RCS Capital, led by Executive Chairman Nicholas Schorsch, filed a plan with the SEC last week outlining plans to retain the more than 9,000 reps it added through the acquisition of four IBDs over the last year. As Investment News reports, along with vesting stock ownership, RSC will provide business loans that will be forgivable once certain goals are met. While it’s not revolutionary, the plan shows that RCS will be aggressive in retaining the reps it has inherited via recent acquisitions — most recently, last month’s purchase of Cetera and its 6,600 reps and last year’s purchase of First Allied and its 1,370 reps.
While one industry expert likened the purchase of independent BDs by a non-traded REIT firm to Nabisco buying Whole Foods to sell more Oreos, LPL’s recent annual reporting indicated that 16% of commissions from their reps in the second half of 2013 came from alternative investments, particularly liquidity events from non-traded REITs.
So two things seem clear: (1) RCS reps will not be easy pickings by other BDs; and (2) flush with capital, RCS may be buying other IBDs — four pending deals are expected to close mid-year. Perhaps Schorsch sees value that industry insiders do not — which is often the case when a paradigm shift occurs.
