February 12, 2018 – Financial Planning Magazine
LPL Financial’s largest hybrid RIA, Private Advisor Group, added $10.4 million in gross dealer concessions through recruiting in 2017, boosting its assets under management to more than $14 billion and its total client assets over $27 billion.
Private Advisor hired 57 new advisors from firms like Ameriprise, Wells Fargo Advisors and MML Investors Services, placing its headcount of 641 above many medium-sized independent broker-dealers. The Morristown, New Jersey-based firm’s RIA has grown by more than 2,200% in AUM since 2011.
Advisory assets at LPL rose 29% year-over-year in the fourth quarter to $273 billion across its corporate and hybrid RIAs. The No. 1 IBD lost two major hybrid practices in the past three months after requiring new advisors to have $50 million in advisory assets with LPL to create their own RIA or join a hybrid.
The policy changes, which also included lower fees for the corporate RIA, took effect at the beginning of the year. Roughly 100 advisors with Private Advisor use LPL’s corporate platform, according to the firm. The firm’s partnership with LPL remains strong, says Private Advisor co-owner Pat Sullivan.
The hybrid practice, which is also a super office of supervisory jurisdiction, can offer prospective advisors compliance and other home-office services within a flexible structure, Sullivan says. “We love LPL as a partner, but we think we make LPL smaller,” he adds.
Private Advisor’s recent new additions include Eric Sluss of the Canonsburg, Pennsylvania-based Sluss Advisory Group, which joined from Ameriprise in December, according to BrokerCheck.
A month earlier, the firm poached Keith Neighbors of the Huntsville, Alabama-based Neighbors Wealth Management Group from Wells Fargo. Jamie Gore and Jathan Stisher came to the Neighbors practice from MML Investors in November as well.
A spokeswoman for Wells Fargo and a spokesman for MML Investors parent MassMutual declined to comment, while representatives from Ameriprise didn’t respond to a request for comment.
Private Advisor’s team has “a great business where advisors can be part of a strong community of like-minded advisors committed to independence,” Brad Hearn, LPL’s executive vice president for business consulting, said in a statement. He added that LPL congratulates them “on their continued growth.”
LPL provides new dually-registered representatives with transition assistance, according to Private Advisor’s Form ADV, which lists it as a conflict of interest. The hybrid firm doesn’t receive any of the forgivable upfront loans, but they help its ability to recruit advisors, the document notes.
“The registrant considers LPL Financial’s historical relationship with the registrant, financial strength, reputation, execution capabilities, pricing, research and service when recommending or requiring that clients maintain accounts with LPL Financial,” the ADV says.
Private Advisor’s ability to transfer assets quickly also helped it recruit its usual annual incoming class of about 50 to 60 advisors, Sullivan says. The firm can typically move roughly 90% of an advisor’s book of business onto its platform within 30 days, he says.
The RIA opened in 2011, with Private Advisor building it up around its “gold standard” compliance, Sullivan says. The firm’s net new advisors for 2017 amounts to about 35 new advisors after compliance-related terminations, tuck-in purchases of advisors’ books and exits to full independence.
The firm only hires “people that we want to do business with,” says Abby Salameh, Private Advisor’s chief marketing officer, who notes the firm doesn’t set recruiting goals. “We’re much more about the personal relationship than we are about meeting a goal or the economics of it.”
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