What are Advisor Group's plans? Some see consolidation as inevitable

Advisor Group's management is weighing whether to combine its network of brokerages into one entity, a reversal of its "multi-brand" strategy.

CEO Jamie Price and other executives at the Phoenix-based independent wealth management firm with eight brokerages and 11,200 financial advisors haven't spoken publicly about a range of potential shifts that could include changing the company's name. Advisor Group issued a statement this week from Jen Roche, the firm's executive vice president of marketing and communications, leaving open the possibility it will consolidate the brokerages.

As the No. 3 firm on Financial Planning's IBD Elite rankings of the independent brokerages, private equity-backed Advisor Group grew even bigger last year with the acquisitions of midsize competitors American Portfolios Financial Services and Infinex Financial Holdings. Current and former advisors have expressed concern about erosion in customer services at the corporate office, and changes to the structure of independent brokerages in the wake of M&A deals often provoke massive recruiting fights. For now, the company isn't revealing its plans. 

"As we noted publicly during our ConnectEd Conference last year and recently discussed with our network of advisors, we are considering options to drive greater efficiency and leverage our scale to enhance the experience and growth of affiliated financial professionals, including bringing our wealth management firms together," Roche said in the statement. "We will move in this direction only when we are certain this would be purely beneficial to our advisors and would not be a repapering event."

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InvestmentNews first reported the potential rollup and speculation about the firm's name and possible aspiration to undertake an initial public offering of its stock. Like most brokerage company conferences, Advisor Group's ConnectEd Conference wasn't open to the press or public, so it's not clear what any executives with the firm may have said at the event.

In 2020, Advisor Group purchased five brokerages that had been a rival network known as Ladenburg Thalmann for $1.3 billion. It later merged the three smallest of those firms into the largest, Securities America. After the Ladenburg deal, which Advisor Group announced roughly three months after Reverence Capital Partners purchased a majority stake in the firm, Price and other executives pledged to keep the ex-Ladenburg firms separate from Advisor Group's four other brokerages. That structure reflected "both companies' commitment to a multi-brand network model," according to a press release about the deal.

In the months afterward, the company's executives said they viewed its stated commitment to offering multiple brokerages, custodians and clearing firms as important to its culture. Price said as much in a May 2020 interview with FP. 

Advisors "pick a partner because they think it's a good cultural fit for them," Price said at the time. "On the ground, we operate multi-brand companies with a little bit more intimacy, so you're not lost in a sea of people."

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Representatives for Advisor Group didn't respond to a request to know when and why the company's plans began changing. They also didn't reply when asked about the service concerns of two former Securities America advisors, Michael Tashjian and David O'Donnell of Westborough, Massachusetts-based Patriot Financial Group, who moved a branch of nearly 70 advisors and $2.5 billion in client assets to Cetera Financial Specialists last December.

Tashjian and O'Donnell started suspecting something was going on a couple of years ago, when Securities America executives were leaving the firm and being replaced by Advisor Group personnel, they said in an interview. Eventually, email addresses that used to include "Securities America" got switched to ones that said "Advisor Group," and the branch struggled to get accurate calculations of its pay from the corporate office. The brokerage rollup now under consideration appeared inevitable to them by last year, they said.

"The consolidation is coming, it's happening. That's what they're looking to do," Tashjian said in an interview. "We did feel the pain on the service end."

"Mike and I feel very strongly that we owe it to our reps to lead," O'Donnell said. "To knowingly just get washed up in a complete mess is not leadership. We've got to lead our firm to where our reps can get paid accurately. Four months later, I'm very happy we did it."

Others expressed support for the idea of consolidation and rebranding. Apple's iPhones, Subway sandwich franchises and Pepsi each represent companies that adopted new monikers, according to Brian Holmes, the CEO of Los Angeles-based Signature Estate and Investment Advisors. Holmes' firm, which has 160 advisors and employees and $16 billion in client assets, received an investment from Advisor Group and Reverence last year.

Some advisors may not realize how big Advisor Group has become and how that could be an advantage in a time when certain broker-dealers could be ripe for purchase amid the crisis in the banking sector, Holmes said in an email.

"I actually think potentially combining BDs and a name change are a great idea for AG," he said. "The benefits of economies of scale, technology streamlining and collaboration among BDs are obvious. … This would be an excellent opportunity to bring attention to their size and strength during uncertain times in the regional bank-owned BD space."