LPL Hikes Fees $1,000 per Advisor, Asserts BD’s Value Proposition

LPL Financial’s Mark Casady spoke to a conference of investors in London of the value the broker-dealer has to shareholders and its advisor-customers, not least the ability to raise fees amounting to $1,000 per advisor.

Speaking at the Nasdaq OMX Investor Program held jointly with Morgan Stanley, Casady delved deeply into the broker-dealer’s business strategy, emphasizing the firm’s ability to grow, develop new markets and avoid blowing up. In lengthy remarks the transcripts of which are posted on financial blog Seeking Alpha, Casady said LPL is now the fourth-largest broker-dealer in America by advisor count. While an M&A binge in 2007 ratcheted up the number of advisors, Casady said 80% of the firm’s 13,000-advisor head count has come through organic growth.

LPL, which has long been the No. 1 firm by advisor count among independent broker-dealers, has also branched out into the RIA space, quickly amassing $20 billion in assets under custody in the three years since it has entered that market. Casady says LPL now ranks No. 5 in that space, right after Pershing, and has diversified its earnings through its custodial services.

Responding to a conference participant’s question about profitability, Casady also touted the firm’s ability to raise its advisors’ fees, attributing that pricing power to “the great relationship with our advisors,” who “understand we have to make sure the company is profitable.”

The fee hike would raise about $13 million. Said Casady: “We’re able to raise fees on our advisers about $1,000 per adviser for the entire system. So, roughly 13,000 people have seen essentially an inflationary increase that’s come as a result of our examination of our costs and the need to charge a bit more in a number of areas, like affiliation fees, E&O insurance, in areas where we see costs going up.” LPL is simultaneously reducing equity transaction ticket charges from $15 to $9.