One LPL Super OSJ Acquires Another

Gateway Financial Partners, a Glastonbury, Conn.-based large office of supervisory jurisdiction of LPL Financial, has acquired Advisors’ Pride, another LPL OSJ, in Appleton, Wis. The deal represents Gateway’s first major OSJ acquisition, and more than doubles its number of advisors, with the firm now serving 170 advisors across 26 states and a combined $7 billion in assets under management.

The deal was a joint acquisition by David Wood, founder of Gateway, and Eric Hall, former president of Advisors’ Pride, according to an announcement. The combined firm will have 95 support team members, and will operate under the Gateway brand.

Wood says the deal is the first of what he hopes are many acquisitions of other OSJs for Gateway.

“This is not a one-and-done,” Wood said. “I think we’re really well-positioned to take our value proposition, which is strong, offer that out to the Advisors’ Pride people to help them grow quicker than they can grow the way they are. And then we’re actively out looking for others. We have a great value proposition, but I don’t think we had a big enough advisor base to take advantage of it.”

Wood said Advisors’ Pride was more of a traditional or facilitator-type OSJ, a group that got together to leverage the economics of the broker/dealer and didn’t offer much beyond that. Gateway is more of a “business-builder OSJ,” big organizations that provide infrastructure to advisors beyond trying to leverage the economics. Gateway provides support across leadership, operations, marketing and technology.

“We’re trying to act as a business partner to them, providing a deep level of resources to the advisors to allow them to outsource as many of the non-revenue producing activities as they can,” Wood said. “That scale is enabling our advisors to grow really fast.”

Last year, Gateway’s average advisor grew their revenues by 40%, and Wood expects Advisors’ Pride advisors to tap into that growth support.

As Gateway looks to do more acquisitions, the firm may bring on a capital partner, such as Merchant Investment Management, Wood said. Merchant has taken minority stakes in other LPL OSJs.

Gateway would look to such a partnership not just to help finance other deals in the future, but also the leadership and intellectual capital that the RIA can get from these firms.

“I think there are a group of those firms, like Merchant, that are now trying to really help their partners that they have an equity stake in grow, so that becomes another growth strategy for us,” Wood said.

“There are smaller OSJs that I think are going to come under pressure because the advisor sits back and says ‘Hey, this other firm is doing all these things, and I don’t get that from my current firm.’ And I think that will be more relevant when the market doesn’t go up 30% a year,” Wood says.