The Dangers of Private Equity to Broker-Dealers and the Financial System
October 15, 2018 By Jon Henschen, ThinkAdvisor Private equity firms continue to have substantial involvement in the independent channel as they fill the void left by insurance companies exiting the broker-dealer universe. Private-equity ownership can bring benefits to the advisor, but we also see moves by PE firms that are detrimental to the interests of broker-dealers’ advisors. Why are institutional investors attracted to private equity, and what lies ahead? Here’s what’s happened with private equity ownership, past and present: Past Private Equity Success As the chart shows, LPL is the only private-equity owned firm to go public, with management and larger producing advisors making millions from selling their stock ownership. For all the other PE-owned BDs, divesting was the exit strategy. NFP stood out as a particularly positive case of PE ownership, as staffing remained robust and...
