BOSTON — LPL Financial may already be the country's largest independent broker-dealer, but conditions are ripe for the company to be even more aggressive, a senior executive says.
“Now is a great opportunity to double down on our core businesses,” Bill Morrissey, president of LPL's business development division, said in an interview at the company's annual Focus conference.
The growing independent channel is becoming even more attractive for advisors, according to Morrissey, who is also an LPL managing director.
“Compared to five years ago, the barriers to going independent have really gone down,” he explained. “We live in an open-architecture world in which technology is ubiquitous.”
LEVERAGING SIZE AND SCALE
What's more, macro trends impacting the industry — such as margin compression, regulatory pressure, clients switching to individual securities from packaged products and the decline of actively managed funds in favor of passive investments — all benefit a firm with LPL's size and scale, Morrissey contended.
About one-third of LPL recruits come from the wirehouses, Morrissey said. It's a pipeline he expects to remain steady as wirehouses withdraw their generous bonus programs and suffer from attrition. What's more, "they don't offer the kind of succession planning that advisors are looking for," he added.
RIAs account for about one-third of LPL's recruits, while 20% come from the insurance sector and about 10% from the bank channel.
'FIERCE COMPETITOR'
But LPL’s biggest recruiting obstacle is inertia, Morrissey said. “It’s such a fierce competitor. If you're a successful advisor, making a change is unnatural. You wonder if clients will follow, who will help me and what happens next."
To ease the anxiety of advisors switching firms, LPL's Business Transition Partner group focuses on advisors' experience. "We measure the speed in which the transition takes place, the asset capture and the net promotion approach, a measure of the advisor's satisfaction," Morrissey said.
Although LPL has lost some ground in the annual FP50
"We're focused on recruiting the right advisors with the right characteristics," he said. "We measure success by our ability to increase asset capture and gross profits."
