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LPL Says Assets Up in May, Clarifies FSI Departure News

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Independent broker-dealer LPL Financial (LPLA) says its total client assets rose nearly 1% in May from to $486 billion compared with their April level, though client cash sweep balances weakened 1% to $29.2 billion.

This follows a 1% jump in assets in April and a 3% decrease in cash sweep balances, according to the firm. (About $291.6 billion of its client assets are in brokerage accounts, while about $194 billion are in advisory accounts.)

The IBD also says that its departure from the Financial Services Institute several months ago “was completely unrelated to the matter of dues” payments to the lobby organization.

“As part of our growing government relations focus, LPL continuously evaluates where we are focusing our efforts around advocacy and the best way to use our time and resources to support the interests of investors and clients,” it said in a statement. “While we respect the work of FSI, having grown our internal government relations efforts considerably over the past few years, and now with our own office in D.C., we felt it best that we focus more of our attention on driving our own advocacy agenda and voicing our distinct views on the issues affecting our industry.”

Earlier this month, LPL announced that it was opening an office near Capitol Hill in Washington.

“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.”

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

As for FSI’s reaction to LPL’s exit from the group, the head of membership and marketing, Chris Paulitz, explained in early June, “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.”

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.

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,” Paulitz said. “We wish LPL well and hope to see them back as a firm member soon.”

LPL is expected to report its second-quarter earnings on Aug. 4. Equity analysts anticipate it to announce earnings per share of $0.44 on revenue of $1.01 billion, according to EarningsWhisper. 

— Check out LPL Expands D.C. Presence After Quitting FSI on ThinkAdvisor.


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