Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Financial Planning > Behavioral Finance

LPL Expands D.C. Presence After Quitting FSI

Your article was successfully shared with the contacts you provided.

LPL Financial (LPLA) said this week that it is opening an office near Capitol Hill in Washington, D.C., several months after ending its membership in the industry lobby group for independent broker-dealers, the Financial Services Institute. 

“In the past, LPL has relied more significantly on FSI because we did not have a Washington, D.C. office or a state government relations program. This is no longer the case. LPL has now invested significant resources to build our own government relations function and to establish our own voice on positions and issues that matter to us,” explained LPL spokeswoman Lauren Hoyt-Williams in a statement.

(The news of the break with FSI was first reported Wednesday by RIABiz.)

LPL’s move in the nation’s capital comes two years after it hired Nicole Petrosino to join its government relations team as a VP and head of its federal lobbying efforts. The IBD insists that opening an office near Capitol Hill and representing itself in Washington, D.C., is a logical extension of its overall lobbying efforts as a major player in the broker-dealer space.

“With the Great Recession and Dodd-Frank [legislation], we knew we were at a point where as a firm and as an industry leader … we felt we should be speaking out and having a seat at the table from a leadership perspective,” said Peggy Ho, head of government relations for LPL, in an interview. “We started investing in our government-relations efforts in 2009-2010 and working more with industry groups.”

The IBD set up a political action committee in 2010, Ho says, and then organized a government-relations team within its legal department, hiring a staff member in the Washington, D.C. area, to complement the work of another LPL employee there.

As for FSI’s reaction, the head of membership and marketing, Chris Paulitz, explained, “We very much value LPL’s involvement at FSI for over a decade and for their leadership in helping us grow to nearly 40,000 financial advisor members. And we’re grateful to have thousands of LPL advisors as members – including on our board of directors.”

Today, the employees at LPL Financial’s D.C. office include Sarah Gill, senior VP of government relations, who focuses on regulatory policy; Emily Gordy, executive VP and deputy general counsel of regulatory affairs; Petrosino; and executive administrative assistant Denena Washington.

“The work of our Government Relations team is one important way LPL demonstrates its commitment to ensuring all Americans have access to independent financial advice,” said David Bergers, the firm’s Boston-based general counsel and managing director of Legal and Government Relations, in a statement.

DOL and Legal Issues

In April, LPL issued a conciliatory response to the Department of Labor’s new fiduciary rule, saying it “is pleased by what appears to be positive changes implemented in the rule and appreciates the Department of Labor’s willingness to listen to concerns about protecting choice for investors.”

In contrast, FSI has been vehemently opposed to the rule and is now one of several trade groups filing a lawsuit to stop the measure.

As FSI President and CEO Dale Brown said in early April: “As we have said since day one, there is no compelling evidence this rule is necessary to achieve a uniform fiduciary standard, and DOL’s own analysis fails to make the case.”

Before the rule was finalized, LPL Financial told its advisors that it would cut prices and account minimums and roll out a fund-only brokerage IRA option. “While we continue to advocate for a thoughtful resolution to the fiduciary issue — one that preserves investor choice — LPL recognizes that the DOL rule will have implications for financial advisors and investors,” said LPL President Dan Arnold, in a statement earlier this year.

The firm says it will drop the pricing of centrally managed platforms, so advisors can offer services “more cost effectively and grow their practices.” The broker-dealer said earlier this year that it was getting rid of the research strategist fee and annual IRA maintenance fee in its Model Wealth Portfolios. Now, it plans to “further reduce MWP pricing” next year.

“The change [in 2017] is expected to lower the total cost of accessing quality financial advice for investors in some cases by nearly 30% compared to current pricing,” according to LPL. In addition, LPL says it intends to lower the account minimum in its Optimum Market Portfolios from $15,000 to $10,000 later this year. It eliminated the IRA maintenance fee for these portfolios in early 2016.

FSI remains hopeful that LPL may reconsider its departure from the group. ”We have over 100 other diverse member firms – about 10 new firm members in the past year – and have added over 2,000 new financial advisor members in just the last month. We wish LPL well and hope to see them back as a firm member soon,” added Paulitz.

LPL is tackling a number of other issues at the moment. In March, for instance, the lawsuits started to pile up for the IBD in the wake of a sharp dropoff in its stock price.

For instance, several attorneys in New York filed a class-action suit on behalf of shareholders a day after a pension fund in Michigan took action in a southern California court against the independent broker-dealer, alleging that it misled investors in order to boost its stock price while executing a $250 million share buyback plan that benefited a key private equity investor. Both suits seek to recover damages for shareholders of record between Dec. 8, 2015, and Feb. 11, 2016.

See LPL Facing Lawsuits Over Stock Drop.

Attorneys have moved to file at least five class-action lawsuits across the country and several attorneys also state that they are investigating the company and its executives for possible securities fraud.

LPL declined to comment, noting that it does not issue statements on pending litigation. Its stock was trading down 4% Friday at $24.75, off nearly 50% from its 52-week high of $48.18.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.