LPL Financial buys its second full-service brokerage after the first ‘exceeded expectations’ following a three-year pilot project

Note from Brooke: I’m pretty sure PG Wodehouse could hardly think of a better name for a brokerage than Boenning & Scattergood [B&S]. Jeeves is the Wodehouse character who saves the day when Bertie Wooster mentally disperses. In this 2022 case, LPL Financial is tasked with making sense of the modern world on behalf of the 108-year-old full-service Philadelphia Main Line company. Legacy B&S software systems can take advantage of a system shared by 20,000 other advisors. Of course, LPL can’t do it all and won’t even try to change the Scattergood brand, which is obviously impossible to improve. Ask Jeeves.

LPL Financial’s experimental purchase of a $3 billion full-service brokerage in Florida has gone so well that it is buying a second $5 billion AUA company in Philly and is looking for more.

Harold Scattergood Jr,: ‘LPL took the time to understand our business, our culture and our goals.’

The independent San Diego broker has expanded its salaried adviser payroll with the purchase of Boenning & Scattergood (B&S), three years after buying Allen & Co. — and loving it. See: LPL Financial enters full-service brokerage via acquisition – with help from Raymond James’ Silver Lane advisors

“I would say it’s a huge success,” said Rich Steimeier, LPL Financial’s division president, business development.

“We haven’t lost a single adviser. The advisers are over the moon.” See: LPL Financial offers a ‘full service’ game with a wirehouse trick and some DFA vibes as it launches a ‘private client’ offering from the University of Chicago

LPL did not disclose the terms of the deal with B&S, but said it was paying a price based on a valuation formula of five times cash flow plus.

Cash flow or EBITDA is being modified to add efficiencies from economies of scale realized by the upcoming merger, according to the statement.

Modernization

The 108-year-old, 40-advisor and registered investment adviser (RIA) broker/dealer headquartered in West Conshohocken, Pa., will retain its brand name and management team, but change its custody, compensation, stack technology and its customer portal.

“We are proud to continue to build Boenning & Scattergood in a relevant and sustainable way, while maintaining our culture and our connection with our customers and our community.” says Harold Scattergood Jr., President and CEO of B&S

The investment banking part of the company is not included in the sale.

Scattergood Jr. was confident LPL would deliver on its promise to modernize the business without homogenizing it after speaking to Ralph Allen, chairman of Allen & Co., Steimeier said.

“LPL has taken the time to understand our business, our culture and our goals. LPL’s commitment to investing in our superior wealth management platform will help build our capabilities,” Scattergood Jr. added in the release. .

The Allen deal created a blueprint to tackle the largely unconsolidated world of full-service small businesses, Steinmeier adds.

Cross-channel growth

Other potential Boenning & Scattergood buyers in the running had to fold the company under their brands and real estate, making them less attractive than the $1 trillion IBD, which has proven itself by staying behind- plan.

“We are in a unique position,” he said. [Steinmeier] said. “We like the positioning ‘of providing IBD services largely to full-service advisors.’

LPL Financial and its shares remain on track despite the market difficulties. It closed the week at $180.75, down less than 10% from its all-time high of $196 in May and with a market capitalization of $14.4 billion.

The company continues to grow across all channels with no apparent conflict between channels, Steinmeier says.

“I don’t think so,” he said. “We always support the [independent] advisers [in the region.] It’s not that different from a recruiting event [of poaching a full-service team and setting them up as an independent.]

The purchase agreement was signed on July 7 and the transaction is expected to close in early 2023.

Wells Fargo, Scattergood’s current clearing company, is expected to be replaced post-closing.

LPL supports 20,000 financial advisors, approximately 1,000 institutional investment programs and approximately 500 RIA companies nationwide.

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