Sunday, September 24, 2023

LPL OSJ Gateway Financial Partners launches equity participation program -Dlight News

Gateway Financial Partners, a major Glastonbury, Connecticut office and regulator of LPL Financial, has launched an equity ownership program for its financial advisors and employees. Under the Gateway Growth Partnership, OSJ will take a 15-20% revenue share of the consultant’s practice in exchange for a combination of cash and equity in Gateway’s holding company.

Participating consultants continue to own 100% of their companies. So far, 50 consultants and employees have taken part. The company has 170 advisors serving approximately $7 billion in client assets.

David Wood, Gateway’s founder and chief visionary officer, said a number of advisors have already used the capital to acquire other practices.

“If you’re a smaller consultant looking to buy a larger practice, you’re going to have a hard time getting funding for it,” Wood said. “The advisor now has significant capital to complete these acquisitions. We view this capital as an opportunity to continue to drive the growth of these consultants.”

The program also enables consultants to participate in the profits of a larger company.

“There’s a big difference between the value of a company and the value of an individual consultant’s practice,” Wood said. “Corporate profits are worth much more. Basically, we mediate the valuation between a consultant’s practice and our company and give them equity to be able to participate in the positive development.”

Gateway has been working on the new program for the past seven to eight months and has hired Paul Lally, a director at Wipfli, to help with the initiative. Wood said the OSJ wants to create greater alignment between the company and the consultants he oversees.

“In a typical company structure like this, a consultant doesn’t really care if the company grows; They really do take care of themselves. I think this alignment completely changes that,” Wood said. “We’ve already seen the difference in our consultants and the way they see us as a partner now, and they care not only about the success of the business much more, but about the success of each other.”

A consultant used the program to position himself more positively towards clients, Wood said.

“That’s direct feedback from a consultant who goes along and says, ‘Boy, now I can really make this place a long-term home and tell my clients and make the clients feel good because I’m involved in a bigger project. ‘ Organization.'”

Last year, Gateway announced its first major OSJ acquisition with the purchase of Advisors’ Pride, another LPL OSJ in Appleton, Wisconsin. The deal more than doubled the number of consultants.

Other OSJs have instituted equity ownership programs for their representatives. Last year, for example, the private advisor group, OSJ of LPL based in Morristown, New Jersey, launched an Advisor Alignment and Equity Program with support from Merchant Investment Management, its first outside investor. Under the opt-in program, an advisor agrees to contribute a portion of their revenue, typically between 10% and 20%, upfront to the Private Advisor Group in exchange for cash and equity.

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