Skip navigation

Concert Breaks Into the Hybrid Market Via LPL Partnership

RIA aggregator Concert Advisor Services has launched a new hybrid platform, Concert Advisors, and partnered with independent broker/dealer LPL Financial to provide brokerage and custody services.

RIA aggregator Concert Advisor Services has launched a new hybrid platform, Concert Advisors, and partnered with independent broker/dealer LPL Financial to provide brokerage and custody services. Concert has hired Doug Tabor from First Tennessee Bank to lead the new hybrid division.

In the past, Concert has been a fee-only firm. But the hybrid channel is one of the fastest growing parts of the business, and Concert wants to take advantage of that growth, Tabor said. According to Cerulli Associates, the hybrid channel is expected to gain 3.5 percent in headcount marketshare by 2014, while the wirehouses are expected to lose 1 percent over that time period.

Derek Bruton, managing director and national sales manager at LPL Financial, who heads up the firm's RIA custody business, also sees the same trend.

“[Concert is] recognizing that to grow your business, there’s two ways to grow—organically, by adding new accounts, and then also by adding new advisors,” Bruton said. “I think firms like Concert are recognizing, given the disruption within the wirehouses and the consolidation of the independent industry, that there’s opportunity to grow your business by bringing more good advisors into your practice. And those advisors are looking for a hybrid model.”

Under the new platform, advisors will come under Concert’s RIA, and Concert will provide all the middle office functions. This includes operations support, administrative support, compliance, regulatory filings, payroll, accounting and finance, human resources, marketing, technology and business consulting, among other things. LPL will provide brokerage services for advisors’ commission-based business and act as custodian of the fee-based assets.

Concert expects the model to appeal to wirehouse advisors in particular, who may have a substantial amount of normal brokerage business that they just can’t walk away from.

Philip Palaveev, president of Fusion Advisor Network, said many of the wirehouse advisors looking to go independent cannot be fee-only. They either have too much commission business to leave on the table, or they may have a strategic reason for holding onto the commission business, he said.

“In order to effectively recruit wirehouse advisors, in most cases, you need to have a solution for their commission business.”

Through the partnership, LPL has another way to attract breakaway brokers to its platform, said Chip Roame, managing partner with Tiburon Strategic Advisors. The middle-office functions provided by firms such as Concert and Dynasty are key to many breakaways, Roame said.

LPL has similar relationships with other large RIAs, such as Stratos Wealth Partners in Solon, Ohio, and Financial Advocates in Olympia, Wash.

Such partnerships provide LPL with the ability to offer more choice to advisors looking to go independent, and such middle-office services are part of that choice, Bruton said.

“The real spirit of this partnership is new business that we’re going to collectively bring on to our mutual platforms,” Bruton said.

There is increasing interest in these large RIAs such as Concert because of the scale they can provide, especially to smaller practices with less than $500 million in assets under management, said Palaveev. At the same time, many advisors who go independent would rather work with a local or an advisor-driven organization, which Concert is, rather than a large corporate entity, he said. Firms like Concert can provide more customized, targeted services for their advisors, than a broker/dealer or clearing firm doing business with thousands of clients.

Of course, there are additional costs associated with outsourcing these functions, but most firms under $500 million in AUM can benefit from outsourcing, Palaveev said.

“Just like all outsourcing solutions, there may be some incremental costs working through Concert, but if you weren’t working through Concert, you will have to create those solutions on your own; you will have to create your own middle office,” Palaveev said. “And the cost of creating your own middle office is probably higher than what you’re paying Concert to do that.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.