LPL Financial Reaches $50 Billion in RIA Assets

LPL Financial, the nation’s largest independent broker-dealer, has reached $50 billion in total RIA assets under custody, doubling its year-ago total.

“The $50 billion milestone caps five years of remarkable growth for our RIA custody business,” Derek Bruton, managing director for LPL Financial, said in a statement. “We made a calculated decision to focus on this area back in 2008, based on the anticipated success of the then-new hybrid RIA model, which enables both fee and commission-based revenue opportunities for advisors who operate under their own RIA firm. Our recruitment efforts have been wildly successful, as the number of RIA firms on our platform, and their ability to attract assets, has exploded. We have become the destination of choice for the most successful and sophisticated RIA firms in the industry.”

The company said that RIA firms on LPL's custodial platform have average assets under custody of $214 million per RIA firm -- compared with $136 million in average assets under custody at the five largest custodians, according to Cerulli Associates' RIA Service Agent Survey from the fourth quarter of 2012. 

What does this mean for advisory businesses under LPL’s umbrella? “There’s a certain stability and peace of mind that you get when you know the custodian that you’re using is a leading player in the space,” Winnie Sun, managing director of Sun Group Wealth Partners, an independent wealth management firm with $150 million in AUM based in Irvine, Calif., told Financial Planning. Her relationship with LPL has allowed her firm to focus more on client relationships as opposed to being distracted by multiple players and multiple fees, she said.

Ben Marks, president and chief investment officer of Marks Group Wealth Management, an RIA firm in Minnetonka, Minn., with approximately $500 million in AUM, echoed Sun’s remarks, saying in the LPL press release that his firm's greatest challenge has always been the time and resources needed for non-client activities. "LPL solves our challenges -- from marketing and practice management support to strategy and turnkey investment management solutions -- and frees us to focus on making smart investment decisions for our clients," he said.

LPL is not the only independent broker-dealer to expand its work with RIAs. Across the FP50, Financial Planning's annual ranking of the top IBDs, the median percentage of revenue accounted for by fees has increased to 26% from 21%. Earlier this month, Commonwealth Financial Network, which already draws a majority of its revenue from fee-based business, announced new RIA affiliation models for its nearly 1,500 financial advisors. The new models “translate to a more flexible way of growing a business,” Andrew Daniels, managing principal of business development at Commonwealth said in a statement.

Commonwealth’s five affiliation models are now:

• Traditional Representative for straight commission-based business
• Dual Registration for commission- and fee-based business through our broker/dealer and investment adviser registrations
• Hybrid for commission business through our broker/dealer and advisory and planning through the advisor’s own RIA
• Corporate RIA for exclusively fee-based business as an IAR of Commonwealth, with access to a full array of investment choices
• RIA-Only for advisory and financial planning through the advisor’s own RIA, with our support to take care of the rest

Read More:

• Commonwealth Introduces New Affiliation Models
• LPL Hires Morgan Stanley Veteran as Chief Risk Officer
• Top Custodians: Battling for RIAs