December 3, 2023

A major wealth management program at a regional bank has left LPL Financial for rival Ameriprise’s financial institutions unit.

The wealth planning of Happy State Bank, based in Canyon, Texas, a division of Centennial Bank with 50 branches, switched from LPL to Ameriprise, the same brokerage and registered investment advisor that Centennial uses, The company said that on May 18. Happy became a unit of Centennial Bank last year after the institution’s parent company, Home BancShares, Acquired Happy Bancshares for $919 million. Combined, Happy and Centennial have 20 financial advisors managing $1.3 billion in client assets.

“Happy State Bank is understaffed, they don’t have enough advisors in their program to cover their footprint in Texas,” Jay McAnelly, group vice president of Ameriprise Financials, said in an interview. “In more than half of the market , their previous firm didn’t have consultants…they’re excited to start recruiting and recruiting in those markets.”

How M&A Affects Brokerage Relationships
Happy State Wealth Plan Shift Shows M&A transactions often change brokerage relationships In an increasingly competitive recruitment Fight for Bank and Credit Union Programs. Ameriprise Financial Institutions scored a huge hiring win in March, adding 100 advisors and $18 billion in client assets From Comerica Bank.Competitor Advisory Group Purchase Banking team at Infinex Investments Last year, while the LPL’s continued large recruiting wave in recent years included CUNA Brokerage Services and Bank of Montreal.

A representative for the LPL declined to comment on Happy State’s move, while citing a policy against discussing team departures.

LPL has benefited from large acquisitions by the parent companies of its existing client banks.It recently said that 85 financial advisors from Western banks with $7.8 billion in client assets will Institutional services to LPL In 2023, due to the acquisition of the company by BMO.Last year, LPL hired 40 advisors with $4.4 billion in client assets from People’s United Bank back M&T Bank bought that company.

The crisis that began in March with the collapse of Silicon Valley Bank and Signature Bank “really strengthened our value proposition to businesses, especially banks, that this type of disruption could be a catalyst to explore different strategic options or alternatives for different lines of business, such as , wealth management,” said LPL CEO Dan Arnold During the company’s first-quarter earnings call.

Consolidation is driving change in banks and brokerages long before bank failures JPMorgan to buy First Republic Bank. Whether it’s an advisor succession deal for a wirehouse spin-off of an independent channel, or a major acquisition shuffling hundreds or thousands of companies Financial Advisor for New Brokerage FirmsM&A is “a very large driver of advisor change, and it’s going to stay that way,” Mark Elzweig & Co..

“Some might like it, some might not,” he said of the adviser’s reaction to the deal to switch brokerages. “Whenever there is a change, there are always people who benefit and there are always people who feel disadvantaged, so it’s good for both parties.”

Banking regulators don’t allow an institution to use multiple brokerages at the same time, so the buy-side brokerage “usually” wins out after the deal closes, according to Eric Armstrong Compass Consulting, working with agencies and consultant teams.Some bankers and advisors left Happy State after the deal closed, Armstrong said, likening the shift to a team’s move earlier this year to join a credit union that uses LPL Following another M&A transaction.

“We’re going to see a lot more of this in the next three to four years, with all the major[broker-dealers]supporting community banks and credit unions scrambling to figure out how they can position themselves so they don’t lose out on plans to merge,” Armstrong said in an email.

“It’s a complex issue, especially with the way most banks and (credit unions) handle wealth management,” he added. “Executive leadership gave little thought to how wealth management would be handled during mergers. Naturally, the acquiring bank controlled the narrative.”

Happy State’s 60 locations span the Texas Panhandle, the state’s Southern Plains, Central Texas and the Dallas-Fort Worth area Represents the largest acquisition ever Home BancShares, headquartered in Conway, Arkansas, According to the latest annual report The publicly traded parent company of Happy State. In the acquisition, Home and Centennial added 193,000 Happy State customers and 146,000 checking and savings accounts totaling $5 billion, as well as 862 new employees.

“Our combination with Centennial Bank expands our product offering, and we are excited that the premium wealth management support they have received from Ameriprise will extend to our clients,” Happy State President Mikel Williamson said in a statement. “Helping individuals, Families and businesses meeting their financial needs has always been our focus, and the added strength of Ameriprise allows us to help more people achieve their financial goals and provide them with great service along the way.”

It was not immediately clear how much advisor and client assets Happy State’s plans brought to Ameriprise after the deal closes, and McAnelly said the information was not immediately available. According to McAnelly, the program officially migrated to Ameriprise late last year. Happy State’s new parent company, Centennial, joined Ameriprise in 2017, marking the company’s first foray into the banking channel Acquisition Investment Professionals, McAnelly pointed out. Between 2019 and 2022, Centennial has tripled its number of certified financial planners and more than doubled its annual business in assets under management and total dealer franchises.

Brokerages like Ameriprise are expanding their business with banks and credit unions as the institutions seek better technology and scale and face greater regulatory scrutiny beyond traditional loans and deposits.Earlier this week, Atria Wealth Solutions subsidiary CUSO Financial Services said it had added Mobiloil Credit Union’s Wealth Planwith 75,000 members and $1 billion in assets.

wealth management plan
Other institutions are completely away from wealth.Only 21% of credit unions and 25% of banks offer wealth management services, according to new data Channel Annual Research Report Provided by consulting firm Kehrer Group. Ameriprise launches investment plan in 2021, increases share Third Coast Advisors at Third Coast Bank And hired four consultants with $800 million in client assets to lead the consulting business.

Most larger institutions maintain wealth plans, but among smaller, more remote banks and credit unions with less than $250 million in deposit assets, “that number has really dropped,” McAnelly said. That vacuum represents “an area of ​​opportunity for consumers and clients of these institutions,” he said.

“They need the service. The challenge you have is you have to find a financial advisor in these markets,” McAlley said. “If you have a $240 million agency with a really good management team and a vision for growth, we work with them to help them staff and build their program.”