ORLANDO, Fla. – They may have different expectations on the pace, but a variety of factors will mean aggressive consolidation in the industry, planning executives said at this week's Financial Services Institute’s annual OneVoice conference in Orlando.

If smaller firms hope to survive or even thrive, they will need to find partners, said Wilson Williams, founder and CEO of Dallas-based Williams Financial Group.

“There will be more consolidation in the small- or midsized arena,” he said in a panel discussion titled, “Leadership Strategies for a Complex Business Environment.”

“You’re kind caught in a vise of declining margins and need of capital. It’s a vise that kind of closes in on you. You need capital for technology, for recruiting, for platform development, things like that. But at the same time your margins are shrinking. … I think what you’re also going to see is affiliations of like-minded broker-dealers that might share certain services,” Williams added.

Dick Averitt, chairman of Raymond James Financial Services, said consolidation “will continue … and so will the growth of new independent entrepreneurial broker-dealers. When it looks like it’s easy to make money in our business, people pop up everywhere.”

Picking up on the consolidation theme, Jim Nagengast, CEO of Securities America, which Ameriprise sold last year to Ladenburg Thalmann, said in an interview: “I think you’re going to see it continue – I don’t know that it’s going to all be this year, but it’s going to be a pace that continues over the next several years. My feeling is that you’re going to have this barbell-type industry where you have at one end the very large firms and then at the other end these niche players. … You just need more and more scale to compete – the technology, the compliance costs.”

Nagengast added: “A lot of what this conference was about in terms of the regulatory issues, the compliance issues, the legal issues – that makes it harder and harder to be in business. It’s increased costs for the small businessperson. … The result is going to be slimmer profit margins and consolidation in the industry.”


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