Ron Carson, LPL Financial LLC's most successful adviser, with more than $3 billion in client assets, is leaving the industry's largest independent broker-dealer this summer and creating his own B-D.
Mr. Carson, who has been with LPL since 1989, said he decided to make the move, in large part, for two reasons: a persistent shortcoming in LPL's services to his 1,346 clients and the opportunity to expand his business.
He will leave LPL as of July 1.
While his departure will certainly be a blow to LPL — Barron's recently ranked Mr. Carson seventh on its list of top 100 advisers — he appears to be leaving on good terms and still will maintain a business relationship with the giant broker-dealer, which has 12,000 reps and advisers.
LPL will be one of three custodians his advisory firm, Carson Wealth Management Group, will use to hold client assets in custody. The others are the custody arms of The
Charles Schwab Corp. and TD Ameritrade Holding Corp. And LPL also will be the clearing firm for the new broker-dealer, Carson Wealth Management Group LLC.
LPL was smart to work out a way to hang on to some of Mr. Carson's business, one industry observer said.
“He's no longer one of theirs, but at least they get a piece of the pie,” said recruiter Danny Sarch.
“The firm knows it's losing, but instead of losing 100%, it still gets to keep a piece of the adviser's business,” he said. “It's intelligent, but the fear for the broker-dealer is, at what point does this happen more often with their advisers?”
At the same time, Mr. Sarch said few representatives and advisers have the size and scale of Mr. Carson's business, making other such moves unlikely.
TECH CRITICISM
“We are pleased to continue to partner closely with Carson Wealth Management Group as they embark on the development of their new business model,” Bill Dwyer, president for national sales and marketing at LPL Financial, said in a statement. “Looking ahead, we are excited to serve as the custodian for the overwhelming majority of Carson Wealth Management's fee-based assets, with only incidental amounts held in custody elsewhere.”
Mr. Carson stressed that LPL has been a leader in creating tools for reps and advisers to give clients comprehensive investment planning and advice. Still, a common criticism from brokers over the years has been shortcomings in LPL's technology.
“They have a good, but not a great, system,” Mr. Carson said when asked last week about the limitations of LPL's registered investment advisory platform.
Mr. Carson pointed to two areas in which LPL had promised improvement: more-robust client reporting and an improved trading and re-balancing function.
He said that he is confident that his move will finally spur LPL to deliver top-tier technology and services to investment advisory clients.
“LPL is committed to providing cutting-edge technology in both trading and reporting,” Mr. Carson said. “We think this shift will put them in a position to attract other large RIAs.”
Still, LPL has its work cut out for it, Mr. Carson said.
“They had to win this business and compete for it just like everybody else did,” he said.
“We believe our No. 1 ranking for customer satisfaction in the 2010 Morgan Stanley RIA custodian survey amply demonstrates our success in providing independent RIAs with the tools and resources necessary to excel at client service and build successful businesses,” Mr. Dwyer said.
The advisory side of Mr. Carson's business, which is responsible for 90% of his firm's assets, is clearly his focus. He said that he needed to start a broker-dealer in order to continue to work with clients who had bought variable annuities, a product that earns a commission.
Mr. Carson said that his decision to leave the firm had nothing to do with LPL's initial public offering in November. He sold about $1.5 million worth of shares in the IPO, but didn't sell in a subsequent offering.
“I'm still a shareholder,” Mr. Carson said. “I'm bullish on LPL.”
And Carson Wealth Management, with 35 employees and advisers, has been expanding of late. In October, the Omaha, Neb.-based firm said that it was buying two advisory practices in Washington state.
“I think other advisers are going to want to do what we're doing,” Mr. Carson said.
E-mail Bruce Kelly at [email protected].
