LPL Financial, which filed an S-1 statement with the SEC on Friday, June 4, to go public with an estimated $600 million stock offering, had 11,950 affiliated representatives as of April 1, 2010, a self-reported number gathered as part of Investment Advisor’s annual independent broker/dealer survey.
According to its filing, it’s had a 14% growth rate in the number of reps since 2000, when it had just 3,570 advisors.
Projecting that pace of growth forward, the independent broker/dealer could surpass all of the larger wirehouse firms by rep count by either 2013 or 2014, depending on how they grow or shrink over the next few years.
Regardless, “This is a huge milestone for independent broker/dealers,” said Chip Roame, head of the consultancy Tiburon Strategic Advisors. “Ten years ago, LPL only had 3,000-4,000 financial advisors and were looked down upon by many wirehouse financial advisors.”
While that viewpoint has not completely turned the corner, it is in the process of doing so. “More wirehouse brokers will respect the firm as a public company and that may boost LPL recruiting of larger teams,” explained Roame.
“The LPL IPO will be an overall positive for their recruiting efforts,” said Mark Elzweig of Mark Elzweig Company, executive search consultants.
“The IPO has been in the works for quite some time, now the uncertainty as to when it will take place has been removed. More importantly, advisors will welcome the opportunity to be part of a solid, public company,” Elzweig explained. (See related story on the recruiting implications of LPL’s announcement.)
Wirehouse rival Morgan Stanley Smith Barney has 18,140 advisors, while Wells Fargo Advisors includes 15,119 and Bank of America-Merrill Lynch has 15,005. UBS’ advisor force is now about 6,870.
Privately held Edward Jones includes 12,743, and publicly traded Ameriprise has 11,837. Raymond James, also a public firm, has 4,523 financial advisors.
A Good Place to Be
“They are well positioned,” said Tim Murphy, CEO and President of Investors Capital, a publicly traded independent broker/dealer with about 550 advisors. “The independent channel is gaining ground, and they are the dominant player in the channel.”
By going public, LPL Financial now has “a currency to pay employees and maybe even to pay financial advisors,” said Roame. It’s “a way to tie key people to the firm longer, and it also gives the firm a source of new funds if they determine that another acquisition is wise. Plus, I assume it lets the firm pay out some long time employees.”
In late 2005, 60% of LPL Financial was sold to Hellman & Friedman of San Francisco and Texas Pacific Group of Fort Worth, a signal to many observers that the company’s next financial move would be to go public. At the time, LPL Financial’s advisor count was 6,800.