Questions abound in the wake of Ladenburg Thalmann Financial Service’s $150 million acquisition of Securities America. Will the broker-dealer be re-branded? And how will this move affect advisors’ administrative costs?
However, one certainty prevails: Securities America is making generous efforts, in some cases, to keep its advisor force intact.
The independent broker-dealer is not working off of a set payout grid. It is negotiating deals with teams individually, instead, particularly with the practices that run on fee-based business models, according to industry professionals.
"Ladenburg Thalmann is going to offer competitive retention bonuses to advisors, based on criteria including production, profitability and business growth," a spokesman for the company said.
One advisor was considering leaving the independent broker-dealer, because it charged a 20 basis-point fee on the practice’s advisory business.
After Ladenburg Thalmann announced the Securities America acquisition on Wednesday, Securities America halved the administrative fees to 10 basis points, and the advisor decided to stay, according to Jonathan Henschen, president of Henschen & Associates, a recruiting firm in St. Croix Minn. Securities America also offered the advisor a 20% note.
That sounds generous, especially when most industry professionals estimate that payouts in the independent broker-dealer space range from 5% to 15%. “It’s not quite like the wirehouses,” said Scott Montgomery, senior vice president of FirstPoint Partners, a new boutique recruiting and consulting firm based in San Diego.
After shedding almost 100 advisors since last April, and being snapped up by Ladenburg Thalmann, the reality is that Securities America has fewer mouths to feed. “That leaves them more money to offer advisors like him,” Henschen said.
Whether the advisors who remain are necessarily loyal to Securities America is still unresolved. Also, few advisors have preconceived good or bad notions about what type of company Ladenburg Thalmann is, Mindy Diamond, president and chief executive officer of Chester, N.J.-based Diamond Consultants said.
Many are simply observing what the company will do over the next six months before forming an opinion, according to industry professionals.
“Will they change payouts? Raise ticket charges other ancillary costs? Will there be a retention package?” are among advisors’ main questions, Diamond said.
The advisors especially want to know how Ladenburg Thalmann’s investment banking and capital markets businesses will affect their work, Montgomery said.
“Most independent advisors don’t want to be told what to sell,” Montgomery said. “Independent advisors are so for a reason. Some might see this as an opportunity, but I would venture to say that most would not want to sell proprietary products.”
All the same, Montgomery said, advisors who do a brisk business in selling equities could take advantage of Ladenburg Thalmann’s well-regarded equity research. “It is really going to depend on the advisor,” Montgomery said.
In the meantime, there is no question that Securities America will continue to lose advisors, and it is unlikely that all advisors will be offered retention bonuses, Diamond said.
Securities America is hosting a round of town hall-styled teleconferences to answer advisor’s questions.
During one held early Wednesday, senior management stuck to introducing Ladenburg Thalmann to the Securities America fleet, according to industry professionals. Another is scheduled for Friday.
For more details and background on the Ladenburg Thalmann purchase of Securities America, take a look at these stories: