With 10,000 financial advisors working under a variety of roofs, Advisor Group Inc., a leading network of independent broker-dealers, is looking to reshape its brand in coming months to show a more unified front, with multiple sources confirming that the moniker "One Advisor Group" will be the network's likely name sooner rather than later.
It's all part of the private equity-owned Advisor Group's steady push toward an eventual initial public offering, similar to the path that LPL Financial Holdings' private backers took when that broker-dealer had its IPO in 2010.
LPL's IPO occurred five years after two private equity managers, Hellman & Friedman and Texas Pacific Group, bought a majority stake in the firm from its founder Todd Robinson. And it's been four years since private equity manager Reverence Capital Partners agreed to acquire 75% of Advisor Group from Lightyear Capital, PSP Investments and other investors.
A rule of thumb for private investors like Reverence Capital Partners is that they have five to seven years to monetize, meaning sell, the companies they own and pay their investors. Since the credit crisis, private equity investors have been chasing and buying both registered investment advisors and broker-dealers, seeking the cash flow those types of businesses create from charging clients annual fees on their assets.
The rebranding of Advisor Group to One Advisor Group is a big first step in that direction. The other is whether the firm's eight broker-dealers will be merged into one operating firm to realize cost savings.
"Management is bandying the title around at conferences, and 'One Advisor Group' is a euphemism for all the broker-dealers coming together," one well-placed Advisor Group source said. "But there's still lots of work ahead to merge into one broker-dealer. Management has to get its profitability in line first and create cost savings before merging the B-Ds."
There are plenty of broker-dealers to merge.
Advisor Group is a sprawling network of broker-dealers: It acquired American Portfolios Financial Services Inc. and Infinex Investments Inc. last year. The other six firms are: FSC Securities Corp., Royal Alliance Associates Inc., SagePoint Financial Inc., Securities America Inc., Triad Advisors and Woodbury Financial Services Inc. The firm has large operational hubs in Omaha, Nebraska, the home of Securities America, and Phoenix, where SagePoint is based.
Advisor Group is even beginning to position itself on Wall Street as if it's a publicly traded company. "I would consider our main competitors in the marketplace to be [LPL Financial Holdings, Ameriprise Financial Inc. and Raymond James Financial Inc.] in the independent space," Advisor Group CEO Jamie Price said in a meeting in March with the investment bank Jefferies, according to a transcript.
LPL, Ameriprise and Raymond James are all publicly traded wealth management behemoths. Can Advisor Group play in the same league?
An official comment from Advisor Group about rebranding and consolidating its broker-dealers was appropriately vague, akin to a beige painting hanging in the Louvre.
“While nothing has been finalized, we’ve made no secret of exploring this opportunity," said Jen Roche, executive vice president of marketing and communication at Advisor Group. "As we noted publicly during our ConnectEd Conference last year and recently discussed with our network of advisors, we are considering options to drive greater efficiency and leverage scale to enhance the experience and growth of affiliated financial professionals."
"We will move in this direction only when we are certain this would be purely beneficial to our advisors and would not be a repapering event," Roche added.
No doubt Advisor Group is playing its hand close here. It's not clear to what extent a rebranding of the brokerage network will affect its websites, signage or any client-facing message. Financial advisors, like the rest of us, tend to dislike any kind of changes, particularly if they disrupt the ease of day-to-day life or business.
Recruiters are making the most of these changes and taking this opportunity to call these 10,000 financial advisors and spew all sorts of rumors about the pending difficulties Advisor Group faces. Some of the tales recruiters are telling are as believable as the latest Elvis sighting at the Memphis airport.
But change is coming to Advisor Group. How will the 10,000 financial advisors react?
Relationships are key to our business but advisors are often slow to engage in specific activities designed to foster them.
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