Review of LPL Financial 2021

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Updated on Wednesday, June 30, 2021

LPL Financial is the largest independent broker-dealer in the U.S. 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 throughout the country. LPL Financial has several different investment strategies with differing minimums to invest. Its client base is primarily composed of individuals, though it also works with a number of institutional investors.

The bottom line: LPL Financial is a massive independent broker-dealer and registered investment advisor, with affiliated advisors all across the country.

  • Several different model portfolio strategies offered
  • No clear published fee schedule for services provided
  • Many disciplinary disclosures on its record
Assets under management: $268,833,916,025
Minimum investment: Varies for customized advisory services; none for financial planning
Individual investor to advisor ratio: 47:1
Fee structure: A percentage of AUM, hourly charges, fixed fees, commissions
Headquarters: 1055 LPL Way
Fort Mill, SC 29715
Website:www.lpl.com
Phone: 704-733-3482

All information included in this profile is accurate as of June 29, 2021. For more information, please consult LPL Financial’s website.

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Overview of LPL Financial

LPL Financial was founded in 1989 after the merger of two smaller brokerage firms, Linsco and Private Ledger. With approximately 16,500 advisors and close to 18,000 licensed insurance agents on its staff, LPL Financial is owned by LPL Financial Holdings, a publicly traded firm.

Advisors with various firms 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 proprietary financial products, so advisors are free to recommend whichever investments and financial products they believe are in their clients’ best interests.

LPL Financial’s pros

  • 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.
  • Awards and recognition: LPL advisors consistently appear on top advisor lists. For example, 29 LPL advisors ranked among the best advisors in their states in the 2021 Forbes’ list of Best-in-State Wealth Advisors. In 2020, the firm was recognized as a technology innovator by the Bank Insurance and Securities Association.
  • Inclusive workplace: Human Rights Campaign gave LPL Financial a 100% score in its Corporate Equality Index as one of the “Best Places to Work for LGBT Equality.” Investors who feel strongly about social and diversity issues can therefore feel good about working with LPL and LPL-affiliated firms.

LPL Financial’s cons

  • Unclear fee schedule: Because LPL Financial is such a huge firm with a massive network of affiliated advisors from different firms across the country, it’s difficult to figure out what you might end up paying until you talk directly to the advisor with whom you will be working. That said, the firm does publish miscellaneous fee schedules, for services such as transaction and retirement account fees, on its website.
  • Potential conflicts of interest: Because LPL Financial Holdings is publicly traded, LPL advisors could potentially recommend a mutual fund or ETF that contains the stock as an underlying investment. This could lead to a potential conflict of interest, as the investment advisor could recommend certain products or services that result in compensation to LPL. That said, LPL ensures that clients will be informed of any potential conflict of interest in this area if such a fund is recommended.
  • 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. We provide more details on the firm’s disclosures below.

What types of clients does LPL Financial serve?

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.

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 insurance products, 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
  • Mutual fund asset allocation programs
  • Financial planning
  • Investment research
  • Advisor-enhanced digital advice
  • Consulting
  • Insurance
  • 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 Financial, 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 Financial’s advisors work independently, investment approaches and strategies vary from advisor to advisor and from client to client. Advisors can offer customized investment advisory services, and LPL also provides advisors with programs for investing client funds.

LPL Financial’s Strategic Asset Management program 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:

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 Financial 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 Financial’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 Financial. 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.

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 types, including a fee based on 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 Financial, 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 $500 per hour, while the maximum flat fee is typically $20,000.

For customized advisory services, LPL Financial 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%.

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 disciplinary disclosures

LPL Financial 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. For reference, the SEC requires all registered investment advisors are required to disclose any legal, regulatory or criminal event that is material to how a client evaluates the business or the integrity of the management team in their Form ADV paperwork.

LPL Financial’s most recent disclosure involves a settlement with the SEC that found LPL wilfully violated a section of the Advisers Act by providing inadequate disclosure to clients of a conflict of interest related to the firm’s receipt of 12b-1 fees and its selection of mutual funds that pay such fees. The SEC ordered a payment to affected investors totaling around $9.3 million.

For more information and a more complete summary of the firm’s disciplinary history , visit LPL Financial’s IAPD page.

LPL Financial’s onboarding process

If you are interested in working with an advisor at LPL Financial, you can find an advisor near you by searching on the firm’s website. You can either search for a specific advisor by name or see a list of advisors in your area.

The exact onboarding process will vary from advisor to advisor. Once you are working with an advisor, you can expect to get monthly or quarterly statements, depending on what kind of account you have and the amount of activity in your account.

Where LPL Financial is located

LPL Financial has advisors across the country, but its Form ADV lists physical offices in the following locations:

Is LPL Financial right for you?

With LPL Financial’s vast network of affiliated advisors, potential clients should be able to find an advisor who can address their needs. However, LPL Financial’s size does bring downsides. The firm has faced numerous disciplinary actions in recent years, and fees and available services can vary from advisor to advisor. Some investors may prefer a smaller, more intimate advisory practice with fewer potential conflicts of interest and a more personalized feel.

That being said, choosing a financial advisor is a personal decision that depends on your preferences and unique needs. Be sure to research multiple firms to ensure you find the right advisor for you.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.