LPL grabs $250M team from Advisor Group amid competitive recruiting fight
Advisor Group’s Royal Alliance Associates lost a practice with $250 million in client assets to LPL Financial — a notable addition during a quarter showing a net loss in the No. 1 independent broker-dealer’s headcount.
LPL grabbed Guy Nicosia’s Strategic Financial and Tax Planning Services from its private equity-backed rival’s largest IBD subsidiary, the firm said on Feb. 14. Nicosia’s son John and their partner Matthew Barbis make up the three advisors of the Long Island-based practice.
The onetime high school physics teacher’s team joined LPL as the firm hit record recruiting for 2018 with $27.3 billion in recruited client assets. However, LPL’s closely-watched headcount fell by a net 65 advisors in the fourth quarter, due in part to some major teams’ defections.
Unlike its mostly private and smaller rivals, LPL reports quarterly metrics and confronts questions about whether it answers more to Wall Street investors or advisors. On the other hand, its $339 million in cash available for corporate use will help enable LPL to spend a projected $135 million this year on technology.
“I love that we’re a publicly traded firm that is focused exclusively on wealth management,” said Rich Steinmeier, who took over as LPL’s head of business development in August after leaving his post as chief digital officer of UBS Wealth Management USA.
The tech spending will go directly to capabilities that benefit advisors, according to Steinmeier. “So yes, you can see the health of your firm, you can see the debt level of your firm, you can see exactly how much we spend, you can see that translated into capabilities. [CEO] Dan [Arnold] talks about it every quarter.”
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Under the deal, private equity-backed Wealth Enhancement Group would make its 10th acquisition in the past five years.February 1
Steinmeier issued a statement welcoming the Hauppauge, New York-based practice to LPL in the firm’s announcement. Reached via email, the elder Nicosia said his team was too busy serving its many tax clients and unavailable to discuss their Dec. 18 move to LPL from Royal Alliance.
Nicosia broke into the field after helping his teacher colleagues with their finances, eventually building the practice to more than 2,000 clients from many fields. Barbis spent 24 years with Royal Alliance, while the 27-year industry veteran and his son were there for five each, according to FINRA BrokerCheck.
For their part, representatives for Advisor Group didn’t respond to a request for comment on the exit. The Lightyear Capital-backed IBD network has dismissed reports it could go up for sale as “speculation,” and it reached deals to acquire two BDs and serve as a third one’s preferred affiliation partner in 2018.
Advisor Group added more than 170 advisors with $5.4 billion in client assets in 2017 alone from advisors in National Planning Holdings’ IBDs after LPL acquired their assets. Ladenburg Thalmann’s Triad Advisors also poached some 50 advisors from LPL at the beginning of 2019 in a move by a retirement plan-focused office of supervisory jurisdiction. In addition, at least nine hybrid RIA practices left LPL in 2018 after the firm announced a new corporate RIA requirement it subsequently walked back.
On the firm’s fourth-quarter earnings call, Arnold noted the OSJ’s exit and said “the previously discussed small group of hybrids that we weren't strategically aligned with” resulted in about about 30 advisors leaving the firm. About 30 low producers also decided to leave the business in “typical year-end noise,” he said.
“That thing's a bit illogical when you look at the solid quarter from a recruiting standpoint and the consistency around our retention from quarter to quarter,” Arnold said in response to an analyst’s question about the sequential losses. “The growth in terms of the number of advisers would correlate better with what you see from the asset growth, the [net new assets], the recruiting and the retention.”