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LPL Conference Opens with New Initiatives, Support for Advisors

LPL Financial (NASDAQ: LPLA) kicked off its annual conference in Chicago on Monday by ringing the opening bell of the NASDAQ stock exchange and announcing some new initiatives aimed at supporting advisors. In particular, the firm is slashing transaction charges for equities and ETFs from $15 to $9 a trade and footing the bill for all its 12,600 advisors to have a one-year membership to the Financial Services Institute, said Bill Dwyer, president of national sales and marketing at LPL, during the opening session Monday.

As of Jan. 1, 2012, LPL reps will pay $9 a trade, down 40 percent from its current charge of $15. At yesterday’s trading volume, this would be equivalent to savings of $6.5 million, Dwyer said. During a roundtable discussion with reporters, Dwyer said the move is part of the firm’s goal to help its advisors achieve scale. In 2007, the firm increased payout for its reps, and in 2008, it reduced administrative fees for its reps.

Transaction costs have been a new pressure point for advisors, particularly with the explosion of ETFs, which is driving them back into the transactional business, Dwyer added. In fact, LPL’s Model Wealth Portfolios (MWP), a centrally managed fee-based asset allocation platform, currently has $1.6 billion in ETF assets. The firm added ETF strategies to the platform in July 2010.

LPL also showed its support of FAs by announcing free first-year membership to FSI, the advocacy organization for independent broker/dealers and independent FAs. After the first year, reps can opt out of the second-year membership, or they can pay a discounted $99 for membership. The typical yearly rate is $129, according to Keith Kelly, FSI’s executive vice president and chief operating officer.

Dwyer, who is chairman this year of FSI, said in a statement: “Ensuring that the collective voice of the independent broker-dealer and independent financial advisor community is heard, especially in times of great regulatory change, is absolutely critical to our ongoing success as an industry.” Might he be referring to a fear that the Obama Administration might go after the IBD model, saying that independent-contractor reps are in fact employees? Dwyer didn’t say, but in our opinion, reading between the lines of the statement, it seems that is a reason.

FSI has 124 b/d members and 16,000 advisor members, although LPL’s advisors will bring the ranks up to about 28,000. This critical mass helps the organization’s influence in Washington, Kelly said. “Representation makes our voice that much louder.”

LPL advisors have never been happier where they are, with a retention rate of 97 percent through the second quarter, an all-time high for the firm, said Mark Casady, chairman and CEO. LPL’s FOCUS conference drew over 5,000 total attendees this week, including 2,600 advisors, covering diverse business segments. This is something else LPL is currently working on to support; the firm wants to identify specialized practice areas and create customized services for these advisors. For example, the firm is currently building out its retirement partners business to serve the subset of advisors with D.C. and 401(k) clients, an initiative prompted by its acquisition of National Retirement Partners. Next year, the firm will devote project spending towards other business areas, such as money management and alternative investments, Casady said.

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