LPL acquiring retirement plan broker-dealer

Financial Telesis brings 470 reps and an RIA to a new advisory arm of the giant B-D

Jul 7, 2014 @ 2:47 pm

By Bruce Kelly

LPL Financial is back in the acquisition business.

Last Monday, LPL announced an agreement to buy the assets of independent broker-dealer Financial Telesis Inc., which focuses on retirement planning and wealth management. LPL has an exclusive right to recruit the firm’s 470 registered representatives.

LPL did not release the terms and conditions of the transaction.

With 13,600 independent reps and advisers, LPL dominated independent broker-dealer mergers and acquisitions from 2005 to 2010, when it had its initial public offering. Since the IPO, it had been out of the broker-dealer chase.

Last week, LPL picked up where it left off four years ago, when it bought certain assets of National Retirement Partners, or NRP, and began building out its retirement plan business. LPL now has 5,500 retirement plan advisers with $99 billion in assets.

Financial Telesis will become part of Global Retirement Partners, a new company within LPL. It is also selling its registered investment adviser to Global Retirement Partners. It will be led by retirement plan broker-dealer veteran Bill Chetney, who sold NRP to LPL.

While LPL has been on the sidelines, RCS Capital Corp. and its executive chairman, Nicholas Schorsch, announced five deals to buy broker-dealers with 9,000 affiliated reps and advisers.

LPL chief executive Mark Casady said in an analyst conference call last October that the time was not yet ripe for LPL to make a broker-dealer acquisition.

“We have not seen properties that make sense to us strategically or we think are priced in the right zone,” Mr. Casady said, according to a transcript of the call. “But we’ll continue to explore whether those are possible for us.”

The deal to pick up Financial Telesis reps appears part of LPL’s broader strategy to focus on retirement-plan advisers, said industry consultant Dave DeVoe.

“The headline is that the broker-dealer space will continue to consolidate,” Mr. DeVoe said. “Margins are so thin that deep-pocketed firms like LPL will move when there is an economic and strategic fit.”


“This new agreement is another significant step forward for us in the retirement planning space,” William Morrissey, managing director of LPL’s Independent Advisor Services, said in an interview last Monday.

In an e-mail to its reps, Financial Telesis president and owner James Williams said that “an increasing technology gap” and a “former strategic partner turning into an aggressive competitor” led him to sell.

“It felt like (Financial Telesis) was on an island with limited opportunities to stay competitive,” Mr. Williams wrote in the e-mail.

A midsize B-D, Financial Telesis had total revenue of $85.6 million and net income of $1.75 million last year, according to a filing with the Securities and Exchange Commission. Like many independent B-Ds, its net profit margins were in the low single digits (2.1%).

In an interview last Monday, Mr. Williams confirmed that competition from NFP Advisor Services Group, had forced his hand to sell. Financial Telesis uses software created by Retirement Plan Advisory Group, or RPAG, a subsidiary of National Financial Partners, which also owns NFP Advisor Services Group.

National Financial Partners had no comment.

Financial Telesis will operate as a large branch office, which will be managed by Mr. Williams.

The firm is based in San Rafael, Calif. In the e-mail, he said that the transfer of client accounts and rep licenses will begin the first week of August.


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