After eight months of negotiations,
LPL Financial Services Inc. this morning finalized the details of its acquisition of the majority of the broker-dealers owned by Pacific Life Co. of Newport Beach, Calif.
The deal, the terms of which were not disclosed, involves 2,200 registered representatives and advisers who generate $350 million in revenue, clearly establishing Linsco/Private Ledger Corp. of San Diego and Boston as the dominant independent-contractor broker in the industry.
After the close of the deal, Linsco expects to have 9,900 registered representatives affiliated to the firm in a growing variety of channels.
The acquisition of the three Pacific Life Insurance Co. broker-dealers, Mutual Service Corp. - or MSC - of West Palm Beach, Fla., Associated Financial of Los Angeles and Waterstone Financial Group of Itasca, has been one of the most hotly contested issues recently in the independent-contractor brokerage industry.
Another Pacific Life broker-dealer, United Planners' Financial Services of America in Scottsdale, Ariz., was not included in the deal.
Many advisers with the Pacific Life broker-dealers, which operated under the collective umbrella called the Pacific Select Group LLC, have been wondering who would wind up owning their firms.
Ameriprise Financial Inc. of Minneapolis was until recently rumored to be the most serious suitor for the broker-dealers.
"We're thrilled," said Mark Casady, LPL's chairman, chief executive and president. "We've been talking to Pacific Life for years."
It's the second major acquisition LPL has made since August, when it acquired UVEST Financial Services Inc. of Charlotte.
The deal comes after many twists and turns.
In September, Pacific Life told its advisers it was not negotiating any deal with Linsco. "Good deals always get done," Mr. Casady said. "Maybe it took a little longer than we would have liked."
As part of the deal, Linsco is carving out the three broker-dealers and allowing them to continue using Pershing LLC as a clearing firm.
Linsco is self-clearing, and prior to the deal many in the industry believed that advisers switching to the Linsco platform from Pershing would have been a major sticking point in the deal.
Advisers were told of the deal at 8:30 this morning.
"It's no surprise," said one MSC adviser. "What's interesting is a separate network [of advisers] on a Pershing platform."
As a sweetener, Pacific Life also gives a bonus to advisers at the end of 12 months, with those details still needing to be worked out, Mr. Casady said.
The adviser said that a conference call with registered reps and Linsco management was scheduled for 2 p.m.today.
Mr. Casady also stressed that top management at the three broker-dealers would be kept in place. Those firms, however, have all seen CEOs exit over time since August, right around the time Linsco began its pursuit of the broker-dealers. John Dixon, the president of Pacific Select group, will remain on as chairman and CEO of that group of broker-dealers under the LPL umbrella.
In a conference call with advisers this afternoon, management from both sides of the deal stressed the benefits - and stability - of the deal.
"We're not planning on making any changes to MSC," said Mr. Casady. "It's business as usual for you. It's business as usual for the MSC staff."
John Dixon, president of the Pacific Select Group, thanked the advisers for their patience as news and speculation of the deal unfolded, adding that the broker-dealers would most likely need to build up management going forward.
And he was clearly optimistic about the future.
"MSC's going to take off again and grow like it did a few years back," Mr. Dixon told advisers.
