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LPL Buys $120B IBD, But How Many Reps Will Stay?

August 16, 2017

LPL Financial has bought the independent broker-dealer network National Planning Holdings from Jackson National Life Insurance Company, a subsidiary of the U.K. insurer Prudential, according to a press release from LPL.

LPL is paying $325 million for NPH as an initial payment and a contingent payment of up to $123 million, scheduled for the first half of next year, that will be tied to the size of NPH’s advice business LPL onboards onto its platform, according to the press release.

NPH, which serves as a holding company for the independent broker-dealers INVEST Financial Corporation, Investment Centers of America, Inc., National Planning Corporation and SII Investments, Inc., had around 3,200 advisors nationwide as of the end of June, overseeing 1.5 million client accounts that held approximately $120 billion, according to LPL.

At least 72% of NPH client assets must transition to LPL’s network for there to be any contingent payment at all, according to the press release.

LPL estimates onboarding costs of around $40 million to $60 million to cover extra staff to help with the transition, fees for account closing and transfers and tech improvements, the firm says.

“Given the similarities in LPL’s independent model to the NPH model, we believe LPL is the ideal acquirer to ensure continuity of the quality service and support for our clients and their financial advisors,” Scott Romine, president and CEO of NPH, says in the press release.

It’s unclear how many of NPH’s 3,200 reps will come over to LPL, according to ThinkAdvisor. LPL is likely to see defections in NPH’s independent advisor channel, made up of reps at SII Investments and the National Planning Corporation, Jon Henschen of the recruiting firm Henschen & Associates, tells the publication. Reps at those firms may have a hard time transitioning to LPL’s large corporate culture, he claims.

The transition process could also prove difficult, with many NPH advisors unable to retain client records on Pershing’s platform, an equity analyst tells the publication. Pershing provides clearing and custody services to three of NPH’s broker-dealers, according to ThinkAdvisor. Meanwhile, LPL was able to retain only around 50% of the advisors in its recent purchase of Financial Telelysis, Henschen tells the publication.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.