After 108 years in the business, Conshohocken, Pa.-based investment bank Boenning & Scattergood has decided to sell its private client group, which includes about 40 advisors and $5 billion in brokerage and advisory assets, to LPL Financial. The deal, expected to close in early 2023, is structured as an asset purchase.
Boenning & Scattergood, which will retain its branding and leadership team, is joining LPL’s employee model, Linsco by LPL, which was originally seeded by LPL’s acquisition of Allen & Company in 2019.
“LPL’s commitment to investing in our superior wealth management platform will help us to further our capabilities to enrich and grow our support for clients,” said Harold Scattergood Jr., chairman and CEO of Boenning & Scattergood, in a statement. “We are proud to continue building Boenning & Scattergood in a relevant and sustainable way, as we retain our culture and connection to our clients and community.”
The Philadelphia Inquirer first reported in June that the 108-year-old brokerage was exploring options for restructuring, and that LPL was a potential buyer for its brokerage unit. The publication cited regulatory changes, automation, and pressure from large Wall Street firms and discount brokerages, as reasons smaller brokerages are finding the need to get larger. In fact, Boenning itself acquired another small brokerage with a long history of 86 years, Sweney Cartwright & Co., a Columbus, Ohio-based firm with eight advisors and $700 million in client assets, in 2019.
Rich Steinmeier, LPL Financial managing director and divisional president, Business Development, likens the deal to LPL’s acquisition of Allen & Co., another firm with a rich history but in need of modernization, in 2019.
“There is a sense of pride; there is a sense of ownership; there is a sense that their brand means something very significant,” Steinmeier said, referring to Boenning & Scattergood. “We believe that we’ve demonstrated that we can nurture those brands because LPL doesn’t stand forward as a brand that has to be in front of the other brands. We don’t make firms change their culture when they come here.”
Boenning & Scattergood was founded in 1914 by Henry Dorr Boenning Sr., who passed away in 1943 during World War II. That’s when Harold Scattergood Sr., who started as an equity trader at the firm in 1935, took over the business. His son, Harold Scattergood Jr., took the reins of the business in 1985, with his passing, and he’s still running the business.
The firm is currently an independently owned, regional firm with offices in the Mid-Atlantic and Midwest. In addition to wealth management, the firm offers investment banking, research, institutional sales and trading and public finance. The firm clears and custodies through First Clearing.
While the firm will maintain that continuity of brand and leadership, it will move to LPL’s more modern platforms. Once the deal closes, client assets will transition to LPL’s custodial and clearing platform. Their advisors will also have access to LPL’s other capabilities.
“They were looking for continuity that this brand that had been built over 108 years needed to continue,” Steinmeier said. “They were looking for the ability for their leadership team to stay in place. They were looking for the ability for their firm to keep its culture, but all the while recognizing they needed significant investments in the business—in their core platforms, in their advisory platforms, in their end investor capabilities, and in the support model to help their advisors that there now as well as a partner who have deep pockets to help them recruit new advisors to their property.”
Steinmeier expects there will be future similar deals with firms looking for a larger partner to help them modernize and compete.
“You think about a firm with 108-year-history that means something in their market, and is a source of pride for the advisors. And yet those firms over time find it hard to compete because their capability sets can’t keep pace with the competitors,” Steinmeier said. “We think there are other firms that look like Allen & Co. and Boenning & Scattergood that, as we show up for them and help them grow and prove to them that we’re as invested in their firm as we are as in ours, I think we’ll become increasingly attractive to a set of firms that may find themselves subscale and not sure how they can allow advisors to continue to compete.”
LPL will offer transition assistance to advisors who come over, but Steinmeier declined to provide any details.
“We recognize through a transaction like this—this is not effortless. The advisors have to learn new systems; have to go through training.”