One of the largest deals in wealth management this year came together over an unusual condition: The Financial Services Network would sell itself to Mariner Wealth Advisors, but only if the latter agreed to let it continue to use its long-standing custodian and brokerage.
Mariner Wealth Advisors doesn’t use the giant custodian, LPL Financial. Instead, it uses the three major custodians, Charles Schwab, Fidelity Clearing and Custody Solutions and Pershing, and a small brokerage called MSEC, which it launched more than a decade ago.
When bought, advisory firms typically switch over to the buyer’s custodian and brokerage. So when Mariner
The combined entity plans to expand to 5,000 financial advisors in the next four to five years, said Jeremy Olen, the Network’s chief investment officer. Mariner listed 484 employees registered as investment advisors as of May, while the Network has roughly 400 advisors.
While Mariner CEO Marty Bicknell didn’t initially expect the unusual condition, he quickly came to see the strength of the bonds between the Network and LPL — and a big opportunity.
“In order to be able to serve the truly independent advisors, it became obvious that we needed a broker-dealer relationship,” he said in an interview. He said the deal ushers LPL in as a custodian to Mariner for the first time and also marks the first time an incoming firm has retained the same brokerage. “We do own a broker-dealer,” Bicknell added, “but it’s very limited, so having this option and partnership with LPL fixes all of that.”
The acquisition will be the independent channel’s
Under the deal, The Financial Services Network and Mariner Platform Solutions will rebrand as Mariner Advisor Network. Launched in 2020, Mariner’s platform division has grown to 33 advisory firms with 66 advisors and $2.6 billion in client assets. The independent service doesn’t require incoming practices to sell any equity; both it and Mariner’s fast-expanding RIA will bring more assets and advisors to LPL through the transaction and the new custodian relationship.
So-called hybrid practices operate their own advisory firms while tapping a wealth manager like LPL for brokerage operations and, often, custody of advisory assets as well. The deal, whose price was not disclosed, is expected to close in September.
Partnerships among wealth management competitors don’t always prove lasting. Following its previous
Representatives for Dynasty didn’t immediately respond to a request for comment.
Olen said that The Network aims to grow significantly under Mariner. Financial incentives flowing between the firm and Mariner, and, on the other side, the firm and LPL won’t favor either when practices choose whether to fold into Mariner or use the platform’s services as independent practices, he said. Such arrangements can make firms like the Network attractive to advisors who receive discounts on vendor services, software and investment products thanks to the buying power of a larger enterprise of practices over a single one. The convenience for advisors acts as another factor.
“Putting them through some kind of change would have been a dealbreaker,” Olen said. Folding into Mariner will enhance the Network’s purchasing leverage for “more services and better pricing to our advisors in the long term” while keeping its existing ones through the links to LPL, he said. “We hope we've been as good to them as they've been to us, and it was really important that we didn't interrupt that relationship,” he said.
Indeed, the Network’s website lists eight different fintech firms that are “technology partners” to the firm, and its Form ADV
The continuance of the Network’s links with LPL didn’t make any impact on the purchase price or amount of equity exchanged with Mariner, Bicknell said, since the firm’s revenue and earnings are what figures the most in valuations.
Representatives for LPL didn’t make any executives available for an interview, but spokeswoman Linda Morgan said in an email that the firm works with other hybrid RIAs that have made their own private equity-backed deals.
“The ecosystem has expanded over the years where many [offices of supervisory jurisdiction] have evolved their models to RIA firms — many of which utilize the LPL custodial platform,” Morgan said.
Acquisitions often result in the buyers adding an additional custodial option to their menu, according to Brad Wales, a former recruiting executive with LPL rival Raymond James who launched a consulting firm called
“Besides LPL being a leading provider for RIAs, it is arguably easier for Mariner to add LPL to their stable of custodian and broker-dealer options than move the assets to one of their existing solutions,” Wales said in an email. “I suspect it was only a matter of time before Mariner added LPL as a custodial option regardless.”
Since launching in 2006 with about $300 million in assets under advisement, Mariner has grown to $60 billion with 1,250 advisors and other employees. After receiving a minority stake investment last year from
Mariner’s potential pipeline for future deals extends to more than 50 other deals, with about 20 of them in active talks and another six to eight to come before the end of the year, Bicknell said. Deals seem to be on the smaller side this year compared to The Network, but the “great talent in those organizations” is “really what we're after” in any potential acquisitions, he said.
“It’s extremely fragmented,” Bicknell said of the industry. “It will take years, if not decades, for that to change.”
