Lunch with an IBD Leader

I was honored to sit down for lunch today with SagePoint Financial’s Jeff Auld, president and CEO of the independent broker/dealer that has been on the acquisition trail lately. In fact, the firm just recently sealed the deal to purchase Spectrum Capital, an Omaha, Neb.-based b/d with about 25 advisors. The deal hit the news late last week. Over lunch, Auld seemed very pleased with the deal. He said that while there’s been some confusion around whether Spectrum had exposure to some of the problematic investments hitting IBDs, including fellow Omaha firms QA3 Financial and Securities America, Spectrum had no exposure and is not a distressed firm.

AIG/SunAmerica’s Advisor Group, parent to SagePoint, has also been on the hunt for b/d acquisitions. Advisor Group president and CEO Larry Roth told me that many of the smaller and mid-size firms are struggling with the current environment, and this provides an opportunity for larger players to buy these firms and consolidate. Auld echoed Roth’s sentiments and expects continued consolidation to occur. Advisor Group has about 4,800 advisors, about 1,545 of which are at SagePoint, as of December 2010.

You can read Auld’s blog here. In his search for firms, Auld said he’s looking even more closely now at b/ds’ exposure to the problematic investments and their liabilities, to make sure they don’t have any problems that could creep up later on. Smart guy. I wrote about a firm last week that purchased a troubled b/d. To get around the liabilities, the parent company bought a new firm with a clean record, and closed the problematic one as a way to start fresh. I’ve never heard of such a scenario.

But SagePoint and Advisor Group are not just on the hunt for broker/dealers, but for advisors as well. In his May 13 blog post introducing the firm’s new ad campaign, Auld had this to say about recruiting in 2011:

Recruiting at SagePoint has been strong in 2011. We have more advisors committed to joining SagePoint already this year than we recruited in all of 2010. With this increased recruiting activity we are also ramping up our advertising. During the next few months, you will see an increase in our advertising in financial advisor trade publications, especially online.

As he recruits, Auld tells advisors that what differentiates SagePoint is that it has a large parent company with a lot of capital behind it and it's a firm where you wouldn't have to worry about problems coming out the woodworks. In other words, you wouldn't be jumping from the frying pan to the fire.

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