Merrill Lynch and AXA Financial, part of the French insurance giant AXA, announced today that Merrill would buy The Advest Group, AXA’s full-service retail brokerage arm.
“We are extremely pleased and look forward to welcoming the Advest financial professionals to Merrill Lynch,” said Bob McCann, president of Merrill’s private client group, in a statement. “With access to our platform, products and services, they will have an even greater number of wealth management tools to better serve their clients.”
That AXA is selling Advest little more than a year after its July 2004 purchase of the firm--and its parent, MONY--didn't come as a surprise to one industry consultant: “AXA’s strategy has always been to focus on insurance and asset management, not brokerage and investment banking,” says André Cappon, president and founding member of the CBM Group, a New York-based consultant to the financial services industry. Indeed, AXA bought troubled U.S. insurance company The Equitable in 1991, which also owned investment bank Donaldson Lufkin & Jenrette (DLJ). AXA sold DLJ to Credit Suisse First Boston in 2000.
Another industry commentator, who wished to remain anonymous, echoed this sentiment, saying that Advest’s conspicuous absence from AXA’s advertising campaign since the purchase stated that perhaps the firm was not interested in building the brand. AXA president and CEO Christopher Condron seemed to confirm as much in a statement: “While Advest is an excellent company…its business is better aligned with Merrill Lynch’s Global Private Client Group…For AXA, this transaction allows us to reinvest in our strong core businesses of life insurance and annuities.”
Some don’t see the two broker/dealers’ corporate cultures meshing, however. Recruiter Mindy Diamond, of Diamond Consultants in Chester, N.J., says she spoke to “about 50” Advest brokers who are “beside themselves” over Merrill’s impending takeover. “You have to remember that Advest is a regional, with a different culture. It’s a flexible place. And now not only are they being forced to work at a wirehouse, it’s one of the most stringent and least flexible there is.”
Hartford-based Advest, with roots dating to 1898, has three primary businesses: the private client group; Boston Advisors, its investment advisory arm; and its capital markets division. Its primary business is its private client group, which has 515 financial advisors, located in the northeast, Midwest and Florida, and includes a municipal bond business, the Lebenthal division.
According to the 2005-2006 Securities Industry Yearbook, Advest has $35 billion in retail customer assets and $8.5 billion in assets under management. By purchasing Advest, Merrill Lynch further solidifies its status as the industry’s largest b/d with—not including Advest reps—14,420 advisors, more than $1.5 trillion in assets and more than $500 billion in assets under management. In addition, Advest has a small institutional group, with 73 reps with $800 million in client assets, according to the SIA Yearbook.
While terms weren't disclosed, the New York Post reports that Merrill paid $400 million for the firm. The deal is set to close in the fourth quarter and is expected to be neutral to Merrill’s earnings in 2006. Shares of Merrill Lynch had risen 53 cents by press time, to $60.33, and shares of AXA rose 15 cents, to $27.37.