NFP back to buying practices with purchase of Fusion

National Financial Partners Corp. once again has asserted itself in the high-profile game of acquiring financial advisory practices with last Thursday's announcement that it has purchased an affiliated firm, Fusion Advisor Network.

“We are definitely on the acquisition path, and have been for quite some time. This Fusion transaction is really a way for us to provide higher-quality services [to advisers],” said Jessica Bibliowicz, chairman and chief executive of National Financial Partners, adding that the firm has focused on both its corporate-client and adviser services groups.

“We know Fusion well. We've been their back office” since the firm's inception in 2003, Ms. Bibliowicz said.

National Financial Partners, through its independent broker-dealer and advisory organization, NFP Advisor Services Group, had been one of the most aggressive buyers of financial advisory practices before the 2008 financial crisis, which derailed that effort. Advisers typically sold a percentage of their practice to National Financial Partners in return for company stock, which traded at a high of above $54 a share in October 2007 before falling to a low of $1.21 just 13 months later.

Shares of National Financial Partners were trading at $13.82 following the announcement of the deal last week.

Although National Financial Partners recently has made a number of acquisitions in its other businesses, such as its corporate-client group, the purchase of Fusion, which has 240 representatives and advisers who produced $60 million in revenue last year, is a return to form, one analyst said.

DEAL COMEBACK

“This is the first big acquisition [of advisers by NFP] I can recall in the past couple of years,” said Mark Finkelstein, managing director and lead insurance analyst with Evercore Group LLC. “The acquisition strategy did slow for a period when they had challenges.”

Terms of the deal weren't immediately disclosed.

NFP Advisor Services Group already includes Fusion Advisor Network in its statistical profile of 1,776 affiliated reps and advisers and $369 million in total revenue, according to InvestmentNews' 2011 survey of independent broker-dealers.

The acquisition of Fusion, however, is expected to improve the broker-dealer's margins by 75 to 100 basis points, Ms. Bibliowicz said.

Another benefit to the transaction is that Fusion's founder, Stuart Silverman, will remain with the firm as chairman emeritus, she said.

Mr. Silverman said that Fusion will remain focused on services to advisers, such as consulting and practice management.

Since 2000, when National Financial Partners launched its effort to buy investment advisory businesses, many more groups have jumped in and expanded rapidly. They include large networks, such as independent broker-dealer LPL Financial LLC, and smaller firms that are owned by advisers and look more like boutiques, such as HighTower Advisors LLC.

“Twelve years ago, [National Financial Partners] was a little unique and out there to be focused on independent broker-dealers,” Ms. Bibliowicz said.

“All those competitors are actually a positive, because it helps the market understand there's a world [for advisers] beyond the employee model” of the wirehouses, she said.

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