When Jamie Price took over as CEO of Advisor Group at the end of 2016, it had four broker-dealers with about 5,000 financial advisors and $160 billion in client assets. Advisor Group, which was acquired by private equity manager Reverence Capital in 2019, now consists of eight broker-dealers with more than 10,000 financial advisors and annual revenue of more than $4.2 billion.
Now Price has to squeeze that operation under one broker-dealer roof and brand. It's a daunting task. Advisor Group said this spring it will merge its eight affiliated broker-dealers under a single, yet-to-be named brand in a process that will take up to two years. Financial advisors will be free of the worry of repapering accounts, which means their clients won't be affected, Price said in a recent interview.
"This is the end of an era for some of these broker-dealers," said Jodie Papike, the president of Cross-Search, a recruiting firm. "Change is hard and this is a significant change. Advisors will have feelings about that and evaluate it."
InvestmentNews: Advisor Group in April announced its rebranding and consolidation of the eight broker-dealers. What’s the next thing to happen?
Jamie Price: We will be ready with the new brand name sometime in July, is my guess. It may be slightly sooner. And we’ll have more about the order in the next 30 days as well.
IN: How have financial advisors reacted?
JP: Our first top producer meeting was a couple of weeks ago with advisors from FSC Securities Corp., and I didn’t know what to expect. But the reaction was exceedingly positive. The fact is, now advisors work with the single broker-dealer entity and take advantage of the full scale of the firm. That means taking advantage of both the wider community and the ability to buy or sell the advisors’ practices across the wider firm.
IN: We reported that the name of the rebranded firm would be One Advisor Group. But that isn’t going to occur. What happened there?
JP: It’s interesting you focused on that. That’s been the internal working name of going to one brand. It was never intended as the actual brand name itself, although my wife did like 'One AG' as a brand. We want to start the next chapter of our company, and the wealth management industry is changing rapidly and we wanted to try to set a new course. The Advisor Group name was the past.
IN: What kind of cost savings do you expect from the consolidation?
JP: I wouldn’t put a figure to that yet, and we are walking through the efficiencies right now. But for example, we won’t have to audit nine firms anymore, so our third-party auditing costs will go down, naturally. There’s stuff like that, but it wasn’t the rationale. We’re already a shared services organization, meaning we already have just one chief financial officer, not nine.
IN: The company has said this process of creating one broker-dealer will take 18 to 24 months. Can we expect an initial public offering after that, say in the summer of 2025?
JP: At the board level, we haven’t had a conversation yet about an IPO or liquidity. We could probably do an IPO today, based on our size, but we’re a little distracted with the rebranding and One Advisor Group push. But we will ultimately have a liquidity event. There is no doubt about that.
IN: What’s the ebb and flow of recruiting financial advisors like as you go through this process?
JP: We’ve been beefing up our recruiting capabilities. We hired Kristen Kimmell from RBC Wealth Management about a year and a half ago to lead recruiting and business development. We’ve also changed over half the recruiters. We had a record year last year recruiting and up first quarter this year compared to last.
IN: Can you share some numbers there?
JP: We added almost $21 billion in recruited financial advisor assets last year, along with the two acquisitions, American Portfolios Financial Services and Infinex Financial Holdings. That's about $66 billion in assets. With normalized attrition, we are going to lose 3% to 4% of our revenue in a given year. I don’t believe any recent cases of advisors leaving had to do with the rebranding and One Advisor Group decision.
IN: A self-clearing broker-dealer, like LPL Financial, for example, creates another way for a firm to generate revenue. Your broker-dealers primarily use Pershing to clear. Is there any plan to have a self-clearing platform for the combined broker-dealers?
JP: There are two reasons to go self-clearing. One, as you noted, is economics, and the other is to control the entire ecosystem of the firm from the back. We review it every year, but we think in the future the economics of clearing are going to change, based on Reg BI and what the Securities and Exchange is looking at. So, economics in the future on self-clearing are a question mark.
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