Independent Broker Dealer Consolidation

National Planning Holdings sale of their independent broker dealers create mass movement

When National Planning Holdings Network announced last year they were selling their four Independent broker dealers National Planning Corp, Invest Financial Corp., Investment Centers of America Inc. and SII Investments to LPL Financial, it created measurable change for many of their approximately 3,200 advisors. Very quickly advisors had to evaluate whether LPL was a good fit for their practice or if they needed to find another suitable partner.

The most essential considerations when there is a merger of this kind is-

  • compensation- Is the acquiring firm keeping the same financial structure? Are payouts, expenses (Errors and Omissions Insurance, ticket charges, technology cost, client costs and monthly fees), administration fees on advisory accounts and commissionable products rates all comparable to the original broker dealer?
  • Business Alignment- Does the acquiring firm have a similar cultural feel? Do they align to the way you run your business? For example are they supportive of the types of products you use or do they support an outside RIA if you have one? Do they allow outside custodians if that is your model? These are just a few examples of the depths of due diligence that needs to be done when there is an acquisition.

In an InvestmentNews story titled “As LPL buys broker-dealers, its rivals also benefit”

the advisor movement that resulted from this acquisition is explored. Jodie Papike is quoted saying-“When there are fundamental changes at a broker-dealer, such as moving to a new clearing firm, advisers have to evaluate that,” said Jodie Papike, executive vice president at Cross-Search, a recruiting firm that works with many Independent broker dealers. “That’s neither good or bad.”

And while LPL expected to loose about 30% of the advisors they acquired in the acquisition, it created tremendous recruiting opportunities for various independent broker dealers in the marketplace. “LPL goes into acquisitions knowing that advisers will evaluate these changes and understands that they won’t keep every adviser,” said Ms. Papike. “Even though they lost some advisers with the NPH deal, I’m sure they expected to.” These anticipated losses came as a result of change and created opportunities for broker dealers that were poised with a strong message.

For more information on the types of mergers and acquisitions most common today and what to expect if your firm is bought visit “Broker-Dealer M&A: Is your firm next?

Or watch Jodie’s video on the topic-

Broker Dealer Acquisition Types

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