Can LPL hit its recruitment target – and at what cost?

As recruiting wars heat up, B-D aims to hire 400 new reps. It won't be cheap.
JUN 03, 2011
Mark Casady, CEO of LPL Investment Holdings Inc., has reiterated aggressive growth targets for the country’s largest independent broker-dealer. Speaking at the Morgan Stanley financial services conference today in New York, he told investors he plans to recruit 400 advisers per year and increase earnings-per-share growth by 20%, according to Reuters. LPL went public last November and will report its first quarterly earnings report as a public company next Monday. Mindy Diamond, president of recruiting firm Diamond Consultants, figures that Mr. Casady and LPL can reach their recruiting targets. “We expect robust growth at LPL and in the independent-broker-dealer space generally,” Ms. Diamond said. “Bringing in 400 advisers per year is not an outrageous goal.” Still, it will be a formidable challenge for LPL, which has been one the most aggressive recruiters in the industry over the last several years. Rivals are also starting to ramp up their hiring. “Now that the wirehouses and many of the other indie broker-dealers are healthier, they’re getting more aggressive in their recruiting,” said Mark Lane, an analyst for William Blair & Co. LLC. Ms. Diamond expects that LPL will have to shell out more money upfront and spend on its technology and trading platforms to lure producers. The company’s favorite poaching ground, Wall Street wirehouses, may not be as easy a source of new recruits this year. Morgan Stanley, for one, indicated that its adviser turnover is nearing historical lows. With the pickings getting slimmer, the costs of signing up new reps is going to go up for LPL. William Katz, an analyst with Citigroup Global Markets Inc., cited low turnover at the wirehouses as a major reason for his “sell” rating on LPL. Mr. Lane, on the other hand, said that increased broker productivity, positive net asset flows and, most importantly, a market that continues to improve should outweigh the margin pressures LPL will experience. “Broker recruiting is just one component of their business,” he said. “This is still a good environment for them.”

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.