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LPL Affiliate Private Advisor Group Launches New Plan to Attract Wirehouse Brokers Who May Want to Go RIA


By: Bruce Kelly, Jan. 10, 2019 /

A key part of the plan is LPL’s agreeing to waive a custody fee.

LPL Financial‘s largest affiliate, Private Advisor Group of Morristown, N.J., is launching a new platform its partners believe will give it the ability to attract wirehouse brokers who want to transition to the RIA channnel.

Private Advisor Group is a giant hybrid brokerage and advisory platform, with $17 billion in assets under management and 644 advisers.

There has been a surge over the past few years in advisers who work at the four Wall Street wirehouses who want to move to independent registered investment advisers or independent broker-dealers, with some IBDs landing a large share of such recruits and others lagging. Over time, it’s possible for advisers to keep more revenue they produce and earn more income working in the RIA or IBD channel than at a wirehouse.

“We will create the path” for the advisers who are looking to move from a wirehouse, said Abby Salameh, chief marketing officer at Private Advisor Group. “We will not bind them in any way and will act as kind of a halfway house for these teams. If they choose to establish their own RIA in a year or two, we will help them go independent.”

The new wrinkle in the firm’s platform includes LPL waiving a five-basis point fee it usually charges advisers who hold assets in custody at competing custodians, including Schwab Advisor Services and Fidelity Clearing & Custody Solutions.

LPL’s willingness to cut a fee for assets held at a competing custodian comes at a time when the firm has been tinkering with its strategy to drive assets to its corporate RIA platform.

LPL does not report the amount of assets its advisers hold at outside custodians, but affiliates have said in the past it could be at least 10% more profitable for LPL to have adviser assets with its own corporate RIA rather than at a competitor such as Schwab or Fidelity.

“We are delighted to help support Private Advisor Group with this new offering,” said Andy Kalbaugh, LPL Financial’s managing director and divisional president, national sales and consulting, in an email. “The firm’s commitment to supporting independent advisors has proven to be a huge success and we look forward to partnering with them and empowering wirehouse teams to make this move to independence.”

It was not clear whether LPL would consider waiving the five-basis point custody fee for other branch offices looking to recruit wirehouse advisers.

Private Advisor Group’s marketing material labels the new offering as a “fully integrated” RIA and branch office, known as an “office of supervisory jurisdiction” in industry nomenclature. While recruited brokers may choose a custodian other than LPL, they will park brokerage assets on LPL’s clearing and custody platform.

The firm’s target adviser or team is those with less than $1 billion in assets who are looking for a complete, all-in-one set of compliance, reporting and trading tools, Ms. Salameh said. Private Advisor Group is working with Orion Advisor Services for technology and MarketCounsel for the recruiting leads in the introduction of the new platform, she added.

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