A giant wealth manager looking to tap into opportunities in a consolidating industry channel has struck a deal to make its biggest acquisition in more than two years.
Advisor Group will buy Infinex Financial Holdings, the parent company of a growing but still mid-sized wealth manager, which has around 750 financial advisors managing $30 billion in client assets across 230 community banking and investment programs. credit unions. said May 19. The parties did not disclose terms of the agreement, which is expected to close in the third quarter without any formal brokerage or custody changes for Infinex advisers.
However, the greater influx of wealth management has sent banks and credit unions into the fold of major players. extend their reach in the channel in recent years through recruitment and mergers and acquisitions. Advisor Group rival LPL Financial has recruited the wealth management programs of M&T Bank, BMO Harris, CUNA Brokerage Services and People’s United Bank during this duration. Despite continued consolidation, experts say bank and credit union programs should double their councilor ranks to meet the need and potential activity.
Advisor Group has experience in the channel, having taken over Securities America’s business with bank and credit union wealth programs when purchase of the Ladenburg Thalmann network wealth managers in February 2020 for $1.3 billion. The addition “confirmed that this is a space we wanted to grow in,” said Greg Cornick, president of Advice & Wealth Management’s advisory group. However, the company has no plans to combine Infinex with it, Cornick said.
“It’s an area where we wanted to build more scale,” he said, describing the Infinex deal as an effort to grow “more aggressively” through the programs of banks and corporations. credit unions. “We do not actively seek to disrupt relationships that already exist at other Advisor Group firms. This is to create as little disruption as possible across the Advisor Group. »
This includes new Infinex registered representatives, whose customers will receive notification messages but will not need to go through the so-called repapering process when switching from Infinex’s existing custodian, Pershing, or leaving home. brokerage. Due to the “minimal amount of disruption” and additional capabilities falling under the advisor pool, the company will not be offering retention bonuses to remaining Infinex advisors during the transition, Cornick said.
“We’re keeping it intact as Infinex,” he said. “What this means is that the brand image will remain the same at closing. The business will not have any kind of significant loss of employees. The systems will still be intact.
Infinex, based in Meriden, Connecticut, was launched in 1993 with a handful of small banks only in that state, according to CEO Stephen Amarante. With a compound annual growth rate of gross concessions of approximately 10% and client assets increasing by 17% over the past two years, Infinex is today one of the largest independent wealth managers serving banks and credit unions.
“We’re going to be able to take the original Infinex concept and take it to another level of scale and power with the Advisor Group team behind us,” said Amarante. “We did this without ever having capital infused into the business.”
The injection of private equity following the deal will usher in a new era for the firm, although big shifts in recruiting and M&A deals often see at least a few advisers or companies leave the ranks when competitors inevitably present themselves as a better house. In the long run, bank and credit union wealth management programs obtain technology, compliance services, and operational resources from their new parent or third-party broker.
Outsourcing tasks like this to LPL will allow CUNA Brokerage to strengthen its training and development programs and increase its reach with potential future advisors among groups such as military veterans, former teachers and students of historically black colleges and universities, according to CUNA Brokerage President Rob Comfort. Credit unions are “significantly under-advised” based on the number of members who would benefit from wealth management services, Comfort said in an interview earlier this year.
“What we want to do is attract really talented people who have been shut out of our industry,” Comfort said. “We think that’s really where the industry needs to go if it really wants to solve this shortage of advisers.”