December 9, 2023

A team of five financial advisors managed $370 million in client assets at a bank that was merging into a larger institution and moving to a credit union that used LPL Financial as a brokerage.

According to Eric Armonstrong, brokers Tim Mol, Pier Mutovic, Indya Kellman, Mike Tormey and Kimberly Trimmer generate nearly $2 million in annual revenue at Lakeland Bank in Oak Ridge, N.J., along with Raymond James Financial Services, the brokerage firm used by the institution. income. Compass Consulting, which provides suggestions for the team’s actions.before the end of the quarter is expected Provident Financial Services’ Pending Acquisition Lakeland’s parent company was sold for $1.3 billion, and the team moved to the Affinity Federal Credit Union and the LPL in Basking Ridge.

Even before the collapse of two regional institutions in March, credit unions had adapted faster than banks to the ongoing shift in wealth management from transactional sales to “comprehensive planning,” Armstrong said in an interview.

“Credit unions have a much steeper curve than banks,” he said. “They operate under different rules. Credit unions now face much less external pressure than community banks.”

The advisors and their new credit union did not respond to requests for comment on the move. A representative for Provident referred inquiries to Lakeland, which did not immediately respond to a request for comment on the team’s departure. A representative for Raymond James also did not respond to a request for comment.

As LPL booms, banks and credit unions are driving massive hiring in the sector Institutional service units as one of the main beneficiaries. As part of the company’s first quarter earnings call, LPL announced that Bank of the West’s 85 advisors with $7.8 billion in client assets will be migrating to the brokerage firm after another LPL client agency, BMO Harris, Acquired a rival bank. In turn, some of the LPL’s smaller rivals have spun off some of its teams, such as the Level Four Group recently joined Wealth Plans for Credit Unions.

Banks and credit unions in general remain a new frontier for potential wealth management business, according to the latest data Channel Annual Research Report Provided by consulting firm Kehrer Group.

The number of credit unions offering investment plans to customers jumped 26% between 2011 and 2022, to 1,066 institutions—an increase that only increases credit unions offering wealth management services from 12% to 21%. Over the same time period, consolidation in the banking sector helped reduce the number of institutions with wealth plans by 36% to 1,170, or 25% of banks – the same as in 2011.

Ken Kehrer, a partner at the Kehrer Group, said in an interview that after credit unions enjoy a reputation as a “sleeping place” in the industry, they are now getting more and more attention from brokerage firms such as LPL. Credit unions and banks are similarly showing signs that they are ditching some of the traditional barriers to attracting advisors who have historically been reluctant to join an institution that claims to have a brokerage book, Kehrer said.

“Credit unions are opening branches and banks are closing branches,” he said. “It looks like credit unions are more dynamic now on the consumer side. Advisors are finding them to be very comfortable homes.”

Disruption in the channel is paying dividends for advisors, said industry veteran Mac Gardner, who worked as an advisor, wholesaler and adviser to banks’ wealth plans before founding financial literacy technology firm FinLit Tech. In the past, planners operated on the assumption that their employers believed that “the bread of the bank was the butter on the bank’s side,” while institutional wealth plans and broker-dealers were “a little bit auxiliary,” he said. That is changing as banking crises and high interest rates put pressure on balance sheets.

“Now they’re like, ‘Oh man, this BD aspect is actually really important,'” Gardner said. “If you’re an advisor on this, you’re in a very valuable position.”