LPL Financial buys NPH, a broker-dealer network with 3,200 advisers

The deal, part of which is based on the advisers and revenue that eventually will move from NPH, could potentially cost LPL $448 million.

After weeks of speculation, LPL Financial said on Tuesday it had completed the purchase of National Planning Holdings Inc., an independent broker-dealer network with 3,200 advisers.

The deal is structured as an asset purchase with an initial price of $325 million. LPL will also make a contingent payment of up to $123 million in the first half of next year that depends on the level of advisers and revenue that eventually move to LPL, the company said in a statement.

No contingency payment would be due if less than 72% of NPH’s production is moved to LPL, according to the company.

The four broker-dealers that make up NPH have approximately 3,200 advisers and $120 billion of client assets. The 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.

LPL’s CEO Dan Arnold is scheduled to have a conference call at 8:00 Wednesday morning to discuss the deal.

“We are committed to being a leader in our core markets, so we are excited to announce our purchase of NPH which brings us together with one of the largest U.S. independent broker/dealer networks,” Mr. Arnold said in a statement. “This transaction adds to our scale, which we can leverage to provide LPL and NPH advisers with the capabilities they need, and the service they expect, at a compelling price.”

LPL will move NPH advisers and client assets onto its platform in two tranches and anticipates completing the move by the end of March. LPL is self-clearing while the NPH broker-dealers cleared trades mostly through Pershing. It will remain to be seen if some NPH advisers move to other broker-dealers that clear with Pershing rather than move to LPL.

NPH was owned by Jackson National, an insurance company. Insurers have been dumping their broker-dealers for the past decade due to the risk and high cost of business.