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Recruiting flurry at LPL eases up — for now

The number of net new reps and advisers at the B-D declined considerably during the first quarter. Still, the company's CFO says the swing to independent advice is a 'longer-term trend'

After a year of record-setting recruiting, LPL Investment Holdings reported today that the pace of bringing in new advisers has decreased substantially in 2010.
For the twelve months ending on March 31, LPL added 450 net new reps and advisers, the company said in its quarterly earnings report today. That’s a decrease of 40% when compared to recruiting for the 12 months that ended in December. Over that time, LPL added 750 net new reps and advisers.
The results also did not include the brokers who left the firm when it integrated three separate broker-dealers — Mutual Service Corp., Associated Securities Corp. and Waterstone Financial Group — onto its platform in September. (Track recent recruiting activity at LPL and other firms here.)
Robert Moore, LPL’s chief financial officer, would not comment specifically about the firm’s recent recruiting results, saying that it was “premature” to announce any trend and that LPL does not look at these results on a quarterly basis.
“The trend of movement into independent advice is a longer-term trend,” he said. “We are well positioned to benefit from that and still feel good about the fundamentals of the marketplace.”
(See how LPL’s total rep count stacks up against others in the latest B-D rankings.)
Last year was a banner year for recruiting in the independent broker industry, with the first six months particularly strong. One reason: the stock market finally bottomed out, causing many brokers’ clients to turn away from traditional firms. Their brokers followed.
In addition, the upheaval at three broker-dealers under the AIG Advisor Group, now simply Advisor Group, sparked an exodus of brokers from AIG.
Moreover, the merger of Morgan Stanley and Smith Barney — and crucially, management’s subsequent decision to cut the lowest producing advisers — put many of those brokers in play.
This year has yet to see the kind of event that would spark brokers to move in droves, noted Larry Papike, president of Cross-Search, a recruiting and executive search firm for independent broker-dealers.
While recruiting slowed last quarter at LPL, its net income for the first three months of the year increased 72.7% when compared to the same period last year, reaching $25.6 million. LPL’s net revenues increased 15.6%, reaching $743.4 million.
LPL is the largest independent broker-dealer in the U.S., with about 12,000 brokers and advisers.