Got Great Advisors? LPL Is Watching

LPL Financial plans to poach from rivals, not buy them.

The nation's largest independent broker-dealer -- which expects to soon surpass Merrill Lynch in number of  advisors -- favors "organic growth over acquisitions in today's market," says Dan Arnold, LPL's new president (and former chief financial officer).

Continuing advisor movement from employee channels to independence and unhappy advisors at smaller firms will  keep LPL's pipeline full, Arnold maintains.

Advisors at smaller B-Ds "looking for more capabilities" and brokers at insurance-based broker-dealers who want to "broaden their practice" present LPL with a "great  recruiting opportunity," Arnold says in his first interview since becoming president.

LPL's size, scale and  ability to  offer advisors a variety of platform offerings have kept acquisition costs "pretty stable," Arnold says. But the company, which has over 14,000 advisors, is "always looking" at its model, he adds, and is "not against unweighting the amount of capital to recruit at a greater pace."

Translation: LPL will do what it takes to get the advisors it wants. "We're the No. 1 recruiter and we have a 97% retention rate," Arnold says. "That's tough to compete against."

BANKING GROWTH

LPL's banking and credit union business, which now accounts for about 15% to 20% of LPL revenue, also  has "room for growth," says Arnold. The company's new president came to LPL  in 2007 from Uvest Financial Services Group, which provided advisors, brokers and investment managers to banks and credit unions.

LPL already has approximately 40% of the  financial institution market,  but is "bullish on the prospects of gaining share," Arnold says. Banks and credit unions want to generate more fee-based income he says, while larger banks are showing interest in in an LPL platform combining banking and  trust services.

WINNING OVER ADVISORS

Arnold won praise for his work at Uvest and his performance as  a strategist and CFO for the past eight years. But he still needs to earn his stripes with advisors in the field, who saw his predecessor, Robert Moore, as a hard-working and friendly advocate for their interests.

Arnold argues that his "entrepreneurial background" at Uvest gives him ''common alignment with advisor practices."  He has already met with top advisors at LPL's recent leadership conference in Hawaii and regional gatherings, he notes; they have a shared goal in continuing to "evolve the client experience."

To achieve that goal, and help advisors  increase productivity and grow their practice, LPL will be investing over the next five years in automation, technology  and "people  to support the IBD's consultative capabilities," Arnold says.

Read more:

 

For reprint and licensing requests for this article, click here.
Career moves Financial planning
MORE FROM FINANCIAL PLANNING