LPL acquires $6.5B wealth management firm

LPL Financial announced plans to acquire Crown Capital Securities, a full-service broker-dealer and registered investment advisor with $6.5 billion of advisory and brokerage assets.

The terms of the deal, expected to close in early 2024, were not disclosed.

Crown Capital has grown to a team of approximately 260 advisors since its founding in 1999. "Since our inception, we have been focused on supporting our advisors so they have more time to develop customized and integrated investment and planning strategies and more time to spend with their clients, providing a best-in-class customer experience," said Darol Paulsen, the CEO of Crown Capital, in the release announcing the deal.

Based in Orange County, California, Crown advisors offer a range of "high-touch services," including investment management, estate planning, risk management, education planning, corporate benefits, full-service brokerage and alternative investments.

"Crown Capital advisors share a common mission to help their clients build their financial legacies," said LPL Managing Director Rich Steinmeier in the announcement. "LPL's industry-leading platform will enable them to streamline operations, enhance their service offering, and grow their client relationships. We are committed to supporting the Crown advisors so they can continue providing exceptional service to their clients, and look forward to welcoming them to LPL."

LPL is set to add $11 billion in client assets from earlier deals with BMO, which will onboard the Bank of the West's wealth management business to LPL's platform, and Commerce Bank. "Our recruiting in traditional markets continue to be a significant source of growth reaching a new first quarter high of approximately $9 billion in assets," said LPL President Dan Arnold in a Q1 earnings call. "Looking ahead, we expect to carry this recruiting momentum into Q2 for both our traditional markets and our new affiliation models."

The company's continued acquisition activity is notable in an industry that is seeing a short-term decline in M&A activity. While wealth management M&A activity hit a record high for the 10th straight year in 2022, with 341 total transactions, the quarterly number of deals has been on the decline since a high in the fourth quarter of 2021, according to a report from Echelon Partners.

The decline is "partially driven by macroeconomic uncertainty," according to the report. As the number of deals declines, buyers are also becoming more selective and bolstering their due diligence with potential acquisitions.

As of Q1 2023, LPL has amassed $1.2 trillion in total assets, with continued acquisitions and a 9% organic growth rate over the last 12 months. The company is set to announce Q2 earnings on July 27.