LPL Financial filed statements with the SEC in early June 4 to go public with an estimated $600-million stock offering.
The independent broker-dealer has 12,026 independent advisors and headquarters in Boston, Charlotte and San Diego. According to its filing, the firm has had a 14 percent growth rate in its advisor headcount since 2000, when it included just 3,570 advisors.
At this pace, the independent broker-dealer is on track to have 13,710 by early 2011; 15,630 by early 2012; 17,820 by early 2013; and 20,315 by early 2014. Thus, LPL Financial could surpass all of the larger wirehouse firms by either 2013 or 2014, depending on how they grow or shrink over the next few years.
As Chip Roame of Tiburon Strategic Advisors and other experts see it, LPL Financial’s IPO could easily shift its position in the brokerage industry: “This is a defining moment for the independent broker-dealers and for LPL,” said Roame. “This announcement is another threat to the dominance of the wirehouses.”
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The broker-dealer has made a very successful transition from being an entrepreneurial firm to being a large corporate firm, Roame explains, “with excellent execution along the way.”
Todd Robinson, Dave Butterfield and Jim Putnam led the firm early on and in 1989, when Linsco merged with Private Ledger. They then handed the baton to Mark Casady, now CEO and chairman, and the firm’s other leaders several years later.
In late 2005, 60 percent 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, and the firm was valued at $2.5 billion.
In 2007, it acquired three broker-dealers from Pacific Life.
“Access to the capital markets will help the firm obtain the needed funds to continue to upgrade technology and grow its business in the coming years,” shared Mark Elzweig, head of Mark Elzweig Company, executive search consultants. “As a public company however, if the firm has a bad quarter, the whole world will know,” said Elzweig.
In addition, “The ability to run the company changes,” said John Rooney, managing principal of privately held Commonwealth Financial, which has about 1,300 advisors.
“As a public company, you are numbers driven, and that will mean that the decision-making process aligns accordingly.”
For Commonwealth, “Our decisions don’t have to be purely profit-maximizing and can incorporate the interests of our community. That’s a big deal for us. In other words, they will have a fiduciary duty to shareholders in being a public company. For a private company, that duty is to your employees and advisors.”
Other experts say that since its sale to the private-equity firms in 2005, LPL Financial has very much been run like a public company. For instance, it has been filing K and Q statements.