LPL Financial, which now counts over 28,000 financial advisors using its platform, for years has been spending significant dollars to attract and recruit financial advisors to the firm, and 2024 was no different, as the firm reported a 57 percent increase in loans made to advisors to tie them to the company.
According to a filing last week with the Securities and Exchange Commission, LPL Financial in 2024 reported $2.14 billion in advisor loans, net, compared to the year earlier, when it reported $1.36 billion in advisor loans.
Brokerage firms like LPL Financial routinely give financial advisors forgivable loans or notes that are worked off overtime as an incentive to change one firm for another. LPL, the largest independent brokerage firm in the industry, has been particularly aggressive in using loans to attract financial advisors the past several years.
LPL has also been aggressive in buying other brokerage firms. In such acquisitions, brokerage firms often use forgivable loans to financial advisors as a way to keep them in their seats.
LPL Financial Holdings Inc., the owner and holding company of the broker-dealer, said last year it was buying the broker-dealer network Atria Wealth Solutions Inc. for roughly $805 million, plus an increase based on the number of financial advisors that would ultimately join the firm.
Atria had 2,400 financial advisors who worked with $100 billion of client assets a year ago, when the acquisition was announced. LPL said it expects to meet or exceed its retention target of 80 percent and complete moving advisors to its service platform by the middle of this year.
“I don’t know for sure, but I have to believe a big percentage of the increase at LPL in loans to advisors is to retain advisors at Atria,” said Simon Hoyle, an industry recruiter. “LPL has the large economies of scale because they are a self-clearing broker-dealer, unlike other independent firms. LPL saves a lot of money there.”
LPL has not publicly released any details about loans or transition money to the Atria advisors. An LPL spokesperson did not return calls on Monday to comment.
According to LPL Financial’s Focus report, which was filed last Thursday, advisor loans, net, is an accounting item that includes loans “made to new and existing advisors and institutions to facilitate their partnership with the company, transition to the company’s platform, or fund business development activities.”
“Loans made can be either repayable or forgivable over terms generally up to 10 years, provided that the advisor or institution remains licensed through LPL Financial,” the filing stated.
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