LPL Financial's aggressive push to retain advisors following its acquisition of Commonwealth Financial Network has sharply curtailed the firm's external recruiting, as reported by AdvisorHub.
LPL reported that recruited assets fell 82 percent year-over-year in the fourth quarter, dropping to $14 billion from $79 billion. Executives attributed the decline to an internal reallocation of resources after the firm announced the Commonwealth transaction in March. According to AdvisorHub, LPL reassigned its top recruiters to focus on retaining Commonwealth's approximately 3,000 advisors, a move that temporarily reduced its ability to recruit from competitors.
Chief Executive Officer Rich Steinmeier told analysts that educating and securing commitments from thousands of incoming advisors required significant internal effort. He explained that the firm expects recruiting activity to gradually normalize as Commonwealth advisors commit and move through the onboarding process, which LPL anticipates completing by the fourth quarter of this year. According to AdvisorHub, Steinmeier declined to offer a precise timeline for a full return to prior recruiting levels.
AdvisorHub reports that LPL remains the nation's largest broker-dealer, with roughly 32,000 advisors, and it has historically led the industry in recruiting spending. During the fourth quarter, the firm spent $133 million on transition assistance, a 74 percent increase from the prior year and an amount equal to 44 percent of its quarterly net income. Executives tied part of that increase directly to retention packages for Commonwealth advisors.
Despite the short-term slowdown, Steinmeier emphasized that interest from experienced advisors remains strong. He noted that many recruiting discussions continue in early and mid-stage phases and expressed confidence that activity will improve as LPL reactivates what he described as its growth engine later in the year.
AdvisorHub reports that the firm also expects to benefit from the ongoing breakaway broker trend. Steinmeier stated that more than half of advisors leaving wirehouses and employee-channel firms now choose independent models. LPL's share of those moves increased to 11 percent from 9 percent, and affiliation models introduced over the past five years generated $1 billion in recruited assets during the quarter.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
