The independent broker-dealer LPL reported $2.3 billion in net advisor loans last year, up a whopping 53% from 2023, per an SEC filing.
Griffin Kelly
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Brokerages aren’t shying away from big upfront payments to wealth managers who join their ranks.
LPL Financial is leading the charge, reporting $2.3 billion in net advisor loans in 2024, a whopping 53% increase from 2023, according to its latest 10-K filed in February. The loans are a commonplace way for major independent firms to help advisors transition to their platforms, and are typically repaid or forgiven over the next five to 10 years. With the industry facing a looming workforce shortage, major brokerages may need to pony up to secure top-producing advisors.
“The best way to grow AUM is to acquire a large book of business,” said Frank LaRosa, CEO of Elite Consulting Partners.
Hey, Big Spender
LPL, which boasts 28,000 advisors, is a particularly aggressive force in recruiting thanks to its lavish loan strategy and strong M&A activity. The leading IBD completed its acquisition of Atria in October, a wealth management firm with roughly 2,400 advisors overseeing $100 billion in assets. LPL said it aims to retain 80% of these advisors and finish onboarding them by mid-year.
But it’s not only LPL playing the big blind, with the likes of Raymond James also upping the ante on advisor loans. The regional BD, which has close to 9,000 advisors, reported $1.33 billion in net advisor loans last year.
Default Judgement. There could be a significant drawback to heavy lending, LaRosa said. He cited the predicaments wirehouses found themselves in during the Great Recession. “They were really aggressive with recruiting bonuses, but then ‘08 came and advisor practices imploded, and those deals took a lot longer to pay off,” he said.
With a recession of that scale seemingly unlikely, LaRosa said brokerages simply aren’t worried about over extending. “No one sees that coming right now … that’s why they’re making hay while they can,” he said.
