Brokerage Firms Change Hands as Insurers Divest In House Securities Firms, While REIT Manager Schorsch Buys First Allied Securities

Symetra Financial Corp. (SYA), an insurance company, is leaving the independent brokerage business after it sells its broker-dealer Symetra Investment Services Inc. to Manulife Financial Corp. (MFC) unit John Hancock Financial Services Inc. (JHF). Symetra chief executive Tom Mara said that considering the company’s products at this time, owning the brokerage firm as a “distribution channel” isn’t a “good strategic fit” any longer.

The insurer’s brokerage company has approximately 280 registered representatives. Manulife is making the buy in part because it wants to broaden its asset-management business. (Last year, it agreed to buy Wellington West Financial Services Inc. from National Bank of Canada.)

However, ever since the credit crisis, Symetra isn’t the only insurer to get rid of their independent broker-dealers because of the risks and expenses involved with being part of the securities industry. (The declined in variable annuities sales hasn’t encouraged insurance companies to stay in the broker business either.)

A couple of months ago, Cetera Financial Group announced it was purchasing two MetLife Inc. (MET) owned brokerage firms,. Meantime Western & Southern Financial Group. is selling assets belonging to Capital Analysts Inc., its independent brokerage firm to Lincoln Investment Planning Inc., and Cetera bought Genworth Financial Inc.’s Genworth Financial Securities for $78.5 million. In 2012, Hartword Financial Services Group (HIG) agreed to sell its Woodbury Financial Services to insurance giant American International Group (AIG).

In other news involving the buying and selling of broker-dealers, Nick Schorsch, who, along with managers, controls RCAP Holdings LLC, is buying First Allied Securities Inc. The deal includes purchasing First Allied Holdings Inc.’s outstanding shares. First Allied Holdings’ 1,500 financial advisers and registered representatives control $32 billion in client assets. Schorsch, who been successful with nontraded real estate investment trusts, also runs American Realty Capital, which is an REIT sponsor that right now has 13 investment offerings. Also this month, another REIT that Schorsch runs, American Realty Capital Properties Inc., announced a definitive merger agreement reached with CapLease Inc., a traded REIT, in a $2.2 billion deal.

Meantime, One net-lease REIT, American Realty Capital Trust IV Inc., is buying $1.4 million in retail properties from GE Capital. The acquisition follows the soaring sales of American Realty Capital Trust IV’s. Advisers and representatives reportedly raised nearly $1 billion in ARC IV equity during the first quarter of this year. After the GE Capital purchase, the REITs portfolio will be at $2.3 billion.

Regardless of the change in players behind the scenes of the independent brokerage business, as an investor it is important that throughout whatever transitions are taking place you, as a customer, continue to get the quality and integrity of services you need from your financial adviser or registered representative. If you suspect investment fraud or some other negligence caused your investment losses, please contact our broker fraud lawyers today.

Insurer to sell its broker-dealer to John Hancock, Investment News, June 11, 2013
First Allied’s Surprise Sale to Real-Estate Group Creates ‘Whole New Dynamic’ for BDs, Advisor One, June 12, 2013

American Realty Capital in another big deal, this time with GE, Reuters/Yahoo, June 3, 2013


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