After a boffo recruiting year at LPL Financial in which it added advisers with a staggering $35 billion in assets, the firm is maintaining its intense recruiting efforts and currently offering to pay advisers recruiting bonuses based on their assets at the end of last year.
Advisers who sign the deal today would clearly benefit: The S&P 500 is down close to 14% for the year as of trading early Wednesday afternoon. Two industry executives, who asked not to be named, confirmed that that is LPL's current offer to some recruits.
Rich Steinmeier, managing director and head of business development for LPL, said in an interview on Tuesday that he wouldn't confirm or deny the offer to recruits based on 2019 assets. LPL is an industry powerhouse when it comes to recruiting, and it usually doesn't publicly comment on what it pays advisers to leave their firms and move their businesses to LPL's expanding platform.
LPL, which is the largest independent broker-dealer in the industry with 16,464 advisers, has had its gloves off when it comes to recruiting from its competitors. Since April 2018, it has been selectively offering advisers a bonus in the form of a forgivable loan that pays an adviser at least 50 basis points on assets transferred to LPL’s corporate registered investment adviser, a potentially far more lucrative structure for the adviser than traditional recruiting deals.
Meanwhile, this week LPL provided details on what it calls a premium model to assist breakaway brokers from wirehouses with the work involved in setting up a business, such as finding office space and arranging employee benefits, as well as an offering focused on registered investment advisers.
The new program, which has similarities to the platform of Dynasty Financial Partners, is called LPL Strategic Wealth Services.
Like Dynasty, LPL will set up advisers’ offices, technology and payroll, Steinmeier said. “We launched our first office on April 1.”
The potential sweet spot for LPL is wirehouse advisers with at least $200 million in client assets, he said. Those advisers, after they move their business to LPL, are likely to see payouts in the neighborhood of 80 cents per dollar of revenue after fees. That's on par with standard pay for such advisers and close to double the pay at a wirehouse.
LPL is continuing to add to the ways advisers can do business with the firm. Last year it bought a small broker-dealer that caters to employees, rather than independent contractors, which have been LPL's bread and butter for decades.
"LPL is adding another weapon to its arsenal," said Casey Knight, executive vice president and managing director at ESP Financial Search, a recruiting firm that works with LPL. "Wirehouse advisers would be foolish not to pay attention. LPL is addressing uncertainty advisers have when [leaving a wirehouse] to start their own businesses."
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