Shares of Legg Mason Inc. LM gained 4% since Thursday after it announced its decision to acquire 82% majority stake in Financial Guard LLC, an online Registered Investment Advisor based in Salt Lake City, UT. Financial terms of the deal remained undisclosed.
Operating since 2011, Financial Guard with the help of its advanced technology platform provides investment advice through its interactive website. The company offers portfolio analysis and recommendations for both passive and active funds.
Financial Guard will be part of Legg Mason's alternative distribution strategies business. The company intends to complement the Financial Guard platform’s capabilities with investment products from its nine independent investment managers.
The latest move by the Baltimore-based asset manager is in line with its long-term strategy focused on providing investors with choices “across investment capability, product and vehicle, and distribution.”
Legg Mason noted that the acquisition will not only boost the technological capabilities that will aid in the business growth of the advisors but will meet the requirements of the Department of Labor's fiduciary rule, effective from Apr 2017. The new rule which requires all financial advisers to put their clients’ best interest ahead of their own profits is applicable to retirement accounts such as 401(k) plans and Individual Retirement Accounts.
Legg Mason noted that it will offer the Financial Guard platform to firms who are seeking technology solutions to help them in meeting additional compliance requirements in a cost efficient manner.
Identifying the growing importance of technology, Terence Johnson, Global Head of Distribution for Legg Mason stated, “Technology innovation is redefining consumer expectations and financial firms need a comprehensive, accessible, secure technology solution to serve their clients in this dynamic environment.”
Johnson further added, “As an online technology platform that evaluates both active and passive funds, Financial Guard creates a complete digital solution for advisors and their clients. Together, we are well-positioned to help partner firms and their advisors by providing a simple and scalable platform coupled with compelling investment offerings.”
Notably, driven by a sound liquidity position, Legg Mason has been able to undertake strategic acquisitions in the past couple of years. Further, this year in January Legg Mason acquired a minority equity position in Precidian Investments, an innovator of products particularly for the ETF market. While in April, the company acquired 82% equity interest in New York-based leading diversified real estate investment firm – Clarion Partners, in May it announced completion of the transaction to combine the EnTrust and Permal businesses, with Legg Mason holding 65% ownership in EnTrustPermal. The company should benefit in the long run owing to its strategic investments.
Currently, Legg Mason carries a Zacks Rank #2 (Buy). Some other favorably placed stocks in the finance space include First Midwest Bancorp Inc. FMBI, HomeStreet, Inc. HMST and Flagstar Bancorp Inc. FBC, each sporting a Zacks Rank #1 (Strong Buy).
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