Products May 5, 2008

LPL Financial Introduces Platform for RIA and Hybrid Markets

LPL Financial Corporation plans to introduce an integrated adviser platform, supporting ndependent registered investment advisers (RIA) and hybrid (dually registered) advisers.
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LPL Financial said the platform will enable advisers to address all of their clients’ commission and fee-based needs while also allowing them the flexibility to grow their independent RIA offering across any business model.

As part of the formal market rollout planned for late 2008, LPL Financial will also offer prospective advisers transition services.

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The company has appointed industry veteran, Gary Gallagher, to executive vice president, head of RIA Services, to be responsible for building out the RIA and hybrid business. Based in Boston, Gallagher will report to Esther Stearns, president and COO.

“We have tremendous confidence that Gary’s experience in the RIA and Hybrid marketplace, combined with his impressive track record at a number of leading financial institutions, will allow us to build out an industry-leading offering that is critical to supporting this unique adviser group,” Stearns said.

Most recently, Gallagher served as senior vice president of Fidelity Institutional Wealth Services at Fidelity Investments. During his tenure at Fidelity, Gallagher launched UMA, alternative investments, separate account, and trust platforms for intermediaries and investment advisers. He was also responsible for developing high-net-worth strategies, focusing on wealth management services, trust services, separate account management, alternative investments, structured products, and liquidity management products.

“The LPL Financial platform is both flexible and scalable, making it possible for us to build out these RIA and hybrid capabilities while still maintaining one fully integrated platform,” Gallagher said. “I believe this expansion initiative offers great opportunity for both LPL Financial and our advisers, and look forward bringing my experience to the team at this exciting time.”

In Practice May 5, 2008

FAs Seek Better Culture, More Independence

Advisers are leaving their firms for various reasons, most often citing culture, the desire for more independence, and disagreement with the senior management philosophy.
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Most financial advisers base their decision to leave or go to a new broker/dealer firm on culture (24%) — a broad term that can describe a wide range of factors, from impending mergers to frustration with other business units. It could also have to do with a negative event that caused dissatisfaction, says The Cerulli Edge—Advisor Edition Recruiting Issue.

The importance of culture is increased at independent B/D firms. Large wirehouses must be able to support a wide range of personalities, but at smaller firms it is more crucial for the adviser’s personality to be aligned with the organization.

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Literal location and where an adviser is in his career are two factors in making a firm a cultural fit. Geographic differences include a midwestern adviser liking things more slow-paced, and a northeastern adviser enjoying a faster pace, Cerulli notes.

Mergers and acquisitions are the greatest factor in culture, the report says. Advisers working in small, regional firms do not always look fondly on being merged with a large, multinational firm. The report cites the example of the Merrill Lynch-Advest merger, in which Merrill lost about 400 of Advest’s 500 advisers.

Desire for Independence

 

The Cerulli data show 20% of advisers cite “increased independence’ as a primary reason for switching firms. Overall, increased independence is a long-standing reason to switch B/D firms. Nearly two-thirds of advisers say they want to go to a less restrictive channel, the report says.

However, a “less restrictive channel’ does not necessarily imply leaving a wirehouse to join a registered investment adviser (RIA) firm. In fact, most advisers leaving national full-service firms go to another national full-service firm (48%), followed by an independent firm (24%) or another channel (23%). Only 4% go to an RIA.

The report also says 13% of advisers cite “business support’ as the primary reason for switching firms, and 10% cite “senior management vision.”

The data show that two-thirds of advisers take all or most of their clients with them when switching B/D firms.

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