Florida B-D, RIA owner pitches bold long-term plan to sell to advisors

Seven-years after breaking from LPL Financial and starting his own broker-dealer and registered investment advisor, industry veteran Bill Hamm is now pitching his firm’s financial advisors a plan to sell the firm in a decade to private equity interests.

The good news for advisors? They can earn up to 40% of IFP's sale price, if and when a transaction occurs, at no cost to themselves. 

Hamm owned and controlled a large LPL office in Tampa, Fla., that split from the independent broker-dealer behemoth in 2019.

He started his own broker-dealer and RIA, IFP Securities and IFP Advisors, respectively, and now works with 279 financial professionals and $19.45 billion in assets under administration, according to the company’s website.

Now, he is presenting his advisors with an opportunity to earn a share in the firm with the goal of selling to a private equity investor in ten-years’ time.  

Private equity and institutional investors for the past decade have been buying wealth management firms, particularly RIAs, at a furious pace. Owners are aging and looking to sell and private investors are also attracted to the strong cash flow streams RIAs kick off annually.

IFP's structure for a potential sale appears finncial advisor friendly: advisors earning into a bonus pool with no cost to themselves, and the more the advisors use the firm's services the bigger the potential reqard. If IFP sells for $1 billion, that means as much as $400 million would be set aside for advisors. And any transaction would be designed to keep the firm stable. 

“Consolidation is accelerating,” Hamm wrote in a recent but undated letter to advisors and staff at IFP. “Private equity and institutional capital continue to flow into the space. Valuation multiples climb higher with each successive transaction. Firms grow larger through acquisition strategies designed to manufacture scale and justify rising enterprise values.”

“We have committed to allocating 40% of the proceeds from any future transaction to the advisors who helped create that value,” he wrote in the letter, which was titled “The Way Things Ought to Be. Our philosophy is straightforward: we are in this together.”

Hamm, the founder and CEO of IFP, did not return calls to comment. He is known for his candor and flamboyance in an industry where executives are typically tightly wound; he sent a bobblehead of himself last year to advisors during the holidays.

In a presentation of IFP’s “value participation program,” the firm states the plan is “designed to reward advisors who remain with IFP through the planned transaction period while driving sustained profitability and growth. It aligns advisor incentives with IFP’s long-term enterprise value and transaction outcomes.”

The presentation, however, does not include a potential price tag for IFP, and the time horizon for any transaction would be by 2036.

Key assumptions in a sale of IFP include an advisor’s organic growth rate of 7.5% and a 1% fee charged to clients using IFP’s inhouse asset management program, according to the presentation.

Clarification: This story has been updated to clarify the IFP transaction plan: financial advisors earn a piece of the firm's sale over time. They do not buy it.