Mark Casady, chief executive of LPL Investment Holdings Inc., says he’s increasingly enthusiastic about his firm’s prospects for recruiting high-end brokerage reps, given LPL’s latest expansion plans.
In a conference call with analysts, he said LPL’s impending acquisition of Fortigent LLC by LPL Financial LLC “positions LPL to more aggressively attract high net worth advisors.”
Fortigent is a provider of customized services including investment research, proposal generation and technology for financial advisors and their wealthy clients.
In July 2010, LPL also announced its plan to buy the assets of NRP Financial Inc., a broker-dealer that focused on retirement accounts.
During the conference call this week, Casady said that “the work we're doing to enhance our platform and to provide new services is definitely leading to a larger business coming to us,” Investment News reports.
“Even as the market for new business remains highly competitive, we added 549 new advisors for the year from all channels,” the CEO said during the conference call. “This excludes the attrition of 146 advisors related to the previously announced U.S. conversion,” he added, when LPL Investment Holdings' subsidiary Uvest Financial Services Inc. was consolidated onto its own self-clearing platform, Investment News explained.
Still, Casady’s comments point to a net increase of over 400 new advisors, and experts say that’s just the beginning.
Currently, TD Ameritrade, Schwab and Fidelity stand out as the “Chrysler, Ford and GM” of the RIA universe, recruiter Dave Moran, managing partner at Experienced Advisors Recruiting in South Florida, told eFinancialCareers recently, adding that “a lot of broker-dealers were trying to nibble their way into that market."
”Now that LPL is marrying its broker-dealer clout with Fortigent’s technological prowess," Moran observed, "it will be vying for the number four spot, and breakaway brokers from the Merrills and Morgan Stanleys of the world will be thinking seriously about moving on to LPL."
In the past, “A long-standing knock on LPL has been its inability to recruit top-producing star brokers. While it is the behemoth of the indie-B-D business with 12,847 affiliated reps and advisors, the average payout of those advisors lags behind competitors such as Commonwealth Financial Network and Raymond James Financial Services Inc.,” Investment News reports.
According to the most recent data, the average 2010 payout per rep at Commonwealth was $377,861 and $311,513 at Raymond James Financial Services, while the average payout at LPL was only $186,223.
Still, LPL chief financial officer Robert Moore told Investment News that changes at the company over the past few years had changed the type of advisor LPL is now recruiting.
Moore said that historically, LPL had focused on serving reps and advisors with $750,000 or less in production, but the firm is now moving up the food chain and seeking bigger producers, says the CFO.
“An important underlying theme is that LPL began quite modestly,” Moore told Investment News. “The core advisors produced $750,000 or less [in fees and commissions]. The goal was to serve them profitably, but LPL has taken a series of steps that has allowed us to move up that chain and to get more complex, larger practices.”
Finally, Moore characterizes LPL’s net new advisory assets of $10.8 billion in 2011 as one clear sign of strength. The figure represents an increase of 27.1 percent over the 2010 figure.