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LPL Exodus

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Jul 29, 2009 11:11 pm

Any truth to the rumor that a lot of the people from Waterstone and Mutual Service are not going with to LPL... Talked to some producers today $1MM+ that relocated to some b/d in iowa.

Why wouldn't they go to LPL?

Jul 29, 2009 11:21 pm

They wanted to stay with Pershing.

Jul 29, 2009 11:36 pm

Seriously… I have Pershing… it sucks…

Jul 29, 2009 11:48 pm

I guess I’ll never know if Pershing is worth changing a B/D over, but I’m having a hard time believing it.  LPL’s clearing has been just fine as far as I can tell…I don’t recall any clearing-related issues in the four years I’ve been with them.  Perhaps someone who has used both clearing platforms can enlighten us, but I’m suspecting the reason for exodus was more than a change in clearing firm.

Jul 30, 2009 2:01 am

The Pershing Platform in many ways is driven by the B/D's contract with Pershing and the associated pricing and features selected.  Although I feel Pershing's NetExchange system is difficult to use especially in terms of model rebalancing and other group trading. 

What I find most troublesome with some Pershing B/D's are the various nickel and dime charges.  Some B/D firms of which I'm familar were even charging for cost-basis reporting; something like $2/month per account charged to the Advisor.  Unbelievable!!!   Even if the Advisors stays with a Pershing B/D; the account numbers will change, bank drafts will have to be updated, no easy chore for sure.  I am seeing some movement of Advisors from these firms banding together and forming their own B/D firm and assuming if Pershing is willing, if they had sufficient number of accounts to transfer, doing a tape-to-tape negative reponse might be an option too.  Some of these Advisor groups are looking into "life outside of Pershing clearing" but LPL isn't allowing for much time.  I suspect some of these Advisors will go to LPL and ultimately leave eventually.   For any Advisors on this forum interested in a comparison/contrast between clearing firm systems, feel free to call upon me.  I've used NetExchane Pro (Pershing); Streetscape (National Financial) and others.   Best of luck to all affected by this sudden change of course by LPL.
Jul 30, 2009 3:23 am

Frederick is somewhat correct. You must look at it from the standpoint of those advisors who were acquired though.

There are many questions these advisors must ask themselves before moving over to LPL carte blanche. LPL is not for everybody, especially larger producers who aren’t all fee based, VA transactional, or have an outside RIA. I personally know several large LPL groups who have left because of the simple fact that LPL clears for AXA Advisors in addition to their own advisor field, then they cut support staff, and now they want to integrate MORE advisors onto their platform? I have heard many complain about the difficulty of their annuity compliance procedures and processing as well. Also, they have completely ruined any integrity they had after they screwed up the (forced) conversion to BranchNet AND repeatedly lied to these advisors about the continuation of the Pershing platform only to pull this disruptive stunt during everyone’s vacation. The troops (both LPL and MSC/Waterstone advisors) have spoken and the writing is on the wall… LPL is now about their shareholders, not the advisors nor their clients. Culture and integrity left the building with Elvis.

Jul 30, 2009 3:39 am

I guess that’s what happens when you sell 60% of your firm to  private equity(the only way they get a big payout is through IPO)

Jul 30, 2009 3:31 pm

Squash – you make an excellent point.  How “Independent” are you really when 60% of your firm is owned by private equity companies whose primary concern is to receive a nice ROR on their investment.  I wonder if Advisors (and their clients interest) are always in line in this model.  My guess is no.

  Yesterday, InvestmentNEWS had a nice article concerning the future of the AIG B/D network also involving what appears to be other private equity companies.  Again, how "Independent" will the B/D's be should this transaction occur?   We certainly live in a constantly changing world.  I hope the Advisors and their clients affected at the end of the day are better off because of it but my experience tells me otherwise, unfortunately.