“ We have an example of a firm that we own. The dad was an insurance guy, the son [ was ] very investment-oriented but they sold to their G3 now, who are very planning-oriented. That’ s a real elegant trajectory.”
Both Amore and Tash Elwyn, president of Raymond James’ s Private Client Group, say that multigenerational teams are going to be the ones with the easiest transitions and be the best targets for broker-dealers.“ We have an example of a firm that we own,” says Amore.“ The dad was an insurance guy, the son [ was ] very investment-oriented, but they sold to their G3 now, who are very planningoriented. That’ s a real elegant trajectory.” It’ s not always so smooth and easy, and B-Ds are in a great place to capitalize on these tensions. Because the older advisors likely were the entrepreneurs of the family and have a harder time letting go, W-2 employee options are also good for helping them ease into retirement, according to another B-D industry veteran.
assets will stay in place,” says Jodie Papike, the CEO and managing partner of Cross-Search, a recruiting firm.“ A lot of firms have lost business to the transition deals, and not wanting to lose those assets, they’ re looking at creative ways to keep advisors.”
The need for an RIA-only channel has forced some larger firms, such as LPL, Commonwealth and Kestra, to shrug off the name“ broker-dealer” altogether when describing their companies as they expand the ranks of their RIA custodian relationships. Amore, who is taking over the role of president at Kestra this month, says his company created its Bluespring Wealth Partners subsidiary to buy majority interests in independent advisory firms and let them work as employees of the Kestra holding company.
“ We have an example of a firm that we own. The dad was an insurance guy, the son [ was ] very investment-oriented but they sold to their G3 now, who are very planning-oriented. That’ s a real elegant trajectory.”
— John Amore, Kestra Financial
“ One trend that’ s accelerated in the last year is brokerdealers, particularly the larger firms, acquiring practices of their financial advisors and essentially building what I refer to as a W-2 channel,” says Larry Roth, a managing partner at RLR Strategic Partners and past chief executive at two giant broker-dealers, Cetera and Advisor Group( the firm now known as Osaic). These acquiring broker-dealers, he says, are“ essentially working with advisors who are in the last 10 years of their career and acquiring their business and moving the assets and clients into an environment which frankly allows the FA to retire whenever they choose.” That will offer long-term value for the clients, he says, but also“ for the broker-dealers that are acquiring them.”
“ Buying into practices is an insurance policy that those
Many advisors want to eventually jettison commission business from their books, partly because they feel these transactions poke a hole in their valuations and depress them. Private equity firms are captivated by the RIA-only model while, at the same time, many advisors enjoy running their firms without the heavy hand of Finra regulation.
“ If you’ re running your own RIA,” says recruiter Louis Diamond at Diamond Consultants,“ or you custody assets with Schwab or Fidelity, you also have more buyers for your business because all of the big private equitybased RIAs are looking for those types of deals. And if they wanted to buy someone who’ s on Cetera’ s platform, that advisor would have to repaper and it’ s more complex and it hurts the deal structure.”
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