LPL Financial is buying one of its largest outposts, in the latest display of the firm's rapidly growing dominance of the bank-based channel and its increased openness to new ideas.
The firm will pay $140 million plus asset-based earnout payments of an undisclosed amount over three years to acquire Financial Resources Group Investment Services early in 2023, both firms
LPL's latest one mimics its move to retain brokerage and custodial ties to another one of its massive outposts, or branches, when it agreed to
"I needed capital to acquire other OSJs," Financial Resources founder Bruce Miller said in an interview about the deal, noting that LPL's financing and consulting resources will fuel the seller's ability to complete more deals like a large one currently "at the last stages" of negotiations. "In this world, every year it gets more complex," he said. "The second part of it was succession planning."
Miller plans to retire at some point after more than 35 years in the industry. But it won't be right away as his firm "deepens" its relationship to LPL, to quote the way Financial Resources described the transaction in its
"We are excited to embark on this new phase of our relationship with our deeply respected, long-standing partner," Rich Steinmeier, LPL's divisional president of business development, said in a statement. "This acquisition strengthens our relationship with a strategically important client and provides a foundation on which to accelerate expansion of several strategic growth areas, particularly in the financial institution space."
Bank and credit union-based wealth management programs have emerged as a major expansion area for LPL over the past two years. The firm's overall headcount
After the substantial losses of
"They're very entrepreneurial," recruiter Samantha Sferas, the head of business development for the Terrana Group, said in an interview about LPL's approach. "I talk to a lot of different people at LPL. They'll sit down and first talk to you, not say they can or can't do it."
Representatives for LPL didn't immediately respond to a question of whether LPL had ever invested in one of its large branches in a similar type of deal. If Financial Resources marks the first time it has done so, then the firm is taking a page from competitors such as
Financial Resources Group's deal carries some twists of its own. The branch's largest outpost across the network of advisory practices, a $13 billion RIA called Gladstone Wealth Partners,
"We support them and provide back-office support for them," Financial Resources' Miller said of Gladstone. "They really attract a lot of high-end advisors."
Once the LPL deal closes next year, Financial Resources aims to continue growing its client assets by 20% each year. This year, the expansion of assets on its platform dipped below that rate to 17% due to slumping stock values. Technically speaking, the acquired firm will be a subsidiary of LPL that operates under the same contractual agreements in their current setup as separate companies. For the Financial Resources advisors, the transition will be a "non-event," Miller said.
"We do business in almost all states," he said. "We intend to use LPL's capital and resources to not just grow like we have been, but hopefully go beyond that."
