This year looks to be another active recruiting year for independent broker-dealers—but beating the record results from 2017 may be tough. The growing diaspora of wirehouse brokers provided one source of recruits, while merger and acquisition activity provided another avenue.

Firms saw good numbers of recruits coming out of the National Planning Holdings (NPH) B-Ds, as reps at the four NPH dealers evaluated their options following the August 2017 purchase of NPH assets by LPL Financial.

That deal-driven movement ignited what had otherwise been an average year. Concerns about the DOL rule abated after the Trump administration came into office in January, causing some advisors to put transition plans on hold.

At least until the NPH announcement. “The August to December period made it a very interesting year,” says Amy Webber, chief executive of Cambridge Investment Research. The NPH deal is “what pushed us back into a really strong year.”

Cambridge picked up more than $80 million of recruited production last year, about $30 million from NPH firms, Webber says, matching a strong 2016. In a normal year, Cambridge sees about $60 million in recruited revenue.

Securities America was probably the biggest beneficiary of the NPH transaction. Last year was a record recruiting year, according to Securities America’s chief executive, Jim Nagengast. He declined to provide details, and parent company Ladenburg Thalmann does not break out individual B-D results, but Nagengast did confirm that the movement the industry saw in the last half of the year helped his firm reach record territory.

Nathan Stibbs, chief strategy officer at Triad Advisors, another Ladenburg Thalmann firm, calls 2017 a “revolutionary year” for his firm, with record recruiting numbers for advisors, revenue and assets. The hybrid firms that Triad caters to came from large IBDs, insurance-owned firms, and small private outfits, Stibbs says. The hybrid space should continue to grow from regulatory disruption, higher costs and risks, and fee compression, he adds.

LPL, of course, will be the biggest beneficiary of its NPH purchase. Its advisor count has been flat over the past few years, and the addition of NPH reps will allow the massive firm to scale up even more. (According to its latest reported figures, as of September 2017, LPL had 14,253 advisors, up by 68 bodies from 12 months prior. NPH firms had 3,200 reps as of last August.)

In November, LPL said it had retained about 70% of the NPH advisors in the first transition wave, with the second wave to follow in the first quarter of 2018. That looks to be in line with what LPL expected, based on the terms of the deal. With more than 15,000 reps, LPL’s growth rate is running into the law of large numbers, prompting several observers to expect the firm to remain on the prowl for acquisitions.

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