LPL super OSJs merge as broker-dealer consolidation intensifies
Two super OSJs are combining, exemplifying the intensifying consolidation in the independent broker-dealer space.
IHT Wealth Management in Chicago is acquiring the five practices and 14 advisors of suburban Kansas City-based nVision Wealth Group, which manages $570 million in client assets. IHT now has 65 advisors and $2.4 billion in client assets in its super Office of Supervisory Jurisdiction, which the company says is one of the largest out of LPL’s roughly 1,500 OSJs.
About $270 million fee-based assets from the suburban Kansas City OSJ will transfer to the RIA of Chicago-based IHT under the deal.
The terms dictate that IHT will also advise on the rest of nVision’s assets, which remain on LPL’s various platforms, according to IHT founder Steve Dudash. The deal marks the second of its type completed by IHT this year amid massive recent acquisitions by LPL and other top IBD players.
“We believe that we are at the forefront of a trend involving super OSJ groups, where smaller, regional super OSJs are increasingly coming to recognize the value of partnering with larger, well-resourced groups as a way to preserve their independence and boost their ability to service clients,” Dudash said.
Advisors Mike Osborne, David Wernli and Paul Ward launched Overland Park, Kansas-based nVision in 2014. Their OSJ includes three offices in Overland Park and one each in the smaller Kansas towns of El Dorado and Augusta.
Nvision “views this as a strategic merger which allows both of our organizations to take advantage of the economies of scale required to provide cost effective compliance for the benefit of our clients and investment advisors,” Osborne write in an email.
Dudash, who took his practice independent from Merrill Lynch to LPL’s hybrid RIA platform in 2014, cites the fiduciary rule as a key area of compliance dictating such a move.
Downward pressure on fees and the challenge of new technologies are also roiling the IBD space, a study found earlier this month.
“Whether it’s regulatory forces, emerging tech disruptions or other industry pressures, it’s becoming harder and harder for small investment professionals to compete in today's landscape,” Dudash writes.
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Such mergers, he adds, help advisors “reduce some of those costs and create greater efficiencies, which benefits clients in the form of better and more affordable services.”
IHT describes itself as an independent RIA group that uses LPL’s hybrid platform, and roughly $1.3 billion of the firm’s assets are fee-based, according to Dudash.
Advisors on LPL’s hybrid platform pay the IBD fees in exchange for technology, compliance, clearing and custody services. Combined brokerage and advisory assets on the platform grew 26% year-over-year in the second quarter to $166 billion, according to LPL’s most recent earnings.
The platform’s momentum has carried into the third quarter, as well. A Wells Fargo team joined an affiliated RIA in July, and a Merrill Lynch team went to another affiliated RIA in August. On the other hand, competitor Triad Advisors poached a hybrid firm off LPL’s platform that month as well.