LPL Financial's largest branch office, Private Advisor Group of Morristown, New Jersey, has taken the unusual step of launching its own broker-dealer; the intention is to put the $29.6 billion RIA in a better position to grab referrals of advisers from custodians who work with registered investment advisers reluctant to be affiliated with LPL.
Private Advisor Group is already a behemoth of a firm, with about 700 financial advisers and $29.6 billion in client assets. It has been an industry success story of the past decade, with its two owners, industry veterans John Hyland and Patrick Sullivan, opening the RIA in 2010.
But with a continuing stream of brokers and financial advisers leaving Wall Street banks, it was time for Private Advisor Group to launch its own broker-dealer, called PAG Financial, said Robert "RJ" Moore, who was tapped late last year to be the RIA's CEO.
LPL has recently seen at least one large office launch its broker-dealer to wind up in competition; in 2018, Independent Financial Partners, a hybrid like Private Advisor Group, said it was breaking ties with LPL to launch its own brokerage, IFP Securities. At the time, IFP had 500 advisers, but the divorce wound up being messy.
That doesn't appear to the case, at least for now, with Private Advisor Group and LPL.
Moore stressed during an interview Monday morning that the new broker-dealer doesn't have a negative impact on its relationship with LPL.
Rather, the move is intended to bolster Private Advisor Group's profile when it gets in line for referrals from the major RIA custodians like Fidelity Investments and the Schwab Advisor Services and smooth over any potential complications, Moore said.
Those custodians are reluctant to feed Private Advisor Group referrals of advisers because the brokerage assets would wind up at LPL, which has been looking to grow its own RIA custody assets and business with advisers.
"We’re not competing with LPL," Moore said. "But say if there is an adviser with a practice comprised of 70% RIA advisory and 30% brokerage, and the adviser wants to affiliate with us as an RIA and already has a custody relationship with Fidelity, and he has those brokerage assets as well, now we can say to that adviser, affiliate with a broker-dealer with more connectivity to Fidelity. We can do that for you."
PAG Financial has been registered with the Financial Industry Regulatory Authority Inc. since the end of last October, according to its BrokerCheck profile.
"Private Advisor Group is a great partner and business and we are excited to see them continue to grow and thrive," an LPL spokesperson wrote in an email. "It’s a privilege to work with this leading firm and their valued advisors."
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