LPL Financial is interested in buying a broker/dealer and looking vigilantly for possible acquisition targets, said Chairman and CEO Mark Casady on the firm’s first quarter earnings call Wednesday.
“We always look,” Casady said.
The mergers and acquisitions market in the independent broker/dealer space is picking up for the same reasons advisor movement is picking up, he added.
“These businesses have recovered from a pretty ugly downturn, and their numbers look much better in 2014 and ’15 than they did in the previous two years. And that likely means that someone who was thinking about selling may very well move themselves along to get that done.”
The firm is no longer looking at acquisitions outside of the firm’s core business, as it did with Fortigent, National Retirement Partners and Concorde.
“They were really good ways to enter new adjacencies in the marketplace,” Casady said on the conference call. “We’re in the spaces we want to be.”
But the acquisition would have to provide a good return on capital, Casady said. That would the key factor in any acquisition deal LPL pursued. The acquisition target, for instance, would have to have a high-quality advisor force.
“We’re very particular in lots of ways, meaning that if we wouldn’t take an advisor in organic underwriting or recruitment, we will not take them through acquisition,” Casady said. “So when we look at a property, one of the first things we look at are the records that are there, and if it’s filled with lots of records of people we wouldn’t take, then that means that they’re going to have to go away at the acquisition. So it doesn’t make a particularly good return on our capital.”