Technology failure thwarts Linsco

NEW YORK — An online-access snafu put a glitch in Linsco/Private Ledger Corp.’s plans to compete with the largest firms in the industry and left 7,000 financial advisers unable to place trades, view accounts or perform other routine tasks for most of last week.
“The custodians and broker-dealers are beginning to take on more responsibility because they’re trying to match the Smith Barneys of the world, and we’re going to see hiccups like this as people try to upgrade their systems,” said Stephen Winks, principal of SrConsultant.com of Richmond, Va.
Some advisers said they are furious at the company, which they think has been insensitive to the burden the technological problems placed on them.

Wrath of advisers
“It’s very understandable that advisers were frustrated,” said Mark Casady, chairman and chief executive of LPL of Boston and San Diego. “But I was struck by the confidence [they had] in us to fix this problem.”
Mr. Casady acknowledged that he had received his fair share of telephone calls and e-mails from advisers who vented at him because they couldn’t access LPL’s system online, a problem he blamed in part on a software installation completed over the previous weekend.
“This happened [during] a particularly large installation of software, and it wasn’t caused by the software itself,” he said.
“It was an indirect effect [of that installation]. It was caused by a change in the operating environment,” Mr. Casady said.
He declined to be more specific.
Contrary to an earlier communication from the company, eMoney Advisor Inc. of Conshohocken, Pa., did nothing to contribute to the system failure, Mr. Casady said.
The problem was largely fixed by Thursday morning, he added.
“The systems are back to normal with the exception of a very small percentage of users and a very small percentage of functionality,” Mr. Casady said.
In addition, LPL will perform an independent review of what happened, wrote Mr. Casady in an e-mail sent to advisers late last Thursday.
LPL’s technology breakdown wasn’t the first such occurrence.
In June, TD Ameritrade Institutional of Jersey City, N.J., faced a series of technical challenges that frustrated some advisers who held assets in custody at the firm (InvestmentNews, June 18).
Rare occurrence
But such failures are unusual, according to Jim Starcev, managing principal of Etelligent Consulting Inc. of Overland Park, Kan.
“It’s hard to imagine,” he said.
“That’s a long time to be down, especially for a company that big,” Mr. Starcev said of LPL’s troubles. “It’s surprising they don’t have some back-up or contingency system.”
LPL did have a contingency system in the sense that it was able to continue to open accounts and process trades manually, Mr. Casady said. This was accomplished by pulling people from other departments of the company to handle the extra volume of phone calls, which is part of a designed disaster recovery plan, he said.
The 3,000 advisers who trade through the three broker-dealers that LPL acquired this year from Pacific Life Insurance Co. of Newport Beach, Calif., weren’t affected by the tech problems. Those reps rely on a separate system to conduct business.