Securities America warns of service slowdown as consolidation begins

Securities America Inc., one of the major broker-dealers in the burgeoning Advisor Group network, on Monday morning warned its advisers of longer than usual times to deal with advisers’ phone calls as it begins a major merger.

The notice regarding slowdowns in services comes as the firm is in the process of absorbing 1,200 advisers from Advisor Group’s recent acquisition of Ladenburg Thalmann Financial Services Inc.

Snafus in technology or service, irritating and at times infuriating to financial advisers, are common during large broker-dealer mergers. Advisor Group said in May it was going to shut down three of the Ladenburg firms and move those advisers over the summer onto the platform of Securities America, the largest broker-dealer that was part of Ladenburg.

“Due to high call volumes, we are experiencing longer than normal wait times,” according to the memo sent to advisers, which was signed by Theresa James, vice president of advisor experience at Securities America. “We appreciate your patience.”

The broker-dealers that are being merged into Securities America are Investacorp, Securities Service Network and KMS. Investacorp is the first firm to move its advisers to Securities America.

Joseph Kuo, a spokesperson for Securities America, said that the firm “anticipated the rise in volume due to the transition of Investacorp over the weekend and increased staffing proportionately to accommodate.”

“Most of the calls were related to technology set-ups, and by mid-Tuesday we were back to normal,” he added.

Consolidating broker-dealers is typically a way for large networks like Advisor Group to lower costs, as separate back offices and employees for each firm often deliver similar services to advisers.

“We’ve found mergers and fast growth are frequently a recipe for overwhelming back office capabilities,” said Jon Henschen, an industry recruiter. “The problem with mergers, in particular, is a high volume of advisers switching in too narrow of a timeline.”

“The firms that do the best transitions are the ones that assertively gap out the advisers’ moves so that the back office is not overwhelmed by work volume,” he added.

Advisor Group said last fall it was buying Ladenburg Thalmann for about $1.3 billion.

The combination of the two broker-dealer networks creates a giant firm with more than $450 billion in assets under management, $3 billion in annual revenues and nearly 11,500 advisers.

The post Securities America warns of service slowdown as consolidation begins appeared first on InvestmentNews.

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