Cambridge Investment Research

Cambridge Advisors Added to LPL's Hit List

Cambridge has been added to LPL’s list of rival firms where advisors are being offered up to 50 basis points on assets to come on board.

LPL Financial is now aggressively targeting advisors at Cambridge Investment Research, offering those advisors the same recruitment deal as those at Cetera Financial, Securities America and Kestra Financial, according to a source familiar with the deal. WealthManagement.com first reported on Tuesday that LPL was offering Cetera, Securities America and Kestra advisors 50 basis points on assets to join its corporate registered investment advisors and 40 basis points on assets to join hybrid offices.

“Recruiting efforts across the industry seem to be very competitive, but we find that Cambridge’s written plans, structure, and resolve to be independent is very appealing to advisors who believe this is important to their independence,” said Cindy Schaus, spokeswoman for Cambridge. “Our independence, culture, and values are key drivers in Cambridge’s record recruiting the last couple of years with over $80 million in annual new revenues for 2017 and 2016.”

But a source close to LPL said the recruiting campaign is much wider than those four firms.

“Early in the first quarter, we developed a disciplined and thoughtful recruiting strategy that was intended to be disruptive and capitalize on opportunities we see in the marketplace where our scale, leadership, and financial stability provide a strategic advantage to independent financial advisors considering a change,” said Jeff Mochal, LPL spokesman, in a statement. “We have recruiting campaigns in the marketplace throughout the year, on a regular cadence, and we believe the terms mentioned in this campaign are compelling.”  

The enhanced recruitment package was announced about a week ago, according to sources familiar with the promotion. The incentives are in the form of forgivable notes. Advisors from these firms who join LPL’s corporate RIA will also get a 93 percent payout for five years as a further enticement. The firm is not including proprietary assets as part of the calculation.

The firm hand-selected some of its larger Offices of Supervisory Jurisdiction to participate in the program; it was not open to all of them.

Jonathan Henschen, president of the recruiting firm Henschen & Associates in Marine on St. Croix, Minn., said Cambridge is a likely target because of its success in recruiting reps from National Planning Holdings, which LPL acquired over the summer.  

“They were the second-most successful firm in taking reps from the Jackson broker/dealers,” Henschen said. “Perhaps they’ll throw Woodbury in there as well.”

LPL Financial said on its fourth quarter conference call that, so far, $34 billion in assets and close to 1,000 advisors have transferred over from NPH.

After a first wave of transitions, 953 NPH advisors had joined LPL as of the end of 2017, out of a total of 3,200. LPL executives said during a quarterly earnings call in February that they expect to retain some 70 percent of the NPH advisors, or $70 to $75 billion of NPH’s $105 billion in reportable assets. Spokeswoman Rachel White said the firm had no further updates on those comments as of the end of February.

Henschen said the addition of NPH reps is going to bring LPL’s service and compliance levels down.

“You already have service problems, and you dump a large amount of new advisors at the broker/dealer, it just makes a bad situation worse when it comes to service,” he said. “And in those scenarios, when you add a lot of reps, a lot of compliance things fall through the cracks cause they’re overwhelmed, and you see that a year or two later in an increase in FINRA fines for lack of supervision and a host of other problems.”

 

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