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Broker Dealer Acquisition Types

Broker Dealer acquisition types
Vlog 10/6/17

It’s no secret broker dealer consolidation has continued at a rapid pace in 2017. While much has been said about why we are continuing to see consolidation, it’s important for advisors to understand mergers are not one size fits all.

Here are the most common types of acquisitions, listed from least disruptive to most disruptive.

1) When a purchaser buys the entire broker dealer leaving everything in tact. This results in not much change for advisors.

2) When a broker dealer acquires a broker dealer and then rolls the advisors into their firm. This is what we are seeing now with LPL’s acquisition of the NPH broker dealers. Advisors should take time to determine what changes, if any, will affect their business and if compensation/expenses will change with this scenario.

3) When a broker dealer goes out of business and does not have an acquiring firm to take over. This is the most disruptive/worst case scenario for any advisor. When this happens, although rare, it leaves advisors having to quickly find a new firm to affiliate with.

Jodie Papike

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