$2B Ameriprise win from LPL signals banks, credit unions on the move

The largest bank- or credit union-based Ameriprise recruit of the year is switching firms at a time when many financial advisors from those institutions are considering a change.

Manhattan Beach, California-based Kinecta Federal Credit Union's Kinecta Wealth Management is dropping LPL Financial as its brokerage, registered investment advisory firm and custodian for the Ameriprise Financial Institutions Group, the firms said last week. The move will bring 20 advisors from California and New York who manage more than $2 billion in client assets to Ameriprise, upon the expected completion in the fourth quarter. 

In terms of wealth management assets among banks and credit unions, the move marks a giant win for Ameriprise over rival LPL and its largest one overall since Comerica Bank last year.

READ MORE: Comerica recruits, client flows help Ameriprise rake in earnings of $2.9B

LPL can point to many victories of its own in that channel of the industry, but advisors who provide onsite investment and planning services to credit union members or bank customers are generating a lot of recruiting and M&A activity in wealth management. Those transitions may come in the form of individual advisors and teams breaking away from the institution to launch their own firms or — as in Kinecta's case — at the enterprise level when an entire bank or credit union wealth program converts to a different brokerage or RIA. For enterprises, those decisions often stem from the cost of technology and the level of risk involved with the many aspects of a business outside their main area, according to Jay McAnelly, the group vice president of the Ameriprise bank and credit union division.

"For small broker-dealers, it's difficult to make the level of investments that the large firms can," he said in an interview. "The scalability is now moving to your partner, and you're not having to scale it with staff and employees."

Representatives for LPL declined to comment on the move by Kinecta, citing a policy against commenting on individual institution moves. Coincidentally or not, LPL unveiled incoming advisors who had come its way from Ameriprise on the day after the Kinecta announcement and earlier this week.

Wealth management firms of all sizes compete fiercely for advisors seeking a different brokerage or RIA setup. Atlanta-based Advisory Services Network, an RIA platform provider with $7.8 billion in client assets, recently picked up an advisor who broke away from a regional bank program to start his own advisory practice, co-founder Tom Prescott noted in an interview. The level of advisor and client services and revenue flowing "back to the mother institution" often prompts successful teams to find a new structure for their business, he said.

"The bank channel struggles, in my opinion," Prescott said. "It's not their main business. It's not what they were set up to be."

READ MORE: Ameriprise to pick up $2B credit union program from LPL

Kinecta Wealth Management has offered wealth management services since 1991, and Kinecta's program had worked with LPL for the past two dozen years, according to the firm.

The credit union has 28 branches in three states with 270,000 members and $6.8 billion in assets. It and another institution that merged into the credit union in 2021 trace their history back to the Hughes Aircraft Employees Federal Credit Union and the Xerox Federal Credit Union in Rochester, New York, according to Kinecta's website. 

"Our new partnership with Ameriprise Financial allows us to offer an elevated level of service backed by powerful digital tools and technology to help our clients achieve their goals with greater confidence," Kinecta Wealth Management President Donna McNeely said in a statement last week. "We're confident we'll have top-notch expertise and resources behind us with Ameriprise, and we're excited to bring new capabilities to our advisors and clients."

Kinecta displays "a deeper penetration of their members" than the wealth programs at most credit unions and banks, where, "Just because you have a program inside of an institution doesn't mean your members are going to do business" with it, McAnelly said. Ameriprise is seeking to work "with the highest quality institutions across the country, not sign up as many as we can," he said. The request-for-proposal and interview stage for a large bank- or credit union-based enterprise usually takes a long time, McAnelly noted.

"On average, it's a yearlong process for an institution to go through an evaluation and either decide to move or stay where they are," he said. "And many institutions are going through that evaluation."