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What Happens When Your IBD Is Sold

News of big M&A deals is becoming more frequent these days. But that doesn’t make it any easier for the advisor whose firm was just sold.

When LPL announced their purchase of four National Planning Holdings firms, it wasn’t just another day at the office for advisors in the independent broker/dealer space. “I feel like I’m riding a wave of disruptive uncertainty,” one IBD advisor said to me. “Are we next?” 

The feeling of “disruptive uncertainty” is quite understandable. The notion that everything you built your life’s work upon may change at any time can be quite unsettling. No one checks in with you first to see if you want things to change; it just happens. And when it happens, you feel like you’ve lost all power and control over your business life.

Certainly for NPH folks, that feeling became a reality. Consider waking up one morning to find that you’re now a part of a much larger organization—going from around 3,500 advisors to 17,000 by LPL’s published accounts.

Of course, there will be changes to processes and culture; that’s just what happens when there is new ownership, despite promises to the contrary. But it’s not always bad news for some folks. Although disruptive at first, the ultimate result of a merger or acquisition can be a good thing for advisors and their clients. It may mean improvements in technology, platform and bench strength, as well as handsome retention deals for top advisors.

So it’s absolutely natural for one’s initial response to be a mix of excitement, deep concern, and, in some cases, outright panic.

M&A Is a Fact of Business Life

News of merger and acquisition deals in the wealth management world is nothing new. And with a landscape that’s changing almost daily, there will likely be more by the time this article publishes.

Whether you’ve been content with your firm or not, there’s no doubt that the announcement of a sale is unsettling. What we tell advisors who are confronted with this situation is this: Stop and take a deep breath and, most importantly, use this as an opportunity to get your power back. Consider these four items as your next steps:

  1. Define your goals and agenda. Without knowing what it is you are looking for, it’s impossible to weigh your options. Now is the time to dig deep and determine what it is that you really feel would be best for your clients and your business life.
  2. Start the process of fully vetting the acquiring firm’s offerings, platform and retention package. Hold the new firm to the same standards you would hold any prospective broker/dealer. Know your own goals and evaluate how they will best be served by a prospective suitor. 
  3. Get educated on the landscape. Things have changed a lot, even in the past year. There are a lot of high quality b/ds offering significant transition dollars, and, in many cases, superior client service, technology and support. Compare and contrast other b/ds against the acquiring b/d; it does no good to compare against your old firm because, in reality, it no longer exists. 
  4. Connect with trusted support. Talk with colleagues at other b/ds and at the acquiring firm to get references and perspective. Reach out to those who understand the industry landscape and waterfall of possibilities; they can often help you to objectify what can be a dizzying array of options. Contact an experienced third-party recruiter to help you identify the right opportunities.

Anytime a firm is sold, advisors owe it to themselves and their clients to make sure that where they will land is, in fact, the best choice. After your own due diligence, you may find that the acquiring b/d is actually the right one for you. Or you may find that better opportunities exist elsewhere.

Even if your b/d hasn’t been sold, getting educated to ensure you’re still in the right place to best serve your clients is key to thriving. Have that Plan B at the ready while the pressure is low and avoid scrambling should the time arise when you need to call upon it.

Ultimately, it’s your responsibility to be proactive in the role you play in your own future—whether your b/d has been sold or not. Start now on your way to ensuring you have power over your future—before the headlines say anything different.

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