LPL Financial has added Equity Design Group, a three-advisor team managing $520 million out of Wausau, Wis., from Osaic. The team was previously affiliated with SagePoint Financial, an independent broker/dealer that recently transitioned to the Osaic brand as part of its efforts to merge its eight b/ds onto one platform.
The team cited the consolidation at Osaic as one of the reasons for moving to LPL. Jason Hohenstein, who co-founded Equity Design Group in 1997, said the move to the Osaic brand added a “significant layer of confusion to our clients.” His firm had purchased an office that was affiliated with FSC Securities, another Osaic b/d, so clients were getting letters from FSC and SagePoint about the Osaic change and thought the team was leaving the broker/dealer altogether.
“It was a difficult situation to manage,” Hohenstein said. “Most people don’t even know who SagePoint or Osaic is when they see their name.”
And the letter that went out to clients wasn’t clear on the reason behind the transition, he added.
“It just tried to explain to the client how glorified it was that they were making the transition,” he said.
The advisors also felt a lack of transparency over who was in charge after the transition; there were changes happening behind the scenes that weren’t displayed.
The team was also tired of the ownership changes; they had been through three different private equity owners since joining SagePoint in 2011.
“We got tired of being shuffled around like cattle from private equity,” he said. “We had no idea which direction Osaic is going. The only people who are going to benefit from that lack of transparency is going to be the shareholders and private equity.”
Osaic is majority owned by private equity firm Reverence Capital Partners, reportedly seeking a buyer for up to 20% of the wealth management firm. Hohenstein said they liked LPL’s financial strength and that it is a publicly traded firm.
“The fact that they’re already publicly traded--we know who we’re working for and what direction they’re going; nobody’s going to be big enough to take them private,” he said.
A spokesman for Osaic declined to comment.
Osaic will undergo even more consolidation as it acquires Lincoln Financial Group’s $108 billion wealth management business. That deal is expected to close in the first half of this year.
The rating agencies have recently said the Lincoln transaction will not materially impact Osaic’s debt leverage and interest coverage. Moody’s Investors Service and Fitch Ratings said their outlook on the wealth management firm’s credit is stable. In December, Moody’s placed Osaic’s ratings on review for downgrade over concerns about the acquisition’s possible negative effects on the firm’s financial profile and its ability to issue debt.
The Equity Design Group was established in 1997 by Hohenstein, Kevin Snow and William Zoromski. The team includes seven other advisors and provides what it calls “life-integrated financial planning.”
“We look at our clients’ entire financial picture and help them fit the pieces together properly to help them meet their fiscal goals and objectives,” Hohenstein said in a statement.
Hohenstein said the team was also attracted to LPL’s technology platform and business solutions, a suite of services advisors can outsource to LPL experts for a monthly subscription fee, including consulting on business growth and strategy.
