With 100-advisor OSJ grab, LPL’s ex-Advisor Group recruits top $5B

Register now

Two years after Securities America attracted hundreds of financial advisors in the wake of LPL Financial’s massive acquisition, the No. 1 independent broker-dealer is returning the favor to its rival’s new parent firm.

Some 100 registered representatives from Jack Connealy’s Lincoln, Nebraska-based JFC Financial Services dropped Advisor Group’s largest IBD subsidiary for LPL, the firm announced May 4. JFC had been Securities America’s biggest office of supervisory jurisdiction at $3 billion in client assets across the predominantly bank-based enterprise.

Connealy’s IBD change also marks the recruiting move with the highest amount of client assets and advisors switching firms in 2020, according to disclosed announcements tracked by Financial Planning. With a sector-leading headcount at a record 16,763 advisors, LPL has also recruited at least 129 reps with a cumulative $5.27 billion in client assets from Advisor Group in 2020.

M&A deals in the IBD sector create tough recruiting fights in addition to eye-popping price tags.

Before Advisor Group bought former Securities America parent Ladenburg Thalmann for $1.3 billion in February, Ladenburg’s then-largest IBD subsidiary recruited at least 215 reps with $8 billion in client assets from National Planning Holdings after LPL acquired the network’s assets.

LPL’s deal required NPH advisors to switch BDs and custodians, though. In Connealy’s case, he says leaving Securities America after 18 years came down to Advisor Group’s private-equity ownership under Reverence Capital Partners and LPL’s OSJ recruiting resources. He cites Advisor Group’s high leverage and that PE firms eventually turn over their investments.

“It's a situation where the ownership landscape in the independent space has become complicated with private equity as a major player,” Connealy says. “We felt that the pain of a transition over the short term paled in comparison to the longer-term pain that was possible in living through private-equity ownership.”

LPL and Raymond James lead in recruiting as M&A deals and new appointments show coronavirus impact
The firms have grabbed some three-fourths of the announced incoming advisors, as the pandemic cuts into valuations and casts uncertainty.

In an emailed statement, Securities America CEO Jim Nagengast says that the firm had retained enough advisors to keep the majority of JFC’s revenue in the fold, and that the remaining JFC advisors recognized “the crucial role we have served” in supporting the firm’s growth over the year.

“As part of one of the largest and most well-resourced firms in the industry, we look forward to continuing to support our advisors by leveraging Advisor Group’s industry-leading scale and proven ability to invest in the tools and platforms that advisors need to grow their practices,” Nagengast says of his La Vista, Nebraska-based firm.

On the other hand, JFC recruited a dozen more advisors to the OSJ — including six from Advisor Group — as it was migrating its existing ranks in waves since the beginning of the year, according to Connealy.

JFC includes 17 home office employees serving the advisors at community banks and other financial institutions in Nebraska and around the Midwest.

Connealy, a 32-year veteran advisor, affiliated with LPL on April 30, according to FINRA BrokerCheck. He had whittled the contenders down to five after two years of due diligence first prompted by the SEC charges against former Ladenburg primary shareholder Phillip Frost. Connealy’s criteria was “financial strength and stability,” along with recruiting, he says.

“The recruiting pipeline that we've generated at LPL over the previous three months, if I count newly joined, committed and engaged assets under management, actually rival what I've been able to recruit over my entire career,” Connealy says. “If you're not growing, you're going backwards.”

For reprint and licensing requests for this article, click here.
Recruiting Independent BDs Business development M&A Private equity firms LPL Financial Advisor Group Securities America
MORE FROM FINANCIAL PLANNING