Technology Investment Platforms Turnkey Asset Management

LPL to Buy $2B Advisory Firm

News May 27, 2020 at 06:27 PM
Share & Print

LPL campus in San Diego. LPL campus in San Diego.

LPL Financial says it is buying E.K. Riley Investments, a broker-dealer and RIA in Seattle with some 35 financial advisors and $2 billion of client assets under management.  

About $673 million of these assets are connected to its RIA, which includes 61 employees, according to its latest SEC filing.

The news comes a month after LPL said it was buying Lucia Securities, a San Diego-based wealth group with about 20 advisors and $1.5 billion of client assets under management, and two weeks after the IBD announced plans to open a technology office in Texas.

While the pandemic shutdown has been damaging for small BDs, "Large firms like @LPL [are] well positioned to acquire. Buying for 'just' 6X post-synergy EBITDA. Expect more of this," said popular blogger Michael Kitces of Kitces.com on Twitter. 

But Ray Lucia Jr., who leads Lucia Securities, responded in a tweet that the E.K. Riley news may not be tied to the coronavirus: "After a year long process we evaluated dozens of potential partners and made our decision before the pandemic, not because of it. Deals take time. It's logical to expect pandemic related deals to be announced closer to Q4."

LPL says it structured the E.K. Riley deal, which should close in the third or fourth quarter, as an asset purchase. It did not disclose the purchase price, but says the transaction includes a payment at closing and potential contingency payments. 

"We believe that LPL's culture, technology, and other capabilities provide the ideal environment for our financial advisors to offer outstanding service and advice to their clients," said Chairman and CEO Edward Riley, in a statement. (Riley spent the past 17 years with the firm and has been in the advice business since 1994).

LPL's Q1 Earnings

In the first quarter, LPL's revenues improved 7% from last year to $1.5 billion. Its assets fell 2% from a year ago  to $670 billion, though fee-based (or advisory) assets jumped 3% to $322 billion.

Total net new asset inflows in the period were $12.5 billion, and recruited assets were $8.4 billion.

The number of LPL-affiliated advisors totaled 16,763, up 574 from a year ago and 299 from the prior quarter. 

"We … continue to use M&A to complement organic growth," said LPL President & CEO Dan Arnold on a call with equity analysts last month.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Related Stories

iCapital to Acquire AI-Based AltExchange How Private Equity Ownership Will and Won't Change AssetMark Envestnet Updates RIA Platform to Optimize Workflows Meet the Luminaries Class of 2024 Finalists For These Dealmakers, RIA Consolidation Is a Race to Scale Advisors Are Afraid to Retire, and That's a Problem

Resource Center

Why Charitable Expertise Should Be Part of Your Practice link

White Paper

Why Charitable Expertise Should Be Part of Your Practice

Generative AI Trends Among U.S. Financial Advisors and Consumers link

White Paper

Generative AI Trends Among U.S. Financial Advisors and Consumers

Tech Is the New Talent Magnet: Firms That Invest in Innovation Attract Top Advisors link

White Paper

Tech Is the New Talent Magnet: Firms That Invest in Innovation Attract Top Advisors