LPL Financial is making a big play to attract advisors by expanding the affiliation options it offers them.

“We believe enhanced performance in our traditional markets, combined with new affiliation models, could drive our recruiting results over time,” LPL chairman and CEO Dan Arnold said Thursday in an earnings call with analysts.

The firm ended 2019 with 16,464 advisors, up 1% from the previous quarter and up 2% year-over-year. [Scroll down for historic advisor headcount data.]

Custom-building affiliation models

Arnold said the firm introduced its premium affiliation model for breakaways in the third quarter of last year, and that it has already seen some success.

“It has been well-received and generated good feedback from prospective advisors. We now have our first couple of committed practices, which we expect will join over the next few months, and we’re encouraged by our growing pipeline of interested advisors,” he said.

The firm brought this offering into the marketplace through its existing recruiters for more of a “soft launch,” Rich Steinmeier, LPL’s managing director and divisional president of business development, said in a separate interview.

LPL announced its foray into these newer affiliation models — namely, the premium RIA and employee RIA affiliation — last year, hoping to capture a bigger share of the $11 trillion traditional employee advisory segment.

The first step towards building out the employee RIA model was LPL’s acquisition last year of the $3 billion RIA Allen & Company. LPL retained all the advisors and assets in that deal.

LPL also plans to launch another fee-based, RIA-only affiliation model. Arnold did not share further details except that one of these models would be launched in the second quarter of this year, while the other would come to market later.

“We see the opportunity to create new affiliation models that really cater to and appeal to advisors who are in search of having an independent model coming out of these other channels,” said Arnold.


And it’s not just about having more options, as Arnold believes one big advantage for LPL is the flexibility it could offer advisors who may wish to move between these various affiliation models.

“Our whole mantra is we have to meet them where they are in the evolution of their practices,” he said.

While these newer ways to align with LPL may sound beneficial, recruiters and experts have in the past cautioned advisors to read the fine print before jumping on any deal.

Role of technology

The firm also touted the investments it has made to drive organic growth, and LPL CFO Matt Audette expects that trend to continue.

“Our investments are focused on recruiting new advisors, helping existing advisors grow and enhancing our technology,” said Audette.

Arnold said the firm continues to work on tools that would help advisors outsource business solutions and digitize workflows, as well as on advisor-focused capital solutions and lead generation support.

LPL rebranded its virtual suite of business solutions last quarter but Arnold says it has seen material success over the past year.

“We ended the year with 650 subscribers, which was up 500 over the year,” he said. “I think we see that is a really positive trend.”

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