National Planning Holdings CEO to advisers: No comment on LPL takeover talk

CEO Scott E. Romine sent an email regarding the rumors to the 3,500 reps and advisers affiliated with the network's broker-dealers

Aug 9, 2017 @ 5:13 pm

By Bruce Kelly

With speculation swirling about an imminent sale of the four National Planning Holdings Inc. broker-dealers, the network's CEO, Scott E. Romine, last week took the extraordinary step to send an email to the 3,500 reps and advisers affiliated with the broker-dealers to say he would not comment about such rumors.

On July 30, Financial Advisor magazine on its website published an article titled "LPL Seen As Front-Runner To Buy National Planning Holdings' B-D Network" and cited "sources in the insurance industry" for attribution. NPH is owned by insurer Jackson National Life Insurance Co.

The next day, Mr. Romine gave his no comment about a sale to LPL Financial. "I wanted to take a moment to address that and say firmly as a matter of practice and prudent management of our business, NPH does not comment on rumors and speculation," according to the email. "Our focus remains on our clients and advisers as well as continuing to leverage our network strengths and capabilities for your continued success."

The four NPH firms are National Planning Corp., Invest Financial Corp., Investment Centers of America Inc. and SII Investments Inc. Combined in 2016 they generated $909 million in revenues, according to InvestmentNews data.

Industry executives have been chattering for at least a month about the blockbuster deal. If it were to come to pass, LPL, which has a new CEO in Dan Arnold, could potentially grow to more than 17,000 advisers, an increase of 21.5% over its current size.

Last week, Bill Morrissey, an LPL managing director and divisional president of business development, was asked by an InvestmentNews reporter about such a deal at the firm's annual meeting for its advisers in Boston, called Focus. Mr. Morrissey said that he declined to comment on speculation.

Melissa Hernandez, a spokeswoman for NPH, did not return a call Wednesday afternoon to comment.

One potential sticking point for a deal to be completed is clearing services for advisers, industry sources said. Three NPH broker-dealers clear trades with Pershing and one with Fidelity, while LPL Financial is self-clearing. That means NPH advisers' businesses would be under pressure during a change in clearing platforms.

An announcement could be made sooner rather than later, sources said. National Planning Corp. has its annual conference for advisers in about two weeks and the clock is ticking. "If I was a betting man, I would expect an announcement before the conference," said on National Planning Corp. adviser, who asked not to be named.

Insurance companies, which 20 years ago gobbled up IBDs to distribute products like variable annuities, have been selling off broker-dealers since the credit crisis to reduce risk and focus on core insurance businesses. Broker-dealer operations have become much more expensive recently, particularly in the wake of the Department of Labor's new fiduciary duty rule, giving insurance companies another set of reasons to cut ties with firms.

Earlier this week, Kestra Financial Inc. said Tuesday it had acquired a 600 rep and adviser firm owned by insurance company H. Beck Inc.

Jon Henschen, an industry recruiter, said NPH had recently cut back on recruiting efforts, an indication that the firm could be for sale. "If you're a broker-dealer that's coasting, you're probably looking for a buyer," he said.

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