All eyes are on the biggest IBD -- which can be a good or bad thing for it

February 2, 2011 — 6:08 AM UTC by Elizabeth MacBride


I fell into step next to Bill Dwyer coming out of the session led by consultant Chip Roame on the challenges facing broker-dealer CEOs, and made some remarks about how the Financial Services Conference, which came to a close last night in Phoenix, had worn me down.

“This carpet seems to get less padded every year,” said Dwyer, LPL’s president, national sales/marketing.

LPL’s way is a little less easy this year, too.

Emulate or beat

LPL’s public offering made it the industry’s standard-bearer. (See: What to make of LPL nearing a successful — but scaled back — IPO) Now, within the world of IBDs, LPL Financial is the model to emulate or beat; Roame laughingly referred to the challenge for the other IBDs of creating a mini-LPL and called Dwyer “Mr. IPO.”

The company is being thrust into a leadership role just as the very premise of the independent broker-dealer – selling products to investors on a commission basis – is under question by regulators and to some extent, the public. The IBD’s industry group, the Financial Services Institute, is just beginning to find its feet as a lobbying organization in Washington, D.C. Dwyer, who is the new chair, will have a lot of politicking to do on behalf of the industry this year. See: Nine things I learned as an RIA infiltrator in an IBD world

Nor is the pressure coming only from within the broker-dealer world. Coincidentally or not, LPL’s 12,000-plus advisors have become the target of custodians’ recruitment efforts as the wirehouse spigot has narrowed. The industry is waiting, it seems, to see if the public offering will spur a flight of advisors who waited out their options rewards and are now seeking a new landing place.

No impact

All this was on my mind when I got a few minutes to talk to Dwyer in the corner of the reception hall. I asked him first about those reports from the custodians.

“We’ve reported those numbers (of advisor wins and retention),” he said. “To be candid, those conversations that people say they’re having have no impact on me.”

At the end of the third quarter, LPL’s hybrid RIA platform had $11.6 billion in AUM, up from $7.3 billion in January. “The overwhelming majority of this AUM was recruited from advisors that had no prior relationship with LPL Financial,” said a spokesman. (See: LPL’s hybrid RIA platform is fast off the mark and names new leaders for 2010.)

Overall, advisory assets in LPL’s fee-based platforms were $86.2 billion for the third quarter of 2010, up 18.7% from $72.6 billion for the year-ago quarter, which outpaced the growth of the average S&P 500 for the period of 10.0%.

The company had 10 fewer advisors in Sept. 10 compared with Sept. 09, for a total of 12,017.

The new advisors on LPL’s platform were won “in direct competition with the custodians,” Dwyer said.

Bank recruitment

Dwyer said LPL recruits from across the channels: 30% from wirehouses, 30% from insurers, 30% from other IBDs, and about 10% from banks. He said recruitment from the latter channel has grown.

“One of the reasons we’ve had this growth (overall) is that we’re a melting pot,” he said.

I asked him whether the regulatory moves in Washington posed a major challenge for IBDs.

“What is hurting b-ds, advisors and consumers is uncertainty,” he said. “We just don’t have the clarity.”

He seemed prepared for the long process of rulemaking and regulations that lies ahead, and said he expected it would take 3-5 years.
“Wherever it ends up, change is hard,” he said.

Inspiration from RFK

Finally, I asked him about the biggest story out there now, and he unhesitatingly said, “retirement.”

Earlier in the day, Dwyer had used his platform as new FSI chair to raise the issue of Americans’ lack of preparedness for retirement. Advisors, he said, are in a position to help. He quote Sen. Robert F. Kennedy, “Few will have the greatness to bend history itself; but each of us can work to change a small portion of events, and in the total; of all those acts will be written the history of this generation.”


Mentioned in this article:

LPL Financial
Asset Custodian
Top Executive: Bill Morrissey

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