Osaic’s integration of its legacy broker/dealers (as well as Lincoln Financial’s wealth business) continues apace. According to CEO Jamie Price, Securities America is fully integrated, and Lincoln’s business is set to be converted by January.
In an interview at WealthManagement.com’s New York office last week, Price said the firm’s expectation of advisor attrition after the Osaic rebranding is “right on” with their annual projections.
Price also stressed that, contrary to prior reports, he doesn’t expect Reverence Capital, the firm’s private equity owner, to sell a majority stake in Osaic “any time soon.”
Price’s background includes leading Wealth Management Advisor Group Americas at UBS, as well as president and COO of Prudential Securities, before joining Advisor Group as CEO in 2016 shortly after PE firm Lightyear Capital purchased it (Reverence Capital would take a majority stake in the firm in 2019).
In June 2023, Advisor Group revealed it would rebrand as Osaic, planning to merge its multi-brand network with 11,000 affiliated advisors into a single entity. The plan included onboarding the firm’s eight b/ds, including American Portfolios, FSC Securities, Infinex Investments, Royal Alliance Associates, SagePoint Financial, Securities America, Triad Advisors and Woodbury Financial Services. Osaic acquired Lincoln’s $115 billion wealth business earlier this year.
In the wake of the rebranding, many advisors and teams (along with billions of dollars in AUM) have left Osaic for competitors, with LPL and Commonwealth being two of the primary beneficiaries. For example, this week, Commonwealth announced two Lincoln/Osaic advisors with $600 million in assets would join Aegis Consulting, a Commonwealth team of advisors who left Lincoln in 2023.
In conversations with WealthManagement.com, some former Osaic advisors cited the firm’s private equity backing as one reason for their departures.
In one case, Jason Hohenstein, the co-founder of the Wisconsin-based Equity Design Group who left Osaic for LPL, said he departed because he was “tired of being shuffled around like cattle” between private equity firms. Striking a similar chord, North Carolina-based advisor Cubby Bice said he fled Osaic because of an “untenable” situation brought on by their private equity backing, which he believed inspired the firm to “scale up as quickly as possible to go public.”
But in his WealthManagement.com interview, Price disputed this explanation for advisor attrition, instead considering it an inevitable byproduct of a large company undergoing necessary changes, coupled with rhetoric from competitors and recruiters trying to draw away Osaic-affiliated reps.
Price recalled competitors warning Osaic advisors that they’d have to repaper all their clients due to the rebranding, but when the firm integrated Royal Alliance without repapering, he remembered the criticism quickly dissipated. To Price, the notion that Reverence would dictate plans for the integration was a “misnomer,” saying they did not chart the change in direction.
“(There’s) the idea of private equity coming in and squeezing costs in our business to gain a profit when 90% of our costs are variable. They’re related to either the markets or the advisors’ payout,” he said. “You would never create a very good wealth management business if that was the thing you did.”
Price said the company may go public one day, but he remained happy the firm was private. It’d be more difficult for the firm to undergo its current changes if leadership needed to “manage to a quarter-to-quarter earnings."
“I probably wouldn’t say we’re driving the car at a hundred miles an hour while changing all four tires if it was a public company,” he said. “It’d just be harder to do.”
Price estimated the firm was about 80% done integrating all of its affiliated advisors onto a single tech stack. This development came none too soon for Price, as he expected tech developments in the next five years, particularly in terms of productivity-enhancing tools for advisors, to be “things that we have never even dreamed about.”
According to Price, it was part of a broader “tech revolution” centered around AI and robotics, making the advent of social media look like a “distant past.” Osaic’s connection to Reverence (and the PE firm’s other investments in fintech) gave the firm a sneak peek into these advancements.
“I will make a bet that two years from now we’ll be talking about ChatGPT as if it was a dinosaur,” he said.
