LPL Financial wants to have it all and that, as it turns out, just may be its Achilles heel. The missteps by the nation’s number one broker dealer have their roots in 2017. First came the mismanaged acquisition of National Planning Holding assets. The $325 million deal netted LPL lack luster results, with only 1,900 of National Planning Holdings’ 3,200 advisors choosing to make the move. This news was rapidly followed by an announcement of internal policy changes for corporate RIAs whereby new advisors needed to have $50 million in assets before joining an LPL hybrid. The dissent which followed these decisions among the LPL ranks was quick and swift.
In an effort to appease their advisor teams and quell general dissatisfaction, LPL closed 2017 out with what it thought was an enticing offer. The firm released, with much fanfare, a new pricing structure which cut advisor fees on its strategic asset management platform to 5 basis points for $50 to $100 million and 3 basis points for $100 million or more. It didn’t work.
Looking at statistics for revenue, advisor attrition, and assets under management tell the tale. LPL Financial is on shaky ground and its competitors have been swiftly bridging the gap in an effort to usurp the leadership position LPL has held for so long. At the close of 2017, LPL revenue totaled $4,281.50 (M), maintaining only a thin margin over number two broker dealer Ameriprise Financial, who closed 2017 with revenue reports of $4,260.00 (M). Those numbers are telling, but even more so are the statistics related to LPL advisor headcount, which has taken a nose dive in 2018. Nine major teams have left LPL Financial to date, taking with them $13.6 billion AUM and 640 advisors.
The message is clear and it is one LPL Financial should heed. Growth is good when well managed with a deft touch, but when driven by an unquenchable thirst to achieve at any cost, the ultimate result will only be negative. Such is the LPL story. Its rise to the top can be highly attributed to the loyalty of its advisor teams. These same advisor teams initially stood by LPL, remained diligent, and optimistically hoped that the buy, grow, change mentality of company leadership would produce positive results. These hopes have never been realized and tensions have now reached a boiling point where the negative impacts of LPL policies far outweigh the positives for LPL advisors. What’s more, from the perspective of many an LPL advisor, the company service model has devolved into something so flawed and broken as to be beyond repair.
Sadly, LPL seems destined to join the growing ranks of other large firms who have disenfranchised their advisors to such a degree that jumping ship seems the best and most attractive option. Which begs the question, when will large firms wake-up from their ivory tower thinking, fueled by greed and arrogance, and put into place long-term strategies and internal policies that place both advisor needs and customer needs front and center? Unfortunately, when taking stock of the current state of the financial services industry, that day may never come. And so, expect to see more and more advisors heading for the door – at LPL and other firms like them – ready to seize their independence and craft a financial services future of their own design.
