by Bruce Kelly and featured in Investment News
Pacific Select Group, LLC, in an internal email to its network of registered representatives and advisors last Monday, dismissed rumors of a merger with Linsco/Private Ledger Corp. which according to numerous industry insiders, had been courting broker/dealers aggressively.
But any deal involving the two may yet happen, one industry recruiter said.
‘On a mission’
Paciﬁc Select’s ﬁve-sentence denial in the internal e-mail of an immediate deal with Linsco of Boston and San Diego was a clear indication of the former’s desirability and the latter’s voraciousness, observers say. In the e-mail, Paciﬁc Select conceded that it had been approached about a sale.
“LPL is on a mission. It has an insatiable appetite for expansion,” said Larry Papike, president of Cross-Search, a Jamul, Calif., recruiting and placement ﬁrm for brokers and executives in the independent- contractor industry. “And if Pacific Life is looking to get out of the broker-dealer business, this would be a plum acquisition,” he said.
Paciﬁc Select of Newport Beach, Calif., a business unit of Paciﬁc Life Insurance Co., has four separate independent-contractor broker-dealers and more than 2,700 afﬁliated registered reps under its umbrella. With $355 million in gross revenues last year, it ranks as the fourth-largest network of broker-dealers owned by an insurance company.
Some reps, advisers and executives with two of Paciﬁc Select’s broker-dealers–Associated Securities Corp. of Los Angeles and Mutual Service Corp. of West Palm Beach, Fla.—have been abuzz over a potential acquisition by Linsco.
The other Pacific Select broker-dealers are United Planners’ Financial Services of America in Scottsdale, Ariz., and Waterstone Financial Group of Itasca, Ill.
The largest independent-contractor broker-dealer with 6,800 afﬁliated reps and $1.4 billion in gross revenue last year, Linsco has been in talks with ﬁrms of late, according to industry executives and recruiters.
Last month, it acquired UVEST Financial Services Inc. of Charlotte, N.C. About 750 brokers and advisers are afﬁliated with UVEST, all in banks and other ﬁnancial institutions.
Mr. Papike said that the advisers afﬁliated with the Paciﬁc Select broker-dealers have books of business that are heavily weighted with packaged products, such as mutual finds and variable annuities.
Between 60% and 82% of gross-dealer concession at the Paciﬁc Select broker-dealers comes from packaged products, he said. The advisers also do strong fee business, Mr. Papike said.Mr. Henschen said that while a large broker-dealer such as Mutual Service may have been a good ﬁt with Linsco, the culture at smaller broker-dealers often can scotch an acquisition. “Mixing large firms and small firms—I don’t see that company. working out too well,” he said.
Talk about a deal between Linsco and Paciﬁc Life had been swirling for weeks before Paciﬁc Life moved to quash such speculation last week.
“Some competitors are spreading rumors that Pacific Life has sold its broker-dealers to LPL,” according to the company’s internal email. Although Pacific Life has been approached, it “has no agreement nor is it in active discussions with anyone, including LPL, to sell its broker-dealers,” the company said.
Paciﬁc Life added that it “will continue to be contacted concerning its willingness to consider transactions relating to its businesses and products, including its broker-dealer.” The ﬁrm declined to comment further. Linsco, through a company spokesman, also was mum, citing a company policy to not comment on rumors of speculation.