The Best Independent Firm Today

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Mar 30, 2008 2:24 am

Would like to hear your opinion on who do you think is the best Independent B/D out there today.

Background:  Spent 7 yrs w/ Edward Jones, now the last 9 yrs w/ LPL under my own DBA.  In the Chairman Club (600K+ production), 93% payout.  Has about $150K in their stock program, fully vests end of this yr.
So please be professional, I don't want to see negative & nasty posts about Jones or LPL here.  IMO, They were the best firms out there at the time.
I'm still very happy about LPL, maybe just 95% happy now vs. 99% in the earlier yrs.  But I do worry about the way-too-fast growth (just like Jones experienced).  Think LPL now has over 12,000 reps by now.  Planning to remain here for a while, but always looking around to see if there's any better independent firms out there.  It took me 3 yrs to do the proper due diligence & research to leave Jones, so probably will take a while to look around.
Only interested in other independent firms.  100% sure not going back to Jones or any other wirehouse, bank, or insurance co.  Just indy.
Any nominations?
 
Thanks,
Mar 30, 2008 6:08 am

What issues are you having with LPL so I'll know if my BD is any better?

Mar 30, 2008 7:41 am

You said you were 99% happy before, and now only 95% happy. What, other than the fast growth, worries you about LPL?

Mar 30, 2008 11:12 am

Thanks for your replies.

 
When I first moved over to LPL from Jones in the late 90's, the service was so much better.  Calls to Everyone (100%) in the San Diego & Boston home office were super & were so nice, all my questions got answered, or all calls returned promptly.  They totally understands that they're 100% overhead & they work for us out here in the field & appreciates our business, not the other way around like back at Jones, no attitude like like a Limited or General partner here at Jones in St Louis & you're just a pee-on out there in the field.   LPL's focus then was 100% to/for the reps. 
I also interviewed w/ IM&R (Raymond James then), great firm, but also worried about their multiple company holdings, in which the independent advisor channel is just one of the many numerous companies that Raymond James owns, so wasn't convinced that IM&R independent reps was their top priority.  & also, someone gotta pay for that Raymond James stadium name, just like Jones now.  So not to bash Raymond James (or IM&R then), they're a great company, but wasn't for me, at that time. 
And now, in 2008, I worry about LPL's plans to go public in the near future, since we're over 12,000 reps, so that it'll go public as a mid-cap company.  There's now LPL independent advisor channel (which I'm in),  guess there's also the bank channel, & just the LPL clearing services for the many B/D that LPL has acquired lately. 
LPL has also grown so big so fast, that's it's getting arrogant about a lot of things. 
I've just been assigned a Compliance "partner" in the home office, just to help me w/ my OSJ duties.  Sounds like big brother too me.
They've added so many useless departments, like the now defunct Mortgage company, the horrible serviced Insurance dept, & a host of other useless departments.
The 2 trips, the Masters conf, & the Summer national conference, are great.  But they're just so overwhelmingly huge, w/ thousands of attendees.  I feel so lost & so insignificant at those events.  That shows that we've lost the small family culture, & has evolved into the huge behemoth wirehouse that everyone hates.
But overall, I'm still very satisfied w/ LPL, love the great payout, the total freedom to conduct my business w/out their interference, the great technology, & the still great service (although has a few small glitches lately), luckily I still do a lot of my business at the MF, VA & REIT firms, & not held at LPL.  Love the self clearing aspect.  Interviewed w/ another indy firm, but they clear though Pershing.  Been w/ Pershing in the early yrs w/ LPL before they went self clearing, so will no freakin' way going back to Pershing ever.  Guess that'll narrow the field down a little...
 
 
Mar 30, 2008 1:19 pm

West, my experience, although shorter (three years this August), is eerily similar to yours.  Aside from what you've said, I notice that more things fall through the cracks than used to...we have to follow absolutely everything to the bitter end to make sure that things happen.  I'm also lower on the production ladder ($300K), so a few of the perks you described (stock ownership) don't trickle down to my level, and I question whether the service is as good as you describe.  Definitely not if you are high enough on the production ladder to have the special service team with the non-published number.

 
Like you, I'm about 95% happy...not actively looking, but keeping my eyes and ears open.  United Planners is pursuing me and I posed a question awhile back about them, but they are definitely smaller and not much is known about them here.  One concern you've raised is Pershing and I believe UP clears through them also.  You've indicated that you've had a bad experience there.  Anything specific you can share?  One plus I saw through Pershing is a mobile trading platform that LPL has thus far shunned.
 
FWIW, I had the same thoughts on Raymond James when I did due diligence three years ago, but I fear that LPL is now heading the same direction.  The day LPL starts haircutting me like RayJay is, I'll be actively looking for another B/D.  That's the one area they've stayed smart on.
Mar 30, 2008 4:25 pm

IndyOne:

That's why I keep over 95% of my business at the funds company, & very little besides stocks at LPL.  Much better service calling into American Funds' All-American 800# or Putnam's Premier Client Group 800#, or VA's internal phone #.  Much less cost, no nagging $5 confirm fee to the client, no inactive acct fee, check goes out next day (no T+3).  Although the Masters' phone lines help, esp the tech support which is superb.
Now I didn't have much problems w/ Pershing.  Just not as efficient nor easy to work with as self clearing at Jones & LPL.  Similar to going from a Caddilac (Jones) to a Ford (Pershing) to a BMW (LPL).  Although the Beemer's performs pretty well, just a few annoyances.  Just don't want to do transfers back from self clearing to Pershing platforms w/ multiple account #'s and painful customer service, then maybe to another platform or self clearing again.
 
Yes, I also worry that LPL is heading the same suicidal path that Edward Jones' "healthy growth" & grow at all costs mentality, at the expense of what I think is the more important: "healthy retention".  It's easier to keep & nurture who you have than going out to recruit new ones.  So LPL needs to step it up to make my life easier to do business w/ LPL, rather than pushing me to do more through the LPL platform & says it's because of the Regulators & Compliance reasons. 
Example:  soon, we will have to place all VA orders through LPL platform.  I have been for many many yrs, send paperwork directly to the VA company w/ no problems.  Now they make me waste a lot to time to place on their clunky VA order system.
LPL now also offers their own proprietary MF & VA's, promoting the group health insurance plan, which is 3 times more expensive than the current BCBS private plan I have now.
 
Looks like they're heading down the wirehouse route...
Mar 30, 2008 6:16 pm

Interesting.  I do a lot of direct business also for the same reasons.  I was starting to think I was the only one who really objected to a $5 nuisance fee to send a confirm.  I've got some stocks and bonds and about 35% of my business is in the SAM platform, so about 40% of my business is direct.  With the exception of what I'm putting in SAM and a few structured notes, that's where my new business is going.


I've done zero OMP & OAP and yes, I took a pass on the health insurance too, although I appreciated that they put something out there for the masses...some reps even indicated that it saved them money.  We'll see if that holds with a bunch of adverse selection.
 
FWIW, I'm starting to like the annuity order platform.  I did one the other day and got paid next day on it.  I've had my problems with it and cussed it more than once, but either it's getting better or I am.
Mar 31, 2008 8:50 am

WestH - I just went through the effort and due diligence; I didn't take as long as I should have to research a whole bunch of firms but did do so at some level with roughly 4-5 firms.  I just NEXT Financial, having joined them with the believe that ownership would mean a voice and more but what I found was service and competence as well as the ability to support and process my business was far more important, and after a few years at NEXT I realized that I was losing business and my net because of their inability to do those things I just mentioned.  I didn't talk to LPL because of the worries you have were worries I had and I didn't want to leave one place to still face the same troubles at another, which was my focus.  I do want to make one comment specific to what you stated about Pershing, I been with 3 firms that use Pershing and have had various levels of satisfaction with them.  Given the fact that you do a lot of your business direct, you won't interact with Pershing hardly at all.  Your interaction will be more in the way of your new b/d's back office and their account aggregation technology like Albridge.  If you find a b/d that has exceptional support with competent and experienced staff that also uses Albridge (or another quality aggregator - avoid Investigo) you will find peace of mind.  Keep us updated!

Mar 31, 2008 8:51 am

Excuse my lack of typing ability but my first line to second line should read:

 
"I just LEFT NEXT Financial"  - sorry.
Mar 31, 2008 9:22 am

I doubt LPL can fix their problems. I have been with them 18 months from Jones and the only thing that Jones has over LPL is the quality of the back room. As for service, forget it. We have a standing policy to have three things to do while waiting on hold for their support staff to get answers. I will say they are considerate and pleasant but they don't know _____.


Our biz is 30% SAM. We will probably move as much to funds in brokerage this year just to alleviate the hassle of LPL. Indy, Annuities are a pain on the new system, but you do get paid very quickly.

A very close friend of mine just left Jones for Ray Jay. 14 year vet, with considerable LP, saw the light and bolted to the other side.....
Mar 31, 2008 10:08 am

Thanks for your input Region & Foot.

 
Guess every firm has a few annoyances & aggravations.  But finding one where you can live w/ those few small problems, & still can make a great living is perfect.
 
Region, you stated that you just left NEXT, which is one that I was looking at.  They took me out to lunch & I have visited their small home office operation.  They glowed over the fact that they won so many awards & were small like LPL was 10 yrs ago & like Jones 20 yrs ago.  But I've also read so many negative comments about them on this forum.  Is it true, &  why have you left them?  & which new firm did you end up with?
Mar 31, 2008 10:36 am

WestH - Obviously in my opinion the negative comments are true.  I voiced many of my problems with NEXT on this forum under "NEXT Financial bad firm"  but most of it boiled down to their complete chaotic and ad hoc way operation.  They have tremendous back ofc turnover and lack any level of competence in their back ofc when it comes to supporting their advisors and ability to process business.  Now in terms of their awards let me just say that when the time comes around for voting I get bombarded with emails from the home ofc telling me to vote and reminding me to vote and all these other little messages/campaigns.  In the end, I think they stack the deck a bit but you know, what does that award truly mean anyway?  How many reps that buy or bought ownership in the firm are going to voice dissatisfaction publicly when it can hurt their own investment?  If you continue to look at NEXT, see if they will produce information in writing on how their stock is priced, formula used and future plan for this program.  Ask about what their turnover is in both the back office and among their reps.  What is their plan as a firm over the next 3,5,7 years.  What are the plans for their new broker/dealer they are looking to create or their proprietary "product" WE2.  There are so many cloak and dagger type things going on with NEXT that it should really scare the heck out of the people there if they just took the time to look underneath the covers.  My opinion is if you are dissatisfied with the level of competence, support and response to your needs at LPL you will be at a minimum equally dissatisfied, but more likely far less satisfied than what you will have with NEXT. 

Mar 31, 2008 11:35 am

Region, based on your research, what Indy firms would you consider moving to?

Mar 31, 2008 1:19 pm

BG - for me I had a couple particulars I was looking for based on what I already stated on this thread; those were most important.  I looked at several that were certainly strong in the support areas and continued digging deeper with them.  I liked firms that also had a small enough size that there was some personality to the culture of the firm, some opportunities to network among fellow advisors etc., but also the type of culture that was pro-independent as much as regulators would allow.  In the end I went with a JNL firm - not to say they are the best at all that I was looking for, but I just gained the most comfort from them in my process than I did with the others I looked at. 

Mar 31, 2008 11:45 pm
WestH, I  was happy at EJ in the past and am not impressed with their future growth desires but I’m curious, do/don’t you think there is a big difference between LPL’s rampant growth and EJ’s?   Specifically “You work FOR EJ but LPL works FOR YOU.”   Wouldn’t you have more power since LPL management knows the risk of voting with your clients dollars by moving them elsewhere?   Clearly it would be a big undertaking to move between indy firms but surely it couldn’t be like the challenge of initially moving clients from EJ or wire to indy.
 
Re: soon having to place all VA orders through LPL’s platform, I believe that’s the writing on the wall being made clear to all firms.  I’ve heard both EJ & ML use the same vendor’s clunky, redundant, burdensome annuity processing program now due to increased industry-wide regulatory scrutiny.   As long as LPL doesn’t do the RJ haircut, I’d view it as almost industry norms that have (d)evolved. 
 
Lets assume hypothetically that both EJ and LPL now have 20-25,000 advisors.  For EJ, clearly the size benefits the GPs and not the FAs nor necessarily the clients.  For LPL can they make this growth still benefit the advisors?  How?
 
Finally, WestH, I realize this was not the intention of your post but might you share with us your assets and production were at point of departure from EJ and your ultimate success at moving client accounts and assets?       
 
Thank you.
Mar 31, 2008 11:47 pm

WestH,  OOPS... meant



WestH,  I  was happy at EJ in the past and am not impressed with their future growth desires but I’m curious, do/don’t you think there is a big difference between LPL’s rampant growth and EJ’s?   Specifically “You work FOR EJ but LPL works FOR YOU.”   Wouldn’t you have more power since LPL management knows the risk of voting with your clients dollars by moving them elsewhere?   Clearly it would be a big undertaking to move between indy firms but surely it couldn’t be like the challenge of initially moving clients from EJ or wire to indy. <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


Re: soon having to place all VA orders through LPL’s platform, I believe that’s the writing on the wall being made clear to all firms.  I’ve heard both EJ & ML use the same vendor’s clunky, redundant, burdensome annuity processing program now due to increased industry-wide regulatory scrutiny.   As long as LPL doesn’t do the RJ haircut, I’d view it as almost industry norms that have (d)evolved. 


 


Lets assume hypothetically that both EJ and LPL now have 20-25,000 advisors.  For EJ, clearly the size benefits the GPs and not the FAs nor necessarily the clients.  For LPL can they make this growth still benefit the advisors?  How?


 


Finally, WestH, I realize this was not the intention of your post but might you share with us your assets and production were at point of departure from EJ and your ultimate success at moving client accounts and assets?       


 


Thank you.

Apr 1, 2008 1:22 am

Superman:


Again, Edward Jones is an excellent firm.  I truly appreciates them giving me an opportunity to be hired, train, & work for them.  But after 7 yrs at Jones, I started looking around, wondering why Jones only does meetings w/ just other Jones reps & never mix w/ other reps.  When I got passed over for my LP, when compliance started to tell me how to run my business from 2,000 miles away & to tell me that I can't sell other funds besides the 7 preferred (esp when we have several other non-preferreds which are much more recognizable in our city).  If I'm in a little bitty town (a Jones town), & if I'm  & the bank is the only choice in town, then I'm all set.  But I'm in a big city, so the Jones model doesn't fit in very well.  At the time, I didn't mind the 40% payout that much, but what really bothers me is that I get back even a fraction of the 60% that I send to Jones.  With fast DSL internet coming on, why are we still using satelites?  & why are we being charged over $2000 a month for technology (computers, printers, etc.), when you can buy a couple of Dell computers for a few hundred that'll last a while.  I was contributing a lot of time & effort to Jones to recruit new brokers for Jones' "healthy growth" initiative, but was really bothered that they don't spend enough on the "healthy retention" aspect of it.  What really got me thinking & moving was the thought that if I work for Jones another 20 yrs, & when I retire, & if one of my kids don't take over the business, I just have to "Goodknight" my office assets over to a new Jones broker & walk away empty handed.  That was then, I don't know if they have a good transition program now.  But at least LPL is partnered w/ FP Transitions to sell your book when you retire.


At the time, I was producing $250 to $300K, w/ assets of about $40 Mil.  Doing about 40% MF & 40% VA, & other stuff mixed in to qualify for my diversification trips.   Taking home $100K net or so.
Now after 9 yrs at LPL, I gross $600+, net high $500's, 89.4% payout (93% payout minus BS charges).  Assets about $90 Mil.  40% MF, 40% VA, 15% REITs.  Very little fee based business, but at least I can give my clients an option & also take care of their no-load funds. 
For the 7% or so I send to LPL, I think I'm getting of it back in the Compliance oversight, the 2 free trips they send to: the summer regional meeting in SD, or Chicago this yr, & the Master's trip for me & my wife to Hawaii, Puerto Rico, last few yrs, Phoenix this yr, & Hawaii next yr (my wife don't care how much I make, just as long as we go on those damn trips), the technical support, & the better home office service.  Oh, the $150K free stock bonus plan is great too.
 
The biggest surprise after moving over to the dark side at LPL was the VA business that I done at Jones, on a $100K order, I get 40% of 4.75% gross (net $1740).  The exact same VA contract thru LPL now pays 8% w/o trail, or 7% gross w/ trail.  So 93% payout of 7% is $6510 net.  Always wondered where the difference between 7 & 4.75 goes to.  That was before Jones' A share Annuities came out.
 
Think both Jones & LPL are at around 12,000 reps current, not sure if they'll reach/can sustain 20,000+. 
 
But at every chance they get, at least LPL management always thanks me for my business, since I guess they know that they work for me & that I can pack up & leave them for any other Indy B/D at any time.  So if I ever get pissed & decides to leave, guess this would be my new dream B/D:
- totally independent, no wire house
- high payout: 90% +
- strict compliance
- all funds, VA's, all companies avail, no limited preferred group to choose from
- smaller, more family culture
- great technology
- great trips
- & sends me Birthday cards & anniversary reminder cards...
Apr 1, 2008 8:46 am

WestH...if you've read any of my posts, you know I'm not a humble poster..but that was a great post.  I'm in lockstep with your thoughts and I appreciate not only getting started in this business but having the guts to say "hey, whats on the other side of the fence".  However, I would be hard pressed to think I could move a step higher than what I have right now, but after I have 9 years at LPL, my thoughts could change. 

Apr 2, 2008 12:05 am

Thanks guys.

 
Wish RR magazine here would have a review or rankings of the indy firms instead of just the big wirehouses...
Apr 2, 2008 10:11 pm

West H   You are the smartest person on this site.  I have never saw any post on here as good as your and as well written.  You can tell that you are probably the most succesful person on this site.   For the first time I am very impressed.