Page 47 - Investment Advisor - Jan/Feb 2021

BROKER-DEALER BEAT

By Janet Levaux

LPL Buys Waddell & Reed Wealth Unit;

Raymond James Strikes 2 Deals

The large broker-dealers were busy in late 2020, striking important

M&As before year-end.

PL Financial has been going all if I was going to another broker-dealer,”
out to retain Waddell & Reed’s according to Papike.
L921 financial advisors as part of According to LPL’s head of business
its $300 million purchase of the wealth development, Rich Steinmeier: “What
business from Macquarie Group, which we disclosed with this transaction is that
it announced Dec. 2. The deal, according our financial model and our financial
to several recruiters and other industry expectations are built on 70% retention
sources, is equal to between 30 to 50% of assets. We would expect to be hopeful
of an advisor’s prior year fees & com- that we would outperform that,” he said
missions (or production) and was first in an interview.
reported by Investment News.
When asked if the retention pack- MORE VIEWS
age being offered to Waddell & Reed’s Other recruiters agree in their assess- Recruiter Jon Henschen of Henschen
advisors is generous, recruiter Casey ment of LPL’s offer to the W&R regis- & Associates is optimistic about LPL’s
Knight of ESP Financial Search said: tered representatives. “They are being plans to keep the W&R advisors once the
“It’s almost unprecedented. It’s a more very competitive in what they’re offer- acquisition from Macquarie Group is
than generous offer that should yield ing, which is like those they offer to done: “Overall, the LPL’s retention pack-
better results than LPL likely expects.” advisors coming from another firm, with age is very generous. Many acquired
What makes it so robust, according no discounting related to the acquisition advisors were not offered as much in the
to the managing director, is that it’s of W&R,” said Jodie Papike, president of past,” he said.
LPL: Michael Vi/Shutterstock; Raymond James: Allen L Improta/Shutterstock
above the historic average for acquisi- Cross-Search, an advisor and executive For the W&R reps, “This is like sign-
tions in the independent-advisor arena placement firm. ing on to a new broker-dealer and get-
“and even in the full-service space.” “It’s very generous and attractive. ting a full forgivable note. It’s really as if
According to Casey, retention deals They’ve done a good job at rolling a com- they’re changing BDs, since the amount
“were not this big with Morgan Stanley petitive offer to folks,” Papike explained, is similar,” the recruiter explained.
and Smith Barney, for instance, or with adding that it’s similar and perhaps “a Advisors getting the high end offer (at
Bank of America and Merrill Lynch.” bit” higher than that offered to National or near 50% of last year’s revenues) are
The retention packages also “likely Planning Holdings’ advisors acquired likely those with a strong level of advi-
were smaller” than those tied to other from Jackson National in 2017. sory, or fee-based, business and active
acquisitions, such as Raymond James’ How will the retention of the W&R in other profitable areas vs. those at
purchase of Morgan Keegan, Baird’s advisor go? “I predict more success on the lower end (at or near 30%) who
addition of Hilliard Lyons, and Advisor this transaction that with the Jackson have more sales of “packaged products,”
Group’s deal to buy the Ladenburg National one, because the offering at LPL according to Henschen.
Thalmann broker-dealers. compared to that of Waddell & Reed looks LPL should “have a low number of
As for the top level, “50% for any advi- pretty attractive — in terms of payouts, exits on the part of the Waddell & Reed
sor is a really big number. At the bottom technology … and the platform,” she said. advisors given the improvements these
level, 30%, some lower producers prob- In general, the W&R advisors should advisors are likely to have [at LPL] and
ably think in general that they might not be thinking, “It’s a better platform, I’m this generous retention bonus on top of
not do well [elsewhere] and need to tran- getting good upfront money, and I have that,” he said.
sition [to LPL]. … 30% is already a good the incentive to stay — because the Steinmeier says the two groups had
number,” Casey explained in an interview. paperwork to transition will be less than “really positive discussions,” and he’s

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