Ameriprise Financial is set to acquire Tampa-based JHS Capital in a deal that will add 150 advisors and $4.1 billion in client assets to the Minneapolis-based firm's balance sheet.
Ameriprise said Tuesday it signed a definitive agreement to acquire the retail assets of JHS. Details regarding the cost of the deal were not disclosed.
“This is a natural fit in terms of both firms’ shared commitment and dedication to providing outstanding service to clients. We look forward to helping JHS advisors grow and serve their clients under the Ameriprise banner,” Neal Maglaque, Ameriprise chief operating officer and head of business development within the company’s advice and wealth management division, said in a statement.
JHS, which started off as Pointe Capital until John Sykes acquired the firm in 2009, operates both employee and independent advisor channels, similar to Ameriprise. The firm’s 150 advisors operating across the U.S. are expected to join one of the existing channels at Ameriprise, which has about 10,000 financial advisors and $815 billion in assets under management.
“This is a tremendous opportunity for our advisors to be affiliated with the stature, stability and national recognition of Ameriprise,” said Scott Bendert, JHS President and CEO. “JHS was founded on the principle of providing excellent service to clients. Ameriprise offers our advisors considerable career growth opportunities and expanded capabilities to enhance the client experience.”
The transaction, which is subject to customary conditions and regulatory review, is expected to close in the third quarter of 2015. The deal is Ameriprise Financial's first acquisition of an advisory firm since August 2008, when it bought H&R Block Financial Advisors for $315 million.
While JHS generated over $38 million in revenue in 2014 and grown quickly in recent years, the firm has also suffered several regulatory setbacks over fees and improper supervision. For example, FINRA censured and fined the firm $22,500 in June 2013, claiming the trade desk supervisor failed to adequately review the consistency and completeness of the firm’s reporting. Prior to that, a former JHS broker, Enver Rahman Alijaj, was accused of churning his clients' accounts for commissions and was later ordered to pay over $1 million in fines.
Discussions with JHS have been ongoing for some time, said Kathleen McClung, Ameriprise's senior director of public relations. “We’ve done extensive due diligence on our part to make sure [JHS Capital] is a good fit.”
With Skyes previously linked to the infamous GunnAllen Financial—which was plagued by a number of regulatory scandals before closing in 2010—it's easy to assume JHS Capital could be just as problematic. But that’s not the case, says Jonathan Henschen, president of recruiting firm Henschen & Associates. “If you look at the quality of the reps, it’s surprisingly good,” he said, adding that very few of JHS’ advisors have more than two disclosure events.
Even though JHS may be cleaner than expected, advisor retention could prove tricky. Henschen called the deal a “potential mismatch” because JHS reps primarily operate a stock and bond business, compared to Ameriprise advisors who focus on a financial planning mix. “If that’s where they want to focus and grow their business, that’s fine, if not, they’ll walk,” he said of the JHS advisors. He added the Tampa-based firm’s advisors had no idea a possible sale to Ameriprise was on the horizon.
“We’re doing everything we can to make this as smooth of a transition as possible for advisors,” McClung said.