LPL, WEG part ways in second large OSJ departure

Wealth Enhancement Group has confirmed that it is the second large advisory practice to part ways with LPL Financial, ending months of speculation.

WEG, a Minneapolis-based investment advisor with $96 billion in assets under management, has operated as an "office of supervisory jurisdiction" at LPL for more than 17 years. An OSJ is a large practice within an independent broker-dealer authorized to fulfill certain supervisory functions on its own rather than having to go through a central office.

Then LPL CEO Dan Arnold said during an earnings call in July that two large OSJs were leaving the firm, eventually taking about $20 billion in client assets with them. It quickly emerged that one of the departing OSJs was Merit Financial Advisors, a hybrid firm with about $12 billion under management.

But the identity of the second firm remained a mystery, and at the time WEG representatives declined to answer FP's question about whether the firm was leaving LPL. A spokesperson for WEG confirmed Friday that the firm is indeed leaving.

"The two firms will be amicably ending their relationship effective June 30, 2025, as each pursues its own growth objectives," according to the spokesperson. "We have appreciated their partnership over the years and are working in close cooperation to smoothly transition the approximately 10% of our clients' assets affiliated with LPL to other custodians and partners."

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The news of WEG's departure was first reported by WealthManagement.com. 

An LPL spokesperson said: "LPL and WEG have enjoyed a mutually beneficial partnership for many years. However, as both companies continue to evolve, WEG will no longer have a relationship with LPL.

"We remain committed to ensuring a smooth transition for WEG advisors and their clients, and we're confident this shift will ultimately benefit and enhance LPL's ability to support our valued clients," the spokesperson added. "This decision aligns with our strategic intent to focus our investments on partnerships that reflect LPL's mission and operating models."

When Arnold announced the departure of the two OSJs in July, he described the exiting firms as being "strategically misaligned with our mission and model as they were limiting advisors' ability to choose how and where they do business.

"That posture is in stark contrast to our core principles of advisor independence, and as a result we have resolved to separate from these relationships," he said. "At the end of the day, these separations will strengthen our overall ecosystem and position us to better serve the great partners on our platform."

Arnold was fired by LPL's board in October over allegations that he had failed to maintain a respectful workplace. LPL, now under CEO Rich Steinmeier, reported in its latest quarterly earnings that the departure of the two OSJs had cost it about $6 billion in asset flows. Even so, the firm reported $27 billion in net new assets for the third quarter.

WEG is among the many private equity-backed aggregators now driving consolidation in the RIA industry. Its backing comes from TA Associates and Onex Corporation and it was founded in 1997.

WEG has so far completed 15 acquisitions this year. Its latest, in November, was of M&R Capital Management, an RIA managing $536 million in Summit, New Jersey.