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Advisor Group’s second acquisition of the year carries the potential to make it bigger than any other independent broker-dealer network, while pushing its largest subsidiary into the top 10 firms in the space.
Some major questions loom over the success of the deal, though.
The private equity-backed network unveiled its plans on June 21 to buy Signator Investors from the insurance giant John Hancock and fold it into the largest Advisor Group subsidiary IBD, Royal Alliance Associates. Neither party disclosed the terms of the deal, which is a full stock-purchase agreement expected to close in the fourth quarter.
“We’ve spent a great deal of time building our company internally,” Advisor Group CEO Jamie Price says. “Acquisitions come along when they come along, and we pass on more than we, quite frankly, accept. They saw us as a really good fit for their business.”
Signator's business, as well as that of Advisor Group and its subsidiary IBD, has changed a great deal over the last few years. Less than three years ago, AIG still owned Advisor Group and John Hancock was merging another IBD into Signator.
Advisor Group, which is based in Phoenix and is now owned by Lightyear Capital and Canadian pension manager PSP Investments, faces the challenge of retaining Signator’s 2,000 advisors. Another Advisor Group IBD, Woodbury Financial Services, just absorbed 51 new advisors from Capital One Investing earlier this year.
The Advisor Group-Signator deal comes amid record M&A activity in recent years, which shows no sign of letting up, according to Alois Pirker, the research director of Aite Group’s wealth management practice. Private equity firms have served as “the fuel and the fire to get consolidation done” in both the RIA and IBD spaces, he says.
Whereas banks once served as the most frequent acquirers of the large wealth management firms (those with $1 billion or more in assets under management), private equity firms now lead that charge.
PE firms accounted for $217 billion, or 42% of the AUM moved in those acquisitions over the last two years, according to Echelon Partner’s annual M&A report for 2017. (In contrast, banks accounted for only 7% of those deals.)
Meanwhile, new technology and new regulation — from the now-vacated fiduciary rule to the SEC Regulation...