LPL Financial is expected to emerge as the biggest beneficiary of Ameriprise Financial's decision to sell its troubled Securities America unit.
at Securities America report they've been bombarded by broker-dealers and
headhunters ever since news surfaced last year about the Omaha-based company's
problems regarding the sale of private placement securities that ultimately were worthless.
The primary attraction of LPL, according to several top producers, is simply that it is viewed as "too big to fail." Advisors affiliated with Securities America say if they have to move they want a firm with a large enough capital base to withstand the $150 million hit their firm inflicted on its parent, Ameriprise Financial.
Ameriprise ponied up the $150 million required to settle $400 million in claims from the sale of Medical Capital and Provident Royalties private securities, which proved worthless. Yet the experience also prompted Ameriprise to decide last month to sell Securities America and refocus on the Ameriprise brand.
Other firms in the running to capture Securities America reps include Raymond James Financial, Commonwealth Financial Network and Cambridge. But for many, LPL appears to be the default option. LPL officials declined to comment.
That said, the drawback to LPL is that it is self-clearing, and Securities America reps don't have experience with LPL's clearing system, which makes it an unknown factor. Securities America used Fidelity's National Financial unit, as does Commonwealth. As a result, says one Securities America rep, he's leaning toward Commonwealth because he has roughly $70 million in separately managed accounts at National Financial.
Among several Securities America reps interviewed for this article, there was a sense of sadness. "The people in Omaha were good-natured, hard-working decent people," one rep says. "The last thing I wanted to do in January was switch broker-dealers."
However, as Securities America's fate hung in the balance in recent months, their reps were forced to consider a Plan B. "This forced top producers to look around and see all the technology," he continues. "Now I know there are B-Ds with which our business model is more consistent."
This particular rep reports making on site visits in recent weeks to both Commonwealth and Cambridge, and still has yet to decide. But with Securities America's future ownership up in the air, he plans to move.
His biggest fear is Securities America getting bought by an insurance company that doesn't grasp the independent nature of the firm's advisor network and tries to push its proprietary products.