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Industry Spotlight > Broker Dealers

LPL Rolls Out Program to Woo Wirehouse Breakaways

By Janet Levaux

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LPL Financial’s East Coast headquarters in Fort Mill, South Carolina (Photo: LPL Financial)

Less than a year after LPL Financial CEO & President Dan Arnold said the firm would roll out a new affiliation model — aimed at attracting wirehouse and other employee advisors — the firm announced it’s done just that.

“The first team to move to this solution did so April 1,” said Rich Steinmeier, LPL’s managing director of Business Development.

“We did that [transition] 100% remotely and used Amazon Echo Show tablets. We also did the physical installation of furniture, technology and other resources, then did a deep clean, and they moved in,” Steinmeier explained.  

While there are about 53,000 wirehouse advisors, the number that want to make a move right now — given the coronavirus pandemic and market volatility — could be less than in “normal conditions.

“We couldn’t have predicted this,” the executive admits, adding that COVID-19 has made “the initial outreach a bit more muted [than expected], broadly speaking.”

Still, some advisors are expressing interest in the model during today’s “new normal,” according to Steinmeier. “It’s an opportunity for advisors to reevaluate their practices and partnerships, and more are seeing things from this perspective.”

Several wirehouses have pushed back changes to their compensation programs and “grids” that were set to take place this year; as a result of those shifts, advisors won’t see expected reductions in pay in the short term.

“Come January, though, they’ll continue to feel ‘I’ve got to do more, more and more to earn my payouts,’” the executive said. “Then they’ll ask questions” about the future of their practices. 

Employee-Advisor Market 

This segment is significant, with some $11 trillion of client assets. 

Beyond the 53,000-plus advisors with Merrill Lynch, Morgan Stanley, UBS Americas and Wells Fargo Advisors, there are many in employee channels at Raymond James & Associates (3,300), Ameriprise Financial (2,130); and JPMorgan (2,880), for instance.   

Some “40% of advisors in the [wirehouse/employee] channel say they aspire to move to the independent channel and prefer to run their own practices, [yet only] some 18% who move … [go] to independent,” Steinmeier said.

The reason? “It feels like it’s a bridge too far in terms of starting their own practice,” he explained, pointing to the time and effort it takes to set up an office, technology, compliance, payroll and other operational tasks. 

“There’s a lot of holding back on advisors’ movement into their preferred channel,” the executive added, “and that’s why we’ve been working pretty hard over the past year for this offering.”

Janet Levaux

@Think_JanetL

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