Pershing vs. LPL

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Jul 3, 2009 9:46 am

Can someone explain the primary differences between operating through an indy that clears through Pershing versus self-clearing (i.e. LPL)?  If you operate through an indy B/D that clears through Pershing, could you easily move your clients to another Pershing BD without ACAT'ing or doing other client transfer paperwork?

Jul 3, 2009 10:34 am

There are many differences, principally, Pershing being an NYSE member is probably "safer,"


SIPC liquidations ( although an unlikely event ) are not pretty.
 
PM me for more info if you wish.
Jul 3, 2009 12:02 pm

Sure, I understand all the differences in services/costs through the B/D.  I was just curious if being at one Pershing B/D helps in facilitating an easy move to another Pershing-based B/D.  What you say makes sense.  Thanks.

Jul 3, 2009 2:19 pm

LPL has a favorable article in today's WSJ

Jul 7, 2009 6:13 am

This isn't regarding Pershing but one BD to another with same clearing firm in general. WAMU cleared through Fidelity (National) and so does JP Morgan Chase. A friend I knew there said they would NOT need to do a negative consent letter or change account numbers since the clearing firm was the same.



Another quick FYI: You can find the clearing information of a firm by using brokercheck. Just choose "firm" rather than broker and pull up the BD you're considering.

Jul 20, 2009 11:11 am

There is a big difference between clearing firms.  Look at all of the tools you have available on Net Exchange Pro.  Those will no longer be available with self-clearing through LPL.   Instead you will have a completely new set of tools at your disposal.  Pershing clears for over 900 broker/dealers, that is their business, and they do it quite well.  They have the economies of scale that LPL lacks. 

 
If you change from one broker/dealer to another that utilizes Pershing, you would need to complete a new account form and change of dealer form.  Because it is an internal transfer, you will probably avoid any ACAT fees, but check with LPL as I have heard of some firms that screw accounts leaving, as the B/D pockets the ACAT fees even though Pershing probably would not charge for an internal transfer.  Forget the negative response letter route.  You will see on the FINRA site that it can only be done by individual producers when firms go out of business.  As for keeping the same account number, each broker/dealer has their own prefixes at Pershing, so account numbers will change.  What stays the same is the technology of Pershing and the statements with a new broker/dealer name on the front. 
 
It makes sense for LPL to move everything over to self-clearing as it will be much more profitable to them and all indications are the people that bought LPL want to take them public and they are looking to boost profit margins.  I just question the "what's in it for me" for those reps that are being forced to change.
Jul 20, 2009 11:59 pm

If any of you are with one of the 3 BDs that LPL is moving away from Pershing, feel free to PM me.  I'm with an Indy BD who clears with Pershing.  Our ticket charges and program fees are very competitive, we have dedicated traders for Muni's, Corporates, and MBS, and we do not haircut product (ie Annuity commissions).  We are completely open architecture and have a robust platform for alternative investments.

I am not a recruiter, but I am part of the management team with this BD and I'm also a producing advisor.

Jul 21, 2009 4:57 pm

Typically, when an Advisor moves from one Pershing B/D to another Pershing B/D, paperwork is still required such as the new B/D firms New Account Application.  Although the assets do not need to be ACAT'ed, you still need to complete an Internal Transfer form though.  Unfortunately though, your clients would receive new accounts numbers, have to order a new set of checks, re-initiate the ACHs, etc., etc.,

 
Now, if you are moving a sizable # of accounts, you might qualify for a tape-to-tape transfer.  Each clearing firm has their own criteria for who can request a tape-to-tape transfer.  This is very typical when financial institutions are changing B/D's but staying with the same clearing and not very common in the independent Advisor space, although it has happened for large OSJ Branch Offices with sizeable operations. 
 
You can even tape-to-tape from one clearing firm to another, completely different clearing firm too.  You would have to inquire with "the losing clearing firm" to see how helpful (or hurtful) they can be in this category.
 
Good Luck everyone especially those affected by the LPL announcement.  I was not surprised of their decision...venture capital firms want their ROR!  I question how "Independent" LPL really is when 60% of the firm is owned by Venture Capital entities??
 
 
Sep 17, 2009 8:58 am
mrclutch:

If any of you are with one of the 3 BDs that LPL is moving away from Pershing, feel free to PM me.  I'm with an Indy BD who clears with Pershing.  Our ticket charges and program fees are very competitive, we have dedicated traders for Muni's, Corporates, and MBS, and we do not haircut product (ie Annuity commissions).  We are completely open architecture and have a robust platform for alternative investments.

I am not a recruiter, but I am part of the management team with this BD and I'm also a producing advisor.

 
If you are considering a move, you should at least speak to this guy. Don't let advertising budgets and magazines dictate what you do; find someone that shoots a straight arrow, pays you what you are worth, and offers some differentiating components.
 
If you don't compromise, you might be surprised with what you get.