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Robert Russo

Practice Management > Building Your Business > Dealmaking

LPL Takes 20% Stake in Independent Advisor Alliance

By John Manganaro

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LPL Financial has taken a 20% ownership stake in Independent Advisor Alliance, marking LPL’s fourth such minority investment.

Founded in 2013 in Charlotte, North Carolina, IAA bills itself as a hybrid firm “strategically focused on empowering financial advisors to succeed as independent business owners.” The firm has about $17 billion in assets under advisement across some 140 partner firms with 226 advisors.

As Robert Russo, IAA’s founder and CEO, told ThinkAdvisor this week, LPL’s investment will support IAA as it works to advance its services and tools and create an “even more supportive ecosystem” for its network of financial advisors.

This includes IAA’s partnership program, Russo explained, where it invests capital in partner firms to ensure that they have the resources needed for sustainable growth and success.

Russo emphasized that IAA will maintain control and ownership of its management and operations, ensuring continuity and stability for its employees and its existing partners and advisors. He said IAA considered several options before selecting LPL, with a key criterion being an investor who shares a longstanding commitment to fostering innovation and enhancing services for financial advisors.

“It’s a win-win for advisors when their RIA and broker dealer are aligned,” Russo said. “Our partner firms know we’re in it for the long haul. They have clarity and security in their future, combined with the best support and services in the industry.”

Russo specifically contrasted this approach with firms that have taken on minority stakes from private equity firms, arguing that LPL’s position in the advisor industry is mutually aligned with that of IAA. He also emphasized that, given LPL’s structure as a publicly traded company, it would essentially be unable to acquire more than a 24.99% stake in an independent firm like IAA — meaning that this is not “just the first step” in a tranced acquisition process.

“The PE route may work well for some other firms out there, but it’s not something we wanted to pursue,” Russo said. “In my view, you have to wonder about the long-term perspective of the PE firms and whether their goals are ultimately well-aligned with those of the advisors and the clients.”

Russo said the alignment with LPL should help his firm stand out from a recruiting perspective, noting that the additional resources will allow for the addition of management staff — freeing him up to do more of what he “really loves,” which is advisor recruiting.

Pictured: Robert Russo

John Manganaro

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