Similarly, Cetera Financial Group announced in May it was hiring LPL Financial veteran Michael Murray as head of business development. LPL Finance’s president of business development, Bill Morrissey, will retire later this year to be replaced by the chief digital officer from UBS Wealth Management USA, Richard Steinmeier, at a time when LPL is trying to hold onto its recently acquired advisors. Morrissey helped LPL grow from 6,500 advisors in 2005 to more than 16,000.
“Advisors consider changes at the top of IBDs [when they think of changing broker-dealers], but they know some change is inevitable,” says Craig Kamis, executive vice president of business development at LPL Financial. “They look for continuity of mission and value proposition within the firm. We have had great success recruiting independent advisors and from banks, wirehouses and insurance companies. What we can offer is to help grow their business.
“We will continue to see consolidation in the industry in the future,” he predicts. “Scale matters more today than it did 10 years ago. These are interesting times and I like our chances. LPL is the market leader and we are publicly traded. Other IBDs are owned by private equity, which creates uncertainty. The competition is always going to be there, but a lot of consolidation works to our benefit.”
Others are equally as confident of their recruiting abilities, including the two-year-old holding company Atria, which has acquired three firms since November. Starting with sister IBDs in San Diego, Cuso Financial Services, which concentrates on the credit union market, and Sorrento Pacific Financial, which focuses on banks, Atria got off to a fast start. It then added Cadaret, Grant in Syracuse, N.Y., with $23 billion under administration.
“The industry is changing more rapidly now. If a firm is not building in digital and building with an eye to the future, it will not be a part of that future,” says Doug Ketterer, founding partner of Atria along with Eugene Elias, both former Morgan Stanley alumni, and Kevin Beard of AIG Advisor Group. “Digital is not just for millennials, it is across generations. Years ago, advisor firms just wanted a little back office help. Now they want a partner to help them grow with technology.”
Technology and compliance have almost become a mantra when IBDs are asked what is driving the consolidations, no matter the size of the IBD that is looking for more recruits.
“Scale is the name of the game for attracting firms, but how you achieve scale is critical to the service you provide,” says James Poer, CEO of Kestra Financial in Austin, Texas.
Spun off from NFP only two years ago, Kestra actually has had four years of strong growth in what Poer says is a competitive environment. “Very large broker-dealers are struggling to provide the kind of culture we can offer. Advisors are entrepreneurs; they need to concentrate on that,” Poer says.
The movement in the industry is ongoing, the IBD executives agree.
“This is such a disruptive business environment with so many different forces at play—regulations, technology, the aging demographics of advisors—that the consolidation will continue,” predicts Nathan Stibbs, chief strategy officer at Triad Advisors, a Ladenburg Thalmann company. “These factors are all coming together to make advisors rethink their positions, but massive consolidations create challenges at every level, which gives Triad Advisors new opportunities to recruit.”