The B/D Custodian

As the broker/dealer industry moves, seemingly inexorably, to the fee side of the business, one specific independent B/D–LPL Financial–has taken what might be considered the logical next step: becoming a custodian to non-affiliated RIAs as well as dually registered advisors. LPL announced May 5 that it was starting just such a new line of business, with a late 2008 rollout, under Gary Gallagher as executive VP and head of RIA Services (see news story on page 23). Gallagher, formerly with Fidelity’s custodial unit for RIAs, will report to LPL Financial President and COO Esther Stearns and will be based in Boston. In an interview with IA’s Kara Stapleton, Gallagher said that the new custodial arm “will certainly be able to satisfy any existing LPL advisor that desires to change their business model,” but also noted that LPL Financial is “very interested in seeing the response externally. We think it will be very strong.” In announcing the initiative, LPL Financial CEO Mark Casady said he expects it to be a “key growth driver” for both the company and its “advisors’ businesses in 2008 and beyond.”