Windy City firm LaSalle St., a private company with both an independent broker-dealer and two registered investment advisor platforms, said today that it was offering a “significant percentage” of its equity to its affiliated reps and advisor. The firm has about 325 advisors using its platform and $12 billion in assets.

Mark Contey, LaSalle's senior vice president and head of business development, said the firm had previously been owned only by three partners, including himself and founder John W. McDermott. “It was offered up collectively at the firm level. The advisors that participated in the program purchased that equity by writing checks and investing in the company by the percentage that they were interested in purchasing. … The transaction closed on January 31, so it went live there, but it’s a program we’ve been working on for the last 14, 15 months.” The ownership structure will allow the advisors who participate to share in the profits through annual distributions.

“Every dollar and profit that the firm earns every year, the shareholders get their proportionate share," Contey said. "The other value that it brings to the table is that there’s an advisor board that will be formed that will meet three or four times a year, and the advisors will provide input and not only have equity ownership but have a seat at the table regarding input and direction of the organization. So I think the program is very unique at our industry. You don’t normally see that in our space.”

Contey said the new equity offering will help the firm retain and recruit advisors and demonstrates “the firm’s commitment to this space—that we’re not for sale or bringing in private equity.”

There’s been a war for assets and head count in the broker-dealer space, a highly competitive environment even in years when assets haven’t cratered, as they did in 2022. That makes advisors in the famously low-margined broker-dealer space a precious commodity—and makes retaining them a big goal of all the giant firms. That goes for public companies like LPL and Ameriprise and private equity-owned firms like Advisor Group and Cetera.

Larry Roth, a private investment and M&A consultant with RLR Strategic Partners, was not familiar with the LaSalle St. deal specifically, but he said the equity sharing sounded like a good idea and a way to solve certain problems the industry faces to hold onto advisors and clients alike.

According to Roth, who in the past ran both Advisor Group and Cetera as CEO, many advisors in the B-D space are tempted to spin out and set up RIAs.

“So they leave the broker-dealers and take most of the assets away,” he said. “If the firm can keep larger advisors and attract other advisors who either have their own RIA but keep the assets with the broker-dealer and an equity position, it’s a very compelling idea.”

According to Contey, LaSalle St. started in 1974 after McDermott purchased a predecessor commodities firm that had an advisor and discount brokerage component. The business was rebranded LaSalle St. afterward, and the RIA was formed in the 1990s, which is when the fee-based business started. The firm’s third owner, Daniel Schlesser, now a senior vice president and chief financial officer, came in during the 1980s. Contey joined in 2013.

LaSalle has been a private company the entire time, which Contey says gives the firm a lot of advantages since it has a longer time horizon to succeed that a firm might not get working under, say, a private equity owner who wants results in five years.

“There’s not a business model we don’t support or have on our platform,” Contey says.

He added that almost every metric at LaSalle has doubled in the last seven or eight years, including its assets, advisor count and gross annual revenue (which he puts at $55 million). “We consistently grow each year.”

After starting in downtown Chicago, the first is now based in suburb Elmhurst, Ill.