LPL Financial opening its coffers for adviser acquisitions

At meetings this year, LPL is talking up its ability to finance advisers' growth

May 6, 2019 @ 2:23 pm

By Bruce Kelly

LPL Financial is letting its affiliate advisers know that if they want to expand, it can help with the financing.

Indeed, the firm has kicked off 2019 by raising the issue with advisers at conferences and has increasingly been willing to discuss funding deals for practices with financing done in-house.

LPL has always had the ability to assist advisers in financing acquisitions but is being more assertive at the moment, according to executives at the firm. With 16,189 financial advisers, LPL is the largest broker-dealer for independent firms.

"What's new for us is an increased willingness for us" to work with advisers looking to buy practices, said Richard Steinmeier, managing director and head of business development. "We've always done financing in terms of acquisitions. If an adviser is buying a practice, this is providing the loan to buy it."

The financing deals are of three varieties, said Gregory Cornick, executive vice president, treasurer, corporate development at LPL.

First is the most traditional, with one practice selling 100% of its business to another. The second is a "sell and stay," in which one adviser is looking to merge with another, but also wants to continue working for a period of time. And the third is what Mr. Cornick called "partial book of business sales," in which one adviser sells some of his clients to another adviser.

"The first two are more prevalent than the last," Mr. Cornick said. "The awareness for capital need is increasing."

Mr. Steinmeier declined to specify the amount LPL has put aside for financing. The firm so far has done a handful of such transactions, he said, and just started talking about it this year at top adviser meetings.

LPL wants its advisers to consult with them before seeking financing at Live Oak Bank and others, he said.

"We've had these capabilities and they have been passively available," Mr. Steinmeier said. "We don't need advisers to go to a third party for capital. We are capital rich. The balance sheet is strong."

"Our profit model is not to make money on these loans," he added. "We are doing this to facilitate the growth of our advisers."


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