Stifel Financial Corp. continued its long-term move away from the independent broker-dealer industry when it said on Monday it had sold Stifel Independent Advisors, with close to 110 registered reps and $9 billion in client assets, to Equitable.
Terms of the deal were not disclosed, but the transaction is an indication of the continued appetite for investors and buyers of wealth management businesses.
LPL Financial Holdings, Cetera Financial Group, and Osaic for more than a decade have been the leading buyers of independent broker-dealers such as Stifel Independent Advisors - formerly Century Securities Associates.
But Equitable Advisors - formerly AXA Advisors - is looking to build right now, industry sources said.
“Equitable is working hard to grow and it uses LPL as its clearing platform,” said Larry Roth, managing partner, Ascentix Partners. “And LPL has a similar deal with Prudential, so the outsourcing business is clearly a target there right now.”
The transaction is similar to Stifel’s 2016 sale of Sterne Agee's independent brokerage business, which it bought a year earlier, to INTL FCStone Inc.
That sale affected about 600 independent reps and advisers. Stifel currently counts about 2,200 employee advisors under its roof.
“Stifel’s primary business is the W-2, employee-based advisors, and it’s a very healthy business and growing,” Roth said. “The independent advisor channel was not core. I wasn’t shocked to hear they exited the business.”
“This transaction reinforces Stifel’s unwavering commitment to our core employee-channel advisory business, while ensuring that our independent advisors continue to thrive with an excellent partner that shares our values,” said Ronald Kruszewski, chairman and CEO of Stifel Financial Corp., in a statement.
Independent registered reps or advisors generally keep a higher percentage of the annual revenue they generate, meaning they are often more expensive and less profitable to operate than employee broker-dealers.
In return, independent advisors pay for the costs of operating their own businesses, including rent and staff.
“We are committed to growth in the wealth management space and take a disciplined approach to acquisitions, focusing on opportunities that deliver long-term value and align with our culture,” said Nick Lane, president of Equitable, in the statement.
“Our acquisition of Stifel Independent Advisors does both, and this transaction complements our organic growth strategy to expand our Wealth Management business,” Lane said. “The acquisition further accelerates the growth strategy for Equitable Advisors, which includes approximately 4,500 financial professionals across the U.S. and more than $110 billion in assets under administration.”
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