Is LPL gearing up for another major acquisition?

After recently announcing the potential sale of up to $4 billion in stock or debt, LPL Financial Holdings Inc. could be rearranging the deck chairs to make room for another deal to acquire financial advisors.

And it could be a big one, said one industry executive. 

“It looks like LPL is getting ready for a large buy,” said the executive, who spoke privately to InvestmentNews about the matter. “It’s moving people around to different departments internally.”

“That wouldn’t happen unless the company needed people to focus on the retention of advisors after a deal is done and advisors move over,” the executive said.

The two biggest targets left in the independent broker-dealer industry are Osaic, with 11,000 financial advisors and $700 billion in client assets, and Cetera Financial Group, with 9,000 financial advisors and $449 billion in client assets.

Both giant financial advisor networks are owned by private equity managers, who the financial advice market regards as always ready and willing to make a deal.  

Reverence Capital Partners in 2019 agreed to acquire 75% of Osaic – then called Advisor Group - from Lightyear Capital, PSP Investments and other investors. Genstar Capital bought Cetera in 2018.

LPL Financial, of course, has been in the acquisitions market for 20 years, ever since the firm’s owner and founder Todd Robinson sold a majority of the company to two private equity managers.

LPL had its initial public offering five years later, listing at $30 per share.

The IPO has been enormously successful. LPL shares – with the ticker LPLA - hit an all-time high last month of $384.04 per share before falling in the recent broad market sell off to $332.09 in trading Wednesday afternoon. 

A spokesperson for LPL did not return calls Wednesday to comment. In a March 3 filing with the Securities and Exchange Commission, LPL said it was using the potential net proceeds of a $4 billion sale of securities "for general corporate purposes, which may include working capital, capital expenditures, possible acquisitions and repayment of debt." 

Other industry executives noted the filing, known as a "shelf" filing, was standard and common business practice.  

"The rumors and speculation about LPL buying Osaic are false and unfounded," wrote Osaic CEO Jamie Price in an email. 

Some notable purchases of broker-dealers and networks by LPL include the 2017 acquisition of the Jackson National Holdings broker-dealers, the 2020 pick up of Waddell & Reed’s wealth management and financial advice business, and last year’s deal to acquire Atria Wealth Solutions. All transactions involved moving hundreds or thousands of financial advisors to LPL.

Other industry executives noted that LPL might shy away from a purchase of Osaic because it has successfully recruited from there recently.

And LPL’s CEO, Rich Steinmeier, might use a portion of the $4 billion to target wirehouse financial advisors, who typically generate the most revenue per year of advisors working today. LPL Financial traditionally has focused on working with independent contractor advisors. 

Steinmeier is a veteran of both UBS and Merrill Lynch.

Meanwhile, another senior industry executive noted that LPL could be currently focused on bringing aboard its brokerage and advisory platform another large group of financial advisors who remain working at another firm.

That would be similar to LPL landing the wealth management business of Prudential Financial Inc.; in 2023, Prudential said it was moving the retail brokerage and investment advisory assets of 2,600 financial advisors from Prudential Advisors’ then custodian, Fidelity's National Financial Services, to LPL Financial.

“LPL is clearly engaged with insurance companies, banks and credit unions, talking to them about running their wealth management businesses,” said the executive, who spoke confidentially about the matter to InvestmentNews. “LPL’s salespeople are all over the place.”