6 ways that independent wealth management firms are consolidating

6 ways that independent wealth managers are consolidating the industry

December 15, 2022 3:58 PM

The largest independent wealth management firms are tweaking their financial advisor fees, consolidating brokerages and real estate, and refining their platforms to close out the year.

In a half dozen announcements from Advisor Group, Ameriprise, Cetera Financial Group, Commonwealth Financial Network, LPL Financial and Raymond James from recent weeks, the firms displayed the latest phase of the industry's primary trends over the past decade of record M&A transactions and growing advisory accounts. The industry is "still incredibly fragmented," however, and brokerages are starting to compete with registered investment advisor consolidators by investing in financial advisors' practices as well, consultant Jeff Nash of Bridgemark Strategies said in an interview. That means the consolidation is here to stay.

"2023 is going to be a tightening of belts, and so that's the tightening of business models," Nash said. "I still believe we're in the second or third inning of a nine-inning game."

Wealth management

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To see a roundup of industry announcements regarding fees, corporate footprints, recruiting and asset management, scroll down the slideshow below. For a look at 23 people who will make an impact on wealth management in 2023, click here.

Advisor Group changes fees at Securities America, Triad Advisors

Teams affiliated with the brokerages Advisor Group acquired in 2020 will pay the same fees next year as the brokers from the companies it owned prior to the deal. The independent wealth management network is bundling together costs such as affiliation, regulatory and subscription fees for advisors with Securities America and Triad Advisors just like those paid by the teams at the four other brokerages Advisor Group owned prior to the acquisition two years ago. Advisor Group later merged three other brokerages coming into the fold under that deal — Investacorp, KMS Financial Services and Securities Service Network — into Securities America.

In an interview, Advisor Group Senior Vice President of Platform Management and Product Development Shannon Larson declined to provide the specific amount of each fee. She described the tweaks to pricing as a "simplification and streamlining" that Advisor Group announced to the teams at Securities America and Triad in early December.

"They're not viewing this as a massive change because we've been doing this for the past two years," Larson said.

The changes don't apply to advisors with Infinex Financial Group and American Portfolios Financial Services, the two midsize firms that Advisor Group acquired this year. Industry outlet WealthManagement.com first reported the adjustments to advisor fees.

Ameriprise cuts real estate footprint at corporate headquarters

Ameriprise is reducing the size of its corporate headquarters in Minneapolis by 50% over the next three years but not laying off any of the 4,600 employees.

The wealth management firm's parent is moving out of the 29-floor skyscraper it has called home since 2000 to its client service center a couple of blocks away and renaming the facility the Ameriprise Financial Center Headquarters, according to a report in the Minneapolis Star Tribune. With no impact to jobs or advisor support, Ameriprise is building out skyway access, a renovated cafeteria, a coffee shop, a fitness center, a health clinic, an event space and an outdoor garden. The company's lease on its current headquarters expires in 2025, but it owns the building housing the service center, Ameriprise spokeswoman Kathleen McClung said.

"We are pleased to bring all of our Minneapolis employees into one contemporary building and energizing environment as we work together to deliver an excellent experience for our clients," she said in an email statement. "While still in the early stages, this begins an exciting new chapter in our longstanding presence in Minneapolis."

Cetera quietly closes First Allied brokerage

Unlike previous shutdowns of other brokerages within independent wealth management network Cetera Financial Group, the firm didn't publicly announce it would close First Allied Securities.

Instead, First Allied quietly ceased doing business in late September after 29 years, according to FINRA BrokerCheck records. The roughly 400 advisors have moved to Cetera Advisors, where they have become a "region" or major branch, industry news outlet ThinkAdvisor reported earlier this month. Two prior shuttered brokerages within Cetera, Summit Brokerage Services and Girard Securities, took similar respective steps in the past five years, although they both joined Cetera Advisor Networks at the time. Cetera's network once spanned as many as 11 different brokerages. Besides Cetera Advisors and Cetera Advisor Networks, its other remaining brokerages are Cetera Financial Institutions and Cetera Financial Specialists.

The move into Cetera Advisors will give the First Allied advisors "an enhanced tech stack and our unified workstation, AdviceWorks," as well as easier access to succession planning services, spokesman Ryan Hoffman said in an emailed statement.

"Cetera is an at-scale wealth hub, with an eye to innovation and growth," Hoffman said. "Realizing this vision entails making things seamless for our financial professionals. As such, First Allied is no longer a separate legal entity, but be assured, its brand is alive, well and flourishing, and we've proven this strategy works with other communities such as Summit. These rich and thriving groups have their own culture, unique products, programs, events and growth teams and underscore how we, uniquely, make big feel small and personalized."

Commonwealth slashes platform fees

Under a push to reach $1 trillion in client assets, Commonwealth Financial Network is cutting the platform fee paid by financial advisors by roughly 60% next year.

The independent wealth management firm will reduce the number of tiers in a fee structure ranging from 1 basis point to 5 basis points, in a shift from the previous levels between 1 and 12 bps, Wealthmanagement.com reported last month. The price reduction "shares more with our advisors, enabling them to invest more in their businesses and perpetuate our growth together, positioning them to continue to best serve their clients' needs," Commonwealth President Trap Kloman said in a statement, noting that the tweaks will also combine wrap expenses, confirmation costs and individual retirement account fees into a single cost.

"As programs scale, we have a history of sharing back economics," Kloman added. "This announcement reflects the success of the program, both in providing choice and in growth and listening to our advisors on what is valuable to them."

LPL adds ex-J.P. Morgan manager to lead model portfolios

As it seeks to bring more client assets onto its corporate platforms, LPL Financial tapped a former J.P. Morgan Asset Management fund manager to lead its model portfolios.

The company appointed Garrett Fish as its first-ever head of model portfolio management, which will put the nearly 20-year industry veteran on LPL's investment research team and its Strategic & Tactical Asset Allocation Committee, the firm said on Dec. 14. LPL has been ramping up its model portfolios in the past several years as wealth management firms use customizable technology to try to draw more advisory assets into corporate programs from those held with outside fund companies or custodians. After the third quarter, the firm had $83 billion in "centrally managed assets," which is 15% of the advisory holdings across LPL.

"Garrett's extensive active portfolio management experience, including his international purview, will deepen our investment model management capabilities for the benefit of LPL advisors and their clients," Chief Investment Officer Marc Zabicki said in a statement. "As he joins LPL's seasoned team of research professionals, his background and experience will also be brought to bear across our entire organization as we work collectively to provide the expertise, rigorous analysis and valued insights on which advisors and their clients can rely."

Representatives for J.P. Morgan Chase didn't immediately respond to a request for comment on Fish's departure.

Ex-Stifel advisor goes to independent channel of Raymond James

After 17 years with Stifel and nearly three decades in the industry, financial advisor Howard Kaplan has become an independent broker with Raymond James Financial Services.

Kaplan joined Cincinnati and Dayton, Ohio-based Riegel Financial's branch after leaving Stifel, where he managed about $200 million in client assets, Raymond James said on Dec. 13. Prior to his time with Stifel, Kaplan had tenures with McDonald Investments, Fifth Third Securities and Merit Financial, according to FINRA BrokerCheck. Raymond James added nearly 200 advisors year over year to reach 8,681 in the third quarter across its independent and employee channels.

"By aligning services with Riegel Financial, and thereby, Raymond James, I will be able to expand the amenities, capabilities and support I offer to clients to help ensure they and their families are even more comfortable along the journey of achieving their financial ambitions," Kaplan said in a statement.

Representatives for Stifel declined to comment on Kaplan's departure.