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LPL Swears to Its Brokers, “We’ll Do Better”

September 18, 2013

LPL Financial brass have said “mea culpa” to the firm’s advisors, promising a technology overhaul and other improvements to address wide-ranging complaints.

Hmm. Technology overhaul … advisors … complaints. Where have we seen this word cloud before? Ah, yes, Morgan Stanley! But back to the news.

At LPL’s recent annual conference, The Wall Street Journal reports, CEO Mark Casady, his chief tech officer and other top executives told 3,000 assembled brokers that management had heard their voices. The fundamental problem, according to the Journal, is that the firm has outgrown its infrastructure, leaving advisors struggling with outdated and unreliable systems for trading, client support and other functions essential to their jobs. LPL added upwards of 1,000 brokers between mid-2010 and the beginning of July 2013; with a current total of 13,400, the firm is now the country’s fourth-largest brokerage. (Morgan Stanley is No. 1, with 16,300.)

But LPL isn’t a wirehouse. In fact, a large number of its advisors are “breakaway” brokers who bailed out of the bigger firms. That may be why LPL executives are so keen to make their lives more pleasant. “Before, I was an externally focused CEO, doing acquisitions, focused on [taking] us public,” Casady told the Journal. “We weren’t as attentive as we could [have been].”

Advisors aren’t the only ones who’ve had issues with the firm. Finra in May fined LPL $7.5 million for failure to monitor and archive e-mails, blaming management for not doing a better job of controlling growth. Securities oversight agencies in Montana and Massachusetts have also disciplined the firm. Casady told the Journal that he’s improving his communication with regulators as well as with his brokers.

The newspaper suggests that successful reform at LPL would make the firm an even bigger threat to the wirehouses. But LPL’s advisors may be forgiven for some skepticism. “We’ve heard a lot of promises in the past,” one affiliate advisor told the Journal. It may be that, whatever the business model, the closer a firm gets to Morgan Stanley’s size, the harder it is for advisors to work there.

By Joan Warner
  • To read the Wall Street Journal article cited in this story, click here if you have a paid subscription.