RCS to Acquire J.P. Turner

RCS Capital Corporation (RCAP) will purchase J.P. Turner & Company LLC, an independent broker/dealer and investment banking firm, and its affiliated advisory company for $27 million in aggregate consideration.

The move by RCAP comes just a day after the company announced it has reached a separate deal to acquire independent broker/dealer Cetera and its 6,600 advisers. RCAP is also engaged in the acquisition of a number of other firms, including Summit Brokerage Services and Investors Capital Holdings.

The purchase of J.P. Turner and its affiliated companies will add 325 producing advisers with $4.3 billion in assets under management to RCAP’s operations, the firm says. Once all pending purchases are complete, RCAP will have some 9,300 registered representatives and financial advisers, making it the second or third largest independent broker/dealer in the U.S. by number of advisers, as measured by the 2013 independent broker/dealer rankings report from Financial Advisor Magazine.

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That report lists LPL Financial, with about 13,300 advisers, as the biggest independent broker/dealer network by adviser number. Ameriprise Financial is ranked second, with about 9,700. It’s yet unclear if or when RCAP will surpass Ameriprise in terms of number of advisers.   

RCAP will pay $16.2 million upon closing the deal, and an additional $10.8 million is payable on the first anniversary of the closing, according to a statement from RCAP. Seventy percent of the amount is to be paid in cash and the remainder in shares of RCAP’s class A common stock. Up to $7.55 million in additional aggregate earn-out payments for the three-year period ending December 31, 2016, is also included in the deal.

Following the acquisition, J.P. Turner will become part of the independent financial adviser network at RCAP.

Aside from its broker/dealer and registered investment adviser (RIA) platforms, J.P. Turner is also active in investment banking, real estate, energy, insurance and annuities, and managed products, according to an investor presentation supplied by RCAP.

RCAP’s executive chairman, Nicholas Schorsch, has received significant media attention in the last several years for piloting large acquisitions and reshaping the financial services industry, especially within the real estate investment trust (REIT) sector.

DC Investors More Active in December

Defined contribution (DC) plan participants saw average daily transfer activity increase in December 2013 over the previous month, according to the Aon Hewitt 401(k) Index.

Defined contribution plan participants transferred 0.025% of total daily balances during December 2013, which is slightly above November 2013’s average of 0.024% and below the 12-month daily average of 0.029%. December 2013 had two days with transfer activity above normal levels, which was the same as November.

The index defines a normal level of relative transfer activity as when the net daily movement of participants’ balances as a percent of total 401(k) balances within the index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.

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The U.S. equity markets continued to improve in December 2013, as the S&P 500 Index gained 2.5% during the month. Non-U.S. equities also ended the year on a positive note, with the MSCI All-Country World ex-U.S. Index returning 0.9% during December 2013. The fixed-income markets, as measured by the Barclays U.S. Aggregate Index, declined by 0.6% during month.

Net transfer activity for December 2013 continued to favor diversified equities (equity assets excluding company stock), with $332 million (0.21%) flowing in. Total net activity across the Aon Hewitt 401(k) Index came in with $359 million (0.23%) transferred for the month. Transfer activity trends were generally consistent throughout the fourth quarter of 2013.

Among the asset classes with net inflows during December 2013, large U.S. funds gained the most, receiving $160 million (45%) of flows. Additionally, international funds had $121 million (34%), while both small and mid U.S. equity funds each received about $26 million (7%) of the monthly inflows.

On average, participants’ overall equity allocation increased to 65.2% at the end of December 2013, up from 64.6% in November 2013.

The percentage of employee discretionary contributions allocated to equities slightly decreased from the high in November 2013 (now 64.1%, down from 65.2%).

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