LPL Financial is putting a bigger emphasis on recruiting registered investment advisors than it has in the past.
Rich Steinmeier, LPL Financial’s new head of business development, spoke with ThinkAdvisor about the firm’s plans to better support and attract RIAs as part of its recruiting efforts.
Over the last nine years, independent broker-dealers have gained a net 22,000 advisors. Meanwhile, RIAs have gained a net 20,000 advisors, according to Steinmeier.
Those are the two highest growth channels in terms of the number of advisors, Steinmeier added.
“We participate very fulsomely in the IBD market and we’re going to be much more intentional about how we make sure we’re supporting RIAs [and] hybrid RIAs,” Steinmeier told ThinkAdvisor. “I would tell you it’s an area of emphasis for us right now, and will continue to be.”
About a year ago, LPL decided it needed to look hard at the advisors who are dropping their Financial Industry Regulatory Authority licenses, according to Steinmeier.
LPL currently has a couple hundred advisors that have dropped their broker license and operate strictly as RIAs. The firm also has hybrid RIAs that still use LPL’s broker-dealer platform.
“We have [RIAs] that are already affiliated with us, but what you’ll see from us is that we are at our core … a broker-dealer chassis,” Steinmeier said.
So, LPL went on a listening tour to hear from the couple hundred advisors already in that space as well as advisors that are considering dropping their licenses. The goal: To find out what LPL needs to look like for RIAs to work ideally.
“We need to make sure that you feel this is an uncompromised platform for RIAs, where you don’t have things like required fingerprints being part of our paperwork, where you don’t have client paperwork that refers to FINRA,” Steinmeier explained.
LPL is now taking a look at the product offerings on the platform, as well as its core workstation to see how they need to work differently for a pure RIA model. The firm is also reviewing some of its policies and procedures that still may have an anchoring to the brokerage model.
“So we’re talking to all those advisors and understanding what does it need to look like. What does our support system need to look like so that you feel that we run the best platform and support for RIAs?” Steinmeier said.
While LPL does currently recruit RIAs, Steinmeier believes the firm will be “much more successful in the not-too-distant future” in part because of the changes the firm is making to better support RIAs.
“Right now more RIAs more often are considering the direct affiliation with the custodians,” Steinmeier told ThinkAdvisor. “That’s where the center of gravity is at this point.”
But Steinmeier says the firm is making changes to become “more front-footed” in the RIA space.
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