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 the Lincoln business will be converted by January.
In an interview in WealthManagement.com's New York office last week, Price said the firm's expectation of shedding advisers after Osaic's rebranding is “right” with their annual forecasts.
Price also stressed that, contrary to previous reports, he does not expect Reverence Capital, the firm's private equity owner, to sell a majority stake in Osaic “any time soon.”
Price's background includes leading the American Wealth Management Council Group at UBS, as well as president and managing director of prudential securities. before joining the Advisory Group as CEO in 2016 shortly after PE firm Lightyear Capital acquired him (Reverence Capital would take a majority stake in the firm in 2019).
In June 2023, Advisor Group revealed it would be rebranding as Osaicplanning to merge its multi-brand network with 11,000 affiliated advisors into a single entity. The plan included the introduction of eight firm b/ds, including American Portfolios, FSC Securities, Infinex Investments, Royal Alliance Associates, SagePoint Financial, Securities America, Triad Advisors and Woodbury Financial Services. Osaic bought the $115 billion Lincoln 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 main beneficiaries. For example, this week, announced the Commonwealth two Lincoln/Osaic advisers with $600 million in assets would join Aegis Consulting, a team of Commonwealth advisers who left Lincoln in 2023.
In conversations with WealthManagement.comseveral former Osaic advisers cited the firm's private equity backing as a reason for their departures.
In one case, Jason Hohenstein, co-founder of Wisconsin-based Equity Design Group who left Osaic for LPL, said he left because he was “tired of being shuffled around like cattle” among private equity firms. Striking a similar chord, North Carolina-based counselor Cubby Bice said he left Osaic because of an “unsustainable” situation caused by their private equity backing, which he believed inspired the firm to “grow as fast as possible to go public “.
But in his WealthManagement.com In the interview, Price disputed this explanation for the removal of advisors, instead calling it an inevitable byproduct of a large company undergoing necessary change, along with rhetoric from competitors and recruiters trying to drive away representatives. related to Osaic.
Price recalled competitors warning Osaic advisers that they would have to overhaul all their clients because of the rebranding, but when the firm integrated Royal Alliance without rebranding, he recalled that criticism quickly dissipated. For Price, the notion that Reverence would dictate plans for integration was a “misnomer,” saying they did not describe the change in direction.
“(There is) the idea of private equity coming in and squeezing costs into our business to make a profit when 90% of our costs are variable. They are related to either the markets or the payment of advisers,” he said. “You'll never build a very good wealth management business if that's what you've been doing.”
Price said the company may go public one day, but he remained happy the firm was private. It would be more difficult for the firm to undergo its current changes if management had to “manage earnings quarter to quarter.”
“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 would be harder to do.”
Price estimated that the firm was about 80% complete integrating all of its affiliate advisors into a single technology stack. That development didn't come too soon for Price, as he expected technology developments in the next five years, particularly in productivity-enhancing tools for advisors, to be “things we haven't even dreamed of.”
According to Price, it was part of a wider “technological revolution” centered around AI and robotics, making the advent of social media seem like a “distant past”. Osaic's connection to Reverence (and the PE firm's other fintech investments) gave the firm a sneak peek into these advances.
“I'll bet two years from now we'll be talking about ChatGPT like it's a dinosaur,” he said.