upscale brokers at wirehouses. Like Raymond James, Ameriprise also operates both an independent and an employee broker-dealer arm and has indicated in the past it might consider acquisitions. Sources said several other firms which have displayed an interest in expanding through acquisitions reportedly were never invited to make offers.
Wall Street analysts have criticized LPL for its relatively slow advisor recruiting. However, the reality is that LPL has done reasonably well in attracting brokers and advisors. But with more than 14,000 reps, moving the needle in a bull market where most advisors are content and prosperous isn't so easy. Acquisitions represent a much faster avenue for growth.