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Why the LPL-Schwab merger rumor making the rounds makes more sense the harder you look

The Boston- and San Francisco-based companies each lead independent channels and redundancies are scarce

Author Brooke Southall November 18, 2016 at 1:15 AM
1 Comment
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Citi's Bill Katz spoke out Thursday to quell rumors about Schwab buying LPL, but only with soft logic.

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RIA Custodians

Stephen Winks

Stephen Winks

November 18, 2016 — 6:56 PM
It would be easier for Schwab to create a first rate advisory services business model in support of fiduciary duty than to try to adapt the LPL transactions model. (1) LLP has no control over their brokers and by starting with a first class advisory services model, Schwab would only attract to advisors who wish to achieve professional standing. (2) Schwab Advisory Services would be a completely different entity than Schwab Institutional but would be a big draw to Schwab Institutional as it would be the only option for largew scale institutionalized support for fiduciary duty. (3) Custodial services pricing will dramatically change when trade execution is treated as a cost center to be minimized in the client's best interest, thus a Schwab Advisory Services affiliate is a mechanism for Schwab to reprice their services to be consistent with the new fiduciary construct. SCW

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