Lpl ipo

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Jun 7, 2010 9:08 am

LPL is going public. Conference call today to explain to advisors why they are now at EDJ....

Jun 7, 2010 9:57 am

Weddle has bought his own island already. Now Casady and friends will be neighbors....

Jun 7, 2010 10:33 am

It's the beginning of the end at LPL.  This is not a knock at independance, or at LPL directly.  It just seems that going public was the death knell to the brokerage industry back in the 80's/90's.  Look where it got us.  Now you will have millions of people looking at your financial results every quarter, questioning every fee, every strategy move, every personnel move.  And it was probably much nicer to tell clients, "hey, you don't see LPL all over the news do ya?"  Well, NEWS FLASH, now they will.  I think it's a bummer.

Jun 7, 2010 12:49 pm


You could be right but we can leave with our books without a fight!

Jun 7, 2010 1:57 pm

That's absolutely true.  And that may the one saving grace - indy B/D's don't have the luxury of pissing off their advisors, because it's MUCH easier for them to walk than at captive firms.  But the public pressure will be there nonetheless. 

Jun 8, 2010 5:46 pm

When LPL is public they will have to explain expenses.

I see were Bill Clinton is going to speak at  this years conference in Boston.

I do not know how much they  are paying him, but it is it is free it is still to much!  

WIth crap like Bill speaking they are throwing money away.

Jun 8, 2010 11:27 pm

How will this benefit current reps?  My hunch is it won't.  If it does, would love to hear about it.  It still baffles me that a firm their size continues to take $100k producers.  Those are either lawsuits waiting to happen or a detriment to the other reps b/c LPL has to manage to the lowest common denominator.

Jun 9, 2010 10:43 am

I would agree they do need to raise the bar.

To many branches for compliance to cover once a year.

The lower producers will need to be covered by a current OSJ. 

Jun 15, 2010 9:57 am

I have heard that they are discouraging low producers to get there OSJ now.

I think the benefit to FA's is nil. It will give the execs island money (as in buying their own). There is a rumor that they will dangle shares to existing FA's to keep them. And I would guess it might be used as a recruiting tool.

In my dreams, I am  hopeful that it would improve service. My nighmares are that it will get worse.

I love it when I talk to a so-called specialist who attains their CFP and recently started to shave. They don't know a heck of a lot, but they have those important credentials...

Jun 15, 2010 10:27 am

I don't think you will notice much of a difference in the first few years.  It will be interesting to look back in 5 years and see what, if any, major changes have occured.  As I said before, I think public ownership was the downfall of the other major brokerage firms.  So instead of island money they only had a boatload of money to go out and vacation on the island. 

BUT, as someone said earlier, the indy model is a bit different than the typical Wall Street brokerage, so it's not an apples to apples comparison.  Then again, Schwab has had a rather bumpy ride over the years.  It would be interesting to see how a public LPL would fare during a time period like 2008.

Jun 15, 2010 11:03 am

Where will you walk? 

There is a reason you chose LPL, no?

There was no way you guys couldn't see the writing on the wall then.

Jun 15, 2010 11:33 am


Where will you walk? 

There is a reason you chose LPL, no?

There was no way you guys couldn't see the writing on the wall then.


I don't think there's a reason to walk unless it actually does turn out poorly (which would probably take years to evolve).  Let's not forget, most of the firm's revenue is in the hands of independant advisors, so there is a vested interest in getting it right.  And it's not like BAC buying MER or something sinister or forced.  It's has been widely anticipated for years.  So I think LPL went about it about the best way they could.  They probably built some goodwill among FA's for being so forthright about their intentions (I assume).

Jun 15, 2010 8:42 pm

As B24 stated, LPL is totally dependent on their advisors and pissing them off would be the death knell of the company. I am not exaggerating.

That is exactly why RJ is so successful even as a public company. They realize that the way to best serve their shareholders, is to serve their FA's well. The culture is clearly one of "FA as client".

Unless the folks at LPL are stupid, which i dont think they are, it will be the same and the IPO will be a non event for the FA force. With one exception. I think, as was stated, the under 100k FA's will have to give up something. Either join another OSJ, or pay a maintenance fee on top of what they already pay. Because every FA will have to be profitable for the firm.

But other than that, its a non event.

Jun 16, 2010 4:19 am

I'm not sure I agree that it's a non-event.

The "FA" may be the client.  But I think you are setting the bar low at $100k producers.  My guess is that number will be much higher.

After all, aren't the margins bigger on larger producers?  Can they reduce the size of the people supporting those FAs if they have less?  Where are the majority of the producers situated and how much of the revenue do they account for?

How significant would it be to either their top line or bottom line if they cut all reps producing less than $300k with a LOS more than five years?  Three years?  $250k and five years? 

They will be looking at these things a lot more carefully and possibly tacking on extra fees.  If you are a good producer, there will likely be no reason to walk, but isn't that how it is at most firms?

Most people who are producing a ton at wirehouses or at regionals stay at there firm.

Jun 16, 2010 9:49 am

I don't think they will cut reps under a certain number, but will force them into OSJ's.  Nothing wrong with that.  You can't have 20,000 reps producing 150K average - it's just too damn expensive.  On the other hand, the small producers have been their lifeline.  The bulk of their sales force is small producers (50% produce under 100K, and their avg is like 225K), and I don't think they will continue to be the B/D of choice if they piss off all the small producers.  In fact, their FA makeup is very similar to Jones' in terms of production - in 2009 Jones did about $3.5B gross revenue on 12,600 FA's.  LPL did about $2.8B with 12,000 FA's.

Jun 16, 2010 9:58 am

B24 - That is what I'm saying.  If 50% of the reps are producing less than one-tenth of the revenue, then why keep them?  How is that their lifeblood?

80/20, right?  If you have 500 clients, but 100 of them make up 80% of your revenue, do you keep the other 400 clients?  No, you begin to tack on fees to make it useful for you to keep them (or make them go to an OSJ and tack on some more fees) until they either a) leave or b) earn money for our company with minimal involvement. 

Jun 16, 2010 4:42 pm

Those small reps already have a marginal cost to LPL of essentially zero.  There might be some minor changes to their model, but what is suggested above is like saying Costco would keep a customer out for not spending enough money there.  As long as you pay your $50/yr membership, it doesn't matter if you never walk in the door...then that $50 falls to the bottom line.  LPL makes money on the nickel and dime stuff and much of that is in fixed costs that the rep bears regardless of their gross.

Jun 17, 2010 4:30 am

Are you saying that those small reps aren't allowed to get support from LPL?

I'll admit it's been a long time since they recruited me, but I can clearly remember that every rep had access to the same tools and support.

I guess I can call Jeff and pretend to be interested in going to LPL to get the breakdown again, but maybe you guys will just set me straight.

Jun 17, 2010 9:54 am

Magician, I'm not saying it's a pure support-cost issue.  There is also a compliance liability issue.  Having 12,000+ reps that you are responsible for is expensive, and a huge potential liability.  Cut that number in half, and it drops your liability dramatically.  Honestly, I don't know what the specific costs are for LPL, nor do I know their level of liability per-rep.  I am just looking at it from a business perspective.  Think of it this way, it's the same reason Starbucks and McDonalds and other fast-food chains close down stores.  They are probably making SOME profit, but not enough to justify the resources allocated to such small amounts of gross profit to the firm.

Jun 17, 2010 10:33 am

We are liable for ourselves. OSJ stands for office of supervisory jurisdiction. We are real business owners like attorneys and cpa's. We are just using LPL's software and support. Also, 5 guys producing 100K is like 1 producing 500K in the firms eyes. Who cares. Here there is no squeeze to force people to produce more so that you can add more GP's and LP's and keep everyone happy. LPL rocks!!!