Technology failure thwarts Linsco

An online-access snafu put a glitch in Linsco/Private Ledger Corp.’s plans to compete with the largest firms in the industry and left 7,000 financial advisers unable to place trades, view accounts or perform other routine tasks for most of last week.
AUG 13, 2007
By  Bloomberg
NEW YORK — An online-access snafu put a glitch in Linsco/Private Ledger Corp.’s plans to compete with the largest firms in the industry and left 7,000 financial advisers unable to place trades, view accounts or perform other routine tasks for most of last week. “The custodians and broker-dealers are beginning to take on more responsibility because they’re trying to match the Smith Barneys of the world, and we’re going to see hiccups like this as people try to upgrade their systems,” said Stephen Winks, principal of SrConsultant.com of Richmond, Va. Some advisers said they are furious at the company, which they think has been insensitive to the burden the technological problems placed on them.
Wrath of advisers “It’s very understandable that advisers were frustrated,” said Mark Casady, chairman and chief executive of LPL of Boston and San Diego. “But I was struck by the confidence [they had] in us to fix this problem.” Mr. Casady acknowledged that he had received his fair share of telephone calls and e-mails from advisers who vented at him because they couldn’t access LPL’s system online, a problem he blamed in part on a software installation completed over the previous weekend. “This happened [during] a particularly large installation of software, and it wasn’t caused by the software itself,” he said. “It was an indirect effect [of that installation]. It was caused by a change in the operating environment,” Mr. Casady said. He declined to be more specific. Contrary to an earlier communication from the company, eMoney Advisor Inc. of Conshohocken, Pa., did nothing to contribute to the system failure, Mr. Casady said. The problem was largely fixed by Thursday morning, he added. “The systems are back to normal with the exception of a very small percentage of users and a very small percentage of functionality,” Mr. Casady said. In addition, LPL will perform an independent review of what happened, wrote Mr. Casady in an e-mail sent to advisers late last Thursday. LPL’s technology breakdown wasn’t the first such occurrence. In June, TD Ameritrade Institutional of Jersey City, N.J., faced a series of technical challenges that frustrated some advisers who held assets in custody at the firm (InvestmentNews, June 18). Rare occurrence But such failures are unusual, according to Jim Starcev, managing principal of Etelligent Consulting Inc. of Overland Park, Kan. “It’s hard to imagine,” he said. “That’s a long time to be down, especially for a company that big,” Mr. Starcev said of LPL’s troubles. “It’s surprising they don’t have some back-up or contingency system.” LPL did have a contingency system in the sense that it was able to continue to open accounts and process trades manually, Mr. Casady said. This was accomplished by pulling people from other departments of the company to handle the extra volume of phone calls, which is part of a designed disaster recovery plan, he said. The 3,000 advisers who trade through the three broker-dealers that LPL acquired this year from Pacific Life Insurance Co. of Newport Beach, Calif., weren’t affected by the tech problems. Those reps rely on a separate system to conduct business.

Latest News

Ackerman promoted at Integrated Partners, Robertson Stephens strengthens board
Ackerman promoted at Integrated Partners, Robertson Stephens strengthens board

Some of this week's hires across the wealth and investment industry

Emergency savings dynamic shifts to positive for first time in three years
Emergency savings dynamic shifts to positive for first time in three years

More Americans have added to their savings than depleted them.

Muted week for stocks, bonds amid data, trade, conflicts
Muted week for stocks, bonds amid data, trade, conflicts

Some big headlines have made many investors cautious this week.

Dollar bets disrupted by Trump trade speculation
Dollar bets disrupted by Trump trade speculation

Traders see tariffs mostly as a bargaining tool.

Treasuries set for challenges as tariffs reality nears
Treasuries set for challenges as tariffs reality nears

Yields could rise to 4.80% for the 10-year benchmark, survey suggests.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.