LPL Financial LLC is planning job cuts in the second half of the year as part of a broader plan to reposition staff. The plan includes some outsourcing as well as allocating more dollars to technology.
The company's focus will be on outsourcing back office tasks performed by employees who do not deal directly with registered reps and financial advisers. It is unclear how many of the company's 2,900 employees face losing their jobs.
The moves and shifting of worker resources are an attempt to increase operating efficiencies and services for LPL Financial's 13,000 independent contractor reps and advisers, the company said.
In a letter to reps earlier this month, CEO Mark Casady praised the potential gains for outsourcing jobs and also cautioned that job cuts would not be made until July at the earliest. “Our confidence in the benefits of outsourcing is grounded in evidence gathered from businesses that have completed similar initiatives and through our own experience,” Mr. Casady wrote.
“Please also know that we value all of our employees and are taking great care to communicate in a proactive, transparent manner and to treat anyone affected with the utmost respect,” he wrote. “We do not anticipate any jobs will be impacted until the third quarter this year.”
The company is working with Accenture, a global consulting and outsourcing firm, and Bain & Co., another consultant, as part of the shift in employees.
Executives at LPL recently stressed how committed the company is to ramping up its technology. New chief information officer Victor Fetter recently told InvestmentNews LPL intends to hire 75 IT workers in 2013.
“A singular focus on serving financial advisers and institutions has always been at the center of LPL Financial's culture,” said company spokeswoman Betsy Weinberger. “Our position of industry leadership – and our ability to support our clients' growth in a changing marketplace – requires that we continually refine our own business practices.”
LPL Financial's parent, LPL Investment Holdings Inc., is scheduled to release its earnings report on Wednesday. The company has cut up to 10% of its work force in the recent past. Those cuts, however, came as LPL, and every other broker-dealer, was dealing with the fallout out of the credit crisis and the staggering market declines of 2008 and early 2009. Broker-dealers routinely make staff cuts when they grapple with profitability.
LPL has struggled meeting its earnings estimates by Wall Street in recent quarters, and, like all B-Ds, is seeing its bottom line severely crimped due to investors' wariness to trade after the financial collapse of 2008 and record low interest rates.