LPL Financial is the largest independent broker-dealer in the United States based on gross revenue. Dually registered as an investment advisor, the firm supports a network of over 16,000 affiliated advisors who operate their own businesses. LPL Financial is based in Boston, and it also has offices in San Diego and Fort Mill, S.C. The network of advisors it supports are located throughout the country. The firm’s advisors oversee nearly $159.1 billion in assets under management (AUM).
All information included in this profile is accurate as of January 23rd, 2020. For more information, please consult LPL Financial’s website.
|Assets under management: $159,099,423,965|
|Minimum investment: Varies by service and portfolio type|
|Fee structure: Percentage of AUM, hourly fees, fixed fees and commissions|
|Headquarters:||75 State Street|
Boston, MA 02109
Overview of LPL Financial
LPL Financial was founded in 1989 after the merger of two smaller brokerage firms, Linsco and Private Ledger. With 16,109 advisors and 17,205 licensed insurance agents on its staff, LPL has $159.1 billion in assets under management LPL Financial is owned by LPL Financial Holdings, a publicly traded firm.
Advisors often choose to affiliate with LPL to tap into the firm’s technology, investment research and business building support, for which the firm earns a fee. LPL advisors maintain their own relationships with clients and negotiate their own fees and service offerings independently. LPL does not sell any of its own proprietary financial products, so advisors are free to recommend whichever investments and financial products they believe are in their clients’ best interests.
What types of clients does LPL Financial serve?
LPL Financial’s advisors serve mostly individual investors. In addition, the firm serves:
- High net worth individuals
- Trusts and estates
- 401(k) plans
- Individual retirement accounts
- Pensions and profit-sharing plans
- Charitable organizations
- State and municipal entities
The minimum amount of assets required to work with an LPL advisor varies depending on the service you receive. LPL does not have a minimum asset requirement for its financial planning, consulting or research services. For customized investment advisory plans, the investment minimum is up to the discretion of the advisor and is detailed in the client agreement.
Clients who opt to use one of the firm’s portfolio programs will be subject to minimum requirements that vary by program. Minimums start as low as $5,000 for Guided Wealth Portfolios and go up to $250,000 for Personal Wealth Portfolios (see more details on these options below).
Services offered by LPL Financial
LPL’s financial advisors offer the full gamut of financial planning and advisory services, such as budgeting, financial projections and selling insurance, though not all advisors offer every type of service. Among the services LPL advisors may offer are:
- Investment advisory services and portfolio management
- Wrap programs
- Financial planning
- Retirement plan and pension consulting
- Selection of other advisors
- Workshops and seminars
- Brokerage services
In addition to the services that LPL advisors provide directly to clients, when advisors affiliate with LPL, they get access to a range of services to help them build and manage their businesses. This includes business building ideas, compliance and technology support, investment research and the execution of trades.
How LPL Financial invests your money
Because LPL’s advisors work independently, investment approaches and strategies vary from advisor to advisor and client to client. Advisors can offer customized investment advisory services, and LPL also provides advisors with programs for investing client funds.
One option offered by LPL is the Strategic Asset Management program, which allows a high level of customization so clients can choose to exclude certain investments or emphasize others. The program offers access to a full range of investment options, including mutual funds, exchange-traded funds, equities, fixed income and alternative investments, such as non-traded real estate investment trusts and non-traditional exchange-traded funds.
Advisors who want to take a more hands-on approach with their high net worth clients can use a separately managed account wrap program from LPL called Manager Select. With this program, LPL reviews and recommends outside institutional portfolio management firms for inclusion.
For advisors who don’t want to create customized portfolios, there is also the option to invest clients’ money in one of LPL’s model portfolios. These portfolios — which include Personal Wealth Portfolios, Model Wealth Portfolios, Optimum Market Portfolios and Guided Wealth Portfolios — are professional asset allocation strategies that are created, managed and monitored by LPL. Mutual funds and ETFs make up the investments within these portfolios, but the exact mix will depend on a client’s responses to an online questionnaire about their financial goals, investment horizon and risk tolerance.
|Portfolio Name||Investment Strategy|
|Strategic Asset Management|
|Open architecture program that allows advisors to invest client assets in mutual funds, ETFs, individual equities, variable annuities and other investments.|
|Separately managed wrap program for high net worth clients that uses LPL-researched and monitored institutional portfolio managers.|
|Personal Wealth Portfolios|
|Asset allocation investment program that combines mutual funds, ETFs and investment models for high net worth investors.|
|Model Wealth Portfolios|
|Program that uses strategic asset allocations to take advantage of market opportunities that will persist for the next 3 or 5 years; designed for more aggressive investors.|
|Optimum Market Portfolios|
|Suite of model portfolios that invests in up to six mutual funds from the Optimum Funds family.|
|Guided Wealth Portfolios|
|Digital investment platform for low-balance investors.|
Fees LPL Financial charges for its services
It’s up to LPL advisors to determine how to charge for their services. Advisors use several fee models, including a percentage of assets under management, hourly fees, fixed fees and commissions. Fees are negotiated between clients and their advisors and detailed in the client agreement. All fees are paid directly to LPL, and LPL then shares a portion with the independent advisor representative.
That said, the firm typically charges for financial planning consulting services on an hourly or per plan basis, which is a flat rate. The maximum hourly fee that LPL advisors will charge is typically $400 per hour, while the maximum flat fee is typically $15,000.
For customized advisory services, LPL typically charges based on a percentage of assets under management. A client’s rate will be set out in their agreement with the firm. LPL states in its Form ADV that the maximum rate it generally charges is 1.50%.
For clients who opt to participate in one of the programs offered by LPL that’s laid out above, they will also pay a fee based on a percentage of assets under management. The maximum account fee is generally 2.50%.
Along with the account fees, clients may pay other miscellaneous administrative or custodial-related fees and charges. Clients are notified of these fees when they open an account, and LPL provides clients with a list of fees on its website.
LPL Financial’s highlights
- Awards and recognition: LPL advisors consistently appear on top advisor lists. In 2019, for example, 65 LPL advisors ranked among the best advisors in their states in Forbes’ list of Best-in-State Wealth Advisors. Deborah Danielson, an advisor based in Las Vegas, ranked No. 3 in her home state on Barron’s list of 1,200 Top Financial Advisors in 2019.
- Advisors for all types of clients: Because LPL has a vast network of advisors across the U.S., clients are likely to find an advisor whose specialty matches their needs. In addition to one-on-one advice with advisors, clients can also tap into technology-assisted portfolio management platforms similar to what they might find at a robo-advisor.
- Inclusive workplace: Human Rights Campaign gave LPL a 100% score in its Corporate Equality Index as one of the “Best Places to Work for LGBT Equality.”
LPL Financial’s downsides
- Advisor defections: Over the last few years, several big RIA firms have left LPL, citing the firm’s lack of service to their advisor groups. These groups included Retirement Benefits Group, which managed $10 billion, and Resources Investment Advisors, which oversaw $5 billion.
- Potential conflicts of interest: Some LPL advisors are dually registered, meaning that they are able to charge fees for financial advice as well as for products they recommend, such as 12b-1 fees, paid to cover distribution costs for mutual funds. This could incentivize advisors to sell certain products. One way that LPL has attempted to mitigate these potential conflicts is to credit back certain fees to client accounts, thus eliminating the financial incentive.
- Numerous disclosures: Over the years, LPL has been fined on several occasions for failing to supervise its brokers carefully, leading to sales of inappropriate and complex investment products.
LPL Financial disciplinary disclosures
LPL has had a long history of disciplinary disclosures, many of which are centered around the firm’s failure to properly supervise its brokerage practices. The firm has been ordered to pay fines and restitution as a result.
Among the most serious instances of wrongdoing, LPL was fined $26 million in 2018 for failing to establish and maintain reasonable policies and procedures to prevent the sale of unregistered, non-exempt securities to its customers.
In 2015, the firm was fined $11.7 million for “broad supervisory failures” in a few key areas, such as non-traditional ETFs, variable annuities, non-traded real estate investment trusts and other complex investment products. The firm was ordered to pay an additional nearly $1.7 million in restitution directly to clients who had bought non-traditional ETFs.
LPL Financial’s onboarding process
Advisors have their own onboarding process when they sign on new clients. LPL has recently streamlined its sign up process by reducing the number of fields clients must fill in and introducing a progress bar.
If you are interested in working with an LPL advisor, you can find one near you by searching on the firm’s website. You can either search for a specific advisor by name or take a look at the advisors in your area.
Is LPL Financial right for you?
With LPL’s vast network of affiliated advisors, potential clients should be able to find an advisor who can address their needs. However, LPL’s size does bring downsides — indeed, the firm has faced numerous disciplinary actions in recent years. Further, some of LPL’s advisors are dually registered as brokers and receive commissions for sales, which could create potential conflicts of interest. Some investors may prefer a smaller, more intimate advisory practice with fewer potential conflicts of interest and a more personalized feel.
Before choosing a financial advisor, it’s always important to do your research and compare several options to ensure your advisor is the right fit for you.