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Industry Spotlight > Broker Dealers

LPL Defends $9M Fortigent Restructuring

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Executives at LPL Financial (LPLA), which shared the news of its $9 million restructuring of the Fortigent wealth management consulting group on Wednesday, insist that its high-net-worth efforts are on track.

LPL bought Fortigent, which provides outsourced wealth management solutions, in April 2012. It is now moving the unit from Rockville, Maryland, to its headquarters in Charlotte, North Carolina, and expects to spend some $4.5 million on severance pay due to the Fortigent restructuring. About 10 employees were immediately terminated, according to a spokesperson. 

“Our goal is to be a premier provider of high-net-worth solutions in the industry – and we’ve been moving up the chart quite a bit,” said Matthew Enyedi, executive vice president of RIA and high-net-worth solutions. “We are fired up about the opportunity [in this segment.] Advisors need help to growth this business, and investors need their help, as well.

Since its acquisition by LPL, Fortigent’s assets have grown from roughly $64.7 billion to $86.3 billion. Still, there have been a number of executive departures: In 2014, then-President & CEO Jamie McIntyre and former-Chief Investment Officer Scott Welch left the business. 

According to Gary Carrai, who is leading the renewed high-net-worth effort in 2015, advisors across LPL gained full access to Fortigent through a “soft launch” in the fourth quarter. “Now, they can access Fortigent for their investors and integrate [these services] in order to expand their business-level potential,” he said.

LPL says it intends to keep the Fortigent brand while expanding access to its high-net-worth platform for advisors, LPL Private Client.

“We are bringing these teams together in a larger campus environment [in Charlotte] for innovation and efficiency,” said Enyedi. “This represents a dramatic change, not to our [high net worth] offering but to how we support it.”

The shift at Fortigent comes while LPL is under pressure to boost its financial results. In its full-year 2014 earnings announcement, the broker-dealer said its profits fell 2% to $178 million; on an adjusted basis, they dropped 4% to $259 million. Expenses grew 6% to $4.1 billion last year.

LPL plans to record about $6 million of expenses tied to the regrouping of Fortigent this year and hopes to boost its earnings by $3 million a year in 2016 and after as a result.

“This move is not about costs …,” said Enyedi. “We’ve seen a lot of growth on the consulting side, and this was an opportunity to bring pieces together and allow for greater innovation and collaboration [around what is] truly greater differentiation” in the high-net-worth space.  

 On Thursday, LPL shared the news that it broke ground on a new campus in Fort Mill, South Carolina, to facilitate 1,000 staff members. Overall, the firm has about 3,400 employees serving some 14,000 independent advisors nationwide. As of Sept. 30, the reps has an average yearly level of fees & commissions of about $248,000.

— Check out 12 Best & Worst Broker-Dealers: Q4 Earnings, 2014 on ThinkAdvisor.


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