A regional bank's major wealth management program left LPL Financial for rival Ameriprise's Financial Institutions unit.
The wealth program at Canyon, Texas-based Happy State Bank, a division of Centennial Bank with five dozen branches, switched from LPL to Ameriprise, the same brokerage and registered investment advisory firm used by Centennial,
"Happy State Bank was not fully staffed, they did not have enough advisors in their program to cover their footprint in Texas," Jay McAnelly, the group vice president of Ameriprise Financial Institutions, said in an interview. "In over half the markets, they did not have advisors with their previous firm … They were excited to start recruiting and hiring in these markets."
How M&A affects brokerage ties
The transition of Happy State's wealth program shows how
Representatives for LPL declined to comment on the move by Happy State while citing a policy against discussing team departures.
LPL has reaped the benefits from giant acquisitions by the parent companies of its existing client banks. It said recently that 85 financial advisors with $7.8 billion in client assets from Bank of the West will
The crisis that began in March with the collapses of Silicon Valley Bank and Signature Bank "does reinforce our value proposition for enterprises and, in particular banks, that that type of disruption may be a catalyst for exploring different strategic options or alternatives for different business lines, as an example, wealth management," LPL CEO Dan Arnold said
Consolidation was driving change among banks and brokerages long before the bank failures and
"Some may like it, some may not," he said of advisors' reactions to deals that switch their brokerages. "Whenever there's change, there are always people who benefit and there are always people who feel they've been affected in an adverse way, so it can cut both ways."
Regulations
Bank regulators do not allow one institution to use more than one brokerage at once, so the purchaser's brokerage "usually" wins out in the wake of a deal, according to Eric Armstrong of
"We are going to see more of this in the next three to four years, and all the major [broker-dealers] that support community banks and credit unions are scrambling to figure out how they can position themselves to not lose a program due to merger," Armstrong said in an email.
"It's a complicated issue, especially the way most banks and [credit unions] handle the wealth management piece," he added. "There is little to no thought from the executive leadership about how to handle wealth management during a merger. The bank that is purchasing controls the narrative, naturally."
Happy State's 60 branches across the Texas Panhandle, the state's South Plains region, Central Texas and the Dallas-Fort Worth area
"Our merger with Centennial Bank expands our offering and we are thrilled that the premium wealth management support they receive from Ameriprise will extend to our clients," Happy State President Mikel Williamson said in a statement. "Helping individuals, families and businesses meet their financial needs has long been our focus, and the added strength of Ameriprise positions us to help even more people meet their financial goals and provide them excellent service in the process."
It's not clear how many advisors and client assets Happy State's program brought to Ameriprise in the wake of the deal, and McAnelly said the information was not immediately available. The program formally migrated to Ameriprise late last year, according to McAnelly. Happy State's new parent, Centennial, came to Ameriprise in 2017 under the firm's first foray into the bank channel with
Brokerages like Ameriprise are expanding their business with banks and credit unions as the institutions seek better technology and scale and face stricter regulatory scrutiny outside their traditional loans and deposits. Earlier this week, Atria Wealth Solutions subsidiary CUSO Financial Services said that it had added
Wealth management programs
Other institutions have stayed away from wealth entirely. Just 21% of credit unions and 25% of banks provide wealth management services, according to the latest
Most of the larger institutions maintain wealth programs, but "the numbers really drop" among smaller, more remote banks and credit unions that have less than $250 million in deposit assets, McAnelly said. That vacuum represents "an area of opportunity for the consumers and clients of those institutions," he said.
"They need this service. The challenge you have is, you've got to find a financial advisor in these markets," McAnelly said. "If you have a $240 million institution and a really good management team and a vision of growth, we would partner with them and help them staff and build their program."
