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LPL Financial Review

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LPL Financial

LPL Financial is an organization of independent financial advisors. The firm provides proprietary technology, brokerage and investment advisory services to more than 14,000 financial advisors and 700 financial institutions, who in turn serve investors across the nation. The firm is headquartered in Boston, and has additional offices in San Diego and Fort Mill, South Carolina.

LPL offers its services through its network of financial advisors spread out across the country. It currently has $152.5 billion in assets under management. Because the firm’s advisors function more as contractors than as employees of the company, each advisor may offer slightly different services and a distinct approach. Still, each advisor has access to LPL’s vast amount of independent research and financial products and must also abide by the firm’s regulations.

LPL Financial Background

LPL Financial was created in 1989 when two small brokerage firms, Linsco and Private Ledger, merged. The firms, which are LPL's namesake, were founded long before LPL was established. Linsco was formed in 1968, while Private Ledger was founded in 1973.

The firm became more nationally known in 2005, when LPL sold a 60% ownership stake to two private equity partners, Hellman & Friedman, LLC and Texas Pacific Group. Five years later, in 2010, LPL's parent company, LPL Financial Holdings, Inc., became a publicly traded company on NASDAQ. 

What Types of Clients Does LPL Financial Accept?

LPL Financial’s advisors work with a wide range of clients.  The firm can provide advisory services to the following client types:

  • Individuals
  • Individual retirement accounts (IRAs)
  • Banks and thrift institutions
  • Pension and profit-sharing plans
  • Participants in  the pension and profit-sharing plans
  • Trusts
  • Charitable organizations
  • State and municipal governments
  • Corporations and business entities

The majority of the firm's client base is comprised of individuals. Though LPL advisors also work with high-net-worth individuals, they work with more than twice as many non-high-net-worth individuals.

LPL Financial Minimum Account Sizes

LPL Financial does not require a minimum amount of investable assets to access its financial planning, consulting or researching services. However, it does require minimum account levels for its advisory services. Account minimums are specified in the client agreement.

LPL also states general minimums for its three main types of managed portfolio programs in its Form ADV paperwork. LPL's Personal Wealth Portfolios, which are aimed at high-net-worth clients and use separately managed sleeves, mutual funds and exchange-traded products (ETPs), generally require a minimum account value of $250,000. For its Model Portfolios Program, which relies on theme-based strategies and uses a mix of mutual funds and exchange-traded funds (ETFs), the minimum is $25,000. The firm’s Optimum Market Portfolios, which use diversified asset allocation models, require the lowest minimum, at $10,000.

Services Offered by LPL Financial

LPL Financial's advisors are capable of providing clients a wide array of financial products, which include mutual funds, annuities and other tax-efficient investments, domestic and international securities, insurance, fee-based asset management programs, estate and financial planning, trust services, group retirement plans and exchange-traded funds and exchange-traded notes. Notably, the firm does not offer proprietary financial products, so its advisors aren't under pressure to sell certain products. 

LPL Financial offers a variety of advisory services and program. Through its independent advisors, the firm provides:

  • Wrap programs
  • Mutual fund asset allocation programs
  • Advisory programs offered by third-party investment advisor firms
  • Financial planning services
  • Retirement plan consulting services
  • Investment research
  • An advisor-enhanced digital advice program
  • Other customized advisory services

LPL Financial Accounts for High-Net-Worth Individuals

LPL Financial's individual client base contains more than twice as many individuals as high-net-worth individuals. However, the firm announced in 2016 that it was expanding the resources it provides to advisors and institutions to support high-net-worth clients. The firm has a high-net-worth consulting team dedicated to help advisors better meet the unique needs of affluent individuals.

Additionally, LPL says its Personal Wealth Portfolio Program, which calls for a minimum investment of $25,000, is geared toward high-net-worth individuals.

Hiring a Third-Party Manager Through LPL Financial

LPL Financial offers third-party asset management programs. The firm's current third-party sponsors include AssetMark, FTJ FundChoice, Loring Ward and SEI. LPL notes that its third-party asset management programs are subject to review by the firm's standards.

Additionally, LPL has entered into referral agreements with third-party investment advisors, and the firm and its advisors may earn fees from third-party advisors for the referral of clients. The firm currently has agreements with AssetMark, BNY Mellon, Brinker Capital, CLS Investments, Flexible Plan, Morningstar, Rochdale Investment Management and Symmetry Partners. LPL may also serve as a broker-dealer on accounts managed by third parties.

Investment Philosophy

Because of the firm's structure, its network of advisors may operate under different investing philosophies and offer different services. However, LPL says that its investment portfolios generally fall under one of these categories, which are listed in order of increasing levels of risk:

  • Income with capital preservation
  • Income with moderate growth
  • Growth with income
  • Aggressive growth
  • Trading

LPL says its advisors make recommendations based on clients' objectives, which they recommend that clients determine ahead of the investing process. Also taken into account are risk tolerance and time horizon.

The firm primarily uses two investment strategies: diversified and alternative. Both strategies seek to grow assets while taking a reasonable amount of risk. The diversified strategy primarily uses traditional asset classes like stocks and bonds, as well as the occasional non-traditional asset classes to do so. The alternative strategy, on the other hand, primarily allocates assets to non-traditional asset classes, thus extending diversification to lower risk.

Fees Under LPL Financial

LPL Financial’s fees are dependent upon which service you receive from an LPL advisor. The firm also notes on its Form ADV that it may be compensated through a percentage of assets under management, hourly charges, fixed fees and/or commissions for its investment advisory services.

The firm’s financial planning services, hourly consulting services and participant consulting advice program are all offered on an hourly fee or flat rate basis. For financial planning services, clients are charged a maximum hourly rate of $400 or a flat rate fee ranging from $0 to $15,000. Hourly consulting services are offered at a maximum rate of $400 an hour, while LPL’s participant consulting advice program calls for a maximum hourly charge of $400 or a flat rate fee ranging from $0 to $5,000.

Clients are usually charged an asset-based fee for the firm’s management and advisory programs. The third-party asset management programs bear a maximum fee of 2.00%, while the maximum advisory fee for LPL’s customized advisory services, IPA and other participant advice services is 1.50%.

Clients pay the fee to LPL, which then shares the fee with the advisor or institution. The exact percentage of the fee that LPL shares with the investment advisor may vary by program.

LPL Financial Awards and Recognition

This year alone, numerous LPL Financial advisors have been recognized as top advisors by notable financial publications and organizations. In 2018, Forbes ranked eight LPL advisors as among the top women wealth advisors in the U.S.,  Barron's named 19 LPL advisors as among America's top 1,200 financial advisors and Financial  Times named four LPL advisors to its list of the top 400 financial advisors. Additionally, 20 LPL advisors were named among NAPA Net's top retirement plan advisors under 40.

As a company, LPL was recognized in 2018 by The Human Rights Campaign as one of the best places to work for LGBTQ equality.

What to Watch Out For

LPL Financial has encountered a number of bumps in the road in recent years. In February 2018, on a call with home-office leaders, the company's CEO Dan Arnold acknowledged the perception that LPL Financial's service level has declined as it's grown rapidly over the last 15 years. The firm recently stepped up recruiting efforts by offering a sizeable bonus to advisors for the assets they bring to the platform, in an attempt to quell dissatisfaction and recruiting struggles.

The firm has recently lost several billion-plus wealth management groups. One of the groups that left, Ingham Retirement Group, told Investment News that it parted ways with LPL Financial because "the firm's brokerage business had been consistently declining."

All of this was predated by a management shakeup in 2017. The prior year, in 2016, the company's stock prices slumped and there was talk of a potential sale. This May however, LPL Financial saw its shares hit a 52-week high.

In addition to these struggles, LPL Financial has also been involved in a number of legal battles and faced numerous disciplinary issues. Legal cases have also been brought against specific LPL advisors. See more below about the firm's disclosures.

Disclosures

As mentioned above, LPL Financial does have disclosures, many of which are related to its brokerage structure and failures to monitor certain areas. In the past decade, several state regulators have penalized the firm for not properly supervising its brokers. The New York Times reported in 2013 that  "brokers at the company have faced the most common industry reprimand more frequently than brokers at its large competitors since the beginning of 2012.”

The issue still persists. In May 2018, LPL Financial was ordered to pay civil fines of up to $26 million to 52 U.S. states and territories after failing to adequately supervise advisors to prevent the sale of unregistered securities. In 2015, FINRA announced it had ordered LPL to pay $1.7 million in restitution for "widespread supervisory failures related to complex product sales, trade surveillance and trade confirmations delivery." AdvisorHub reports that LPL has "absorbed more than $75 million in fines and restitution over sales practice violations by its independent contracts from 2014 to 2016."

Opening an Account With LPL Financial

LPL Financial provides an advisor locator tool on its website so interested advisors can easily find an advisor. You can search by address, zip code, name or business name/area code.? Once you've filled in a field, LPL will provide a list of advisors who match your search criteria. The advisor's name, physical address, phone number and email address are provided, as well as links to driving directions, a detailed map and the advisor's website.

Some advisors who appear in the search may not be registered as an LPL Financial advisor and are instead affiliated with LPL because their firm has an agreement to use LPL as a custodian for client assets.

Where Is LPL Financial Located?

LPL Financial is headquartered in downtown Boston. In addition, the company has offices in Fort Mill, South Carolina and San Diego, California. LPL Financial advisors are located across the country.

Investing Tips for Beginners

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How Many Years $1 Million Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about cost of living in retirement there.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology SmartAsset calculated the average cost of living for retirees in the largest U.S. cities. Using that calculation, we determined how many years $1 million would last in retirement in each major city.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors throughout the country. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%, reflecting the typical return on a conservative investment portfolio. Finally, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would last in each of the cities in our study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research