At Ladenburg Thalmann Financial Services’ annual fee-based advisory conference in January, we welcomed financial advisors, home office executives and strategic partners from across the country. Enthusiasm among the event’s participants was reinforced by new faces from our merger partners at Advisor Group, and our shared message of optimism about the future of our combined company, and our broader industry.
The diversity and success represented by the participants from Advisor Group and Ladenburg was a cause for celebration of all that we have created at Ladenburg over the past 15 years. We have been privileged to help shape the rapid evolution of an industry that, at its core, is all about helping individuals and families across the country to meet their life goals.
In recent months, as we approached the completion of Ladenburg Thalmann’s merger with Advisor Group, we have reflected on our remarkable journey. Our transaction with Advisor Group is more than just one of the largest and most high-profile deals in the history of our industry – it is a culmination of strategy and execution by many individuals, with lessons for our broader industry.
Looking back, we believe our success in building Ladenburg is due to five key elements that every firm – regardless of capital structure, ownership or business model – must get right in order to create maximum value for financial advisors and their clients: vision, leadership, strategy, growth and risk management.
When we entered the independent advisory and brokerage space, we had a clear vision: To build the leading innovator of the network model in the independent financial advice industry. We purposefully sought to acquire and grow independent firms that each had a unique brand and culture appealing to a specific segment of the advisor community. At the same time, we had a shared passion for delivering professional financial guidance to mass affluent households who might otherwise not have access to the advice and planning they need.
Central to our vision, we always challenged ourselves to think in multiples bigger than others. We started in 2006 when Ladenburg had just $36 million in revenues. By 2019, Ladenburg had grown by over 40 times, reaching almost $1.5 billion in revenue. Our early vision of opportunistic growth focused our financial advisors, shareholders, employees, strategic partners and other stakeholders on what we knew was possible.
Our leadership team at Ladenburg had many strengths which drove our success since 2006. Identifying these many talented individuals throughout our organization and empowering them has been core to our leadership philosophy.
The leaders we selected across our organization challenged our thinking, embraced change and fostered an environment of effective collaboration in addressing major challenges while unlocking major growth opportunities.
With the right leaders in place, our team was able to drive execution of our strategy, building Ladenburg into a scale player with over 4,400 advisors, $180 billion of client assets, $80 billion of managed assets, and over $100 million of adjusted EBITDA.
Consider the numbers behind this growth: In 2006, the enterprise value of Ladenburg was $165 million. In our transaction with Advisor Group, completed last month, Ladenburg achieved a total valuation of $1.3 billion.
How did we do it? We executed on a unique opportunity to significantly scale up our independent firms, while growing in other areas that synergistically added value for advisers, including our trust company, investment bank, asset management, insurance and annuity marketing organizations.
Our growth strategy had four key themes. First, build scale in a severely fragmented IBD space. Second, lean into the strong demographic trends fueling organic growth of advisers. Third, utilize the economies of scale to drive not just profitability, but also continuous internal investment. Fourth, acquire companies only at very attractive valuations.
Put simply, our growth philosophy was “One plus one should be greater than two.” During our tenure, Ladenburg achieved strong organic growth, led the industry in advisor recruiting from 2016 to 2019, and completed a number of value-enhancing strategic acquisitions over 15 years while looking at more than 100 deals.
Of course, growth in the absence of careful risk management is a sucker’s bet. Our approach to risk was to miss small and win big. Even when we acquired Securities America in 2011, a company nearly triple our existing size at the time, we had confidence that we had conservatively structured and financed the deal in a way that our long-term existence was never in jeopardy. Risk was a top priority in all decisions and strategic initiatives we moved forward on.
The past 15 years of building and operating Ladenburg has given us the most profound joy one could dream about. There are countless people to thank. Our board of directors, shareholders, strategic partners and stakeholders, for believing in our vision. Our employees, for fearlessly executing strategy and serving financial advisers. And, of course, our advisors, for enabling countless clients to achieve their goals and fulfill their dreams. You all taught us, and the industry, so much.
We extend our deepest congratulations to the entire expanded Advisor Group organization, which is exceptionally well-positioned to lead the future of our industry.
As we bid a fond and grateful farewell to Ladenburg and to our employees and advisors, we also look ahead with a sense of excitement, towards new beginnings in the wealth management industry. Whatever the future holds – for us, and the broader industry – promises to be very bright.
Richard Lampen is the former chairman and CEO of Ladenburg Thalmann Financial Services. Adam Malamed is the former executive vice president and COO of Ladenburg.