LPL Financial said Wednesday it was reshuffling top management to sharpen its focus on recruiting.
The main part of the move is to shift the roles of Andy Kalbaugh and Bill Morrissey, both managing directors and divisional presidents. Mr. Kalbaugh is currently in charge of all services to advisers who work in LPL's financial institutions or bank group, while Mr. Morrissey oversees services to advisers in the brokerage, RIA or hybrid side of the house.
That will change. Mr. Morrissey will return to solely focusing on recruiting and branch development for both advisers and bank brokers at LPL. Meanwhile, Mr. Kalbaugh will be in charge of relationship management and business consulting for all of LPL's 14,000 registered reps and advisers.
The change puts Mr. Morrissey's focus back to where it had previously been. Beginning in 2006, his title was executive vice president, business development. His role expanded in 2014 when he was promoted to managing director.
RECRUITING PROSPECTS
“This is a positive move,” said Jodie Papike, executive vice president of Cross-Search, a recruiting firm that focuses on independent broker-dealer reps and employees for such firms. “LPL had a lot of success when Bill was in charge of recruiting. This year could be a good year for recruiting because of the number of changes taking place.”
A number of factors are at work that could make 2016 a fruitful year for recruiting at the firm, LPL President Dan Arnold said. Those include: the disruption, due to increased costs, of the businesses of smaller broker-dealers; the change and flux in corporate ownership to other independent firms; the compensation changes to employee reps at the some wirehouses; and the coming Department of Labor fiduciary rule for retirement accounts — the implementation of which is widely feared in the advice industry to lead to rising costs.
(More: 2015 was ugly for for IBDs; will 2016 be any better?)
“We're positioning ourselves for an increased level of adviser movement in the industry,” Mr. Arnold said.
Long the dominant recruiter in the independent brokerage industry, LPL in the past has stated an annual goal to gain 300-400 net new advisers. At the end of September, LPL reported 14,073 advisers compared to 13,910 a year earlier. That was a gain of just 163, or 1.2%. Mark Casady, LPL's CEO, on a conference call in October with analysts about the third quarter, said that “the business environment was challenging” in that period, pointing to a slowdown in both broker commissions and net recruiting.
“In the first three quarters of 2015, we have had departures of approximately 100 more lower-producing advisers than we had through the comparable period of 2014,” said LPL's acting chief financial officer at the time, Thomas Lux, on the same conference call. “As a result, we saw a decline in our total adviser count over the past three months, but we remain pleased with the quality of assets and advisers coming to LPL, as evidenced by our new net advisory asset flows. We remain optimistic about our recruiting momentum and our retention for the remainder of 2015 and into 2016.”
NO JOB CUTS
No layoffs will result in the changes in the groups led by Mr. Kalbaugh and Mr. Morrissey, Mr. Arnold said. Those groups have 650 employees; in total, LPL has 3,400 employees.
In an indication of across the board belt-tightening, LPL recently eliminated as many as 70 jobs and said it was delaying raises in 2016.
Those job cuts primarily affected managers. Mr. Casady told investors in October that the company intended in 2016 to keep a sharp eye on the growth rate of its expenses and also launch a $500 million buyback of its shares.
