LPL Financial’s share of bank and credit union-based wealth management programs keeps expanding, with its latest billion-dollar recruits adding to its record headcount.

Commerce Financial Advisors, a retail brokerage and advisory business owned by major regional institution Commerce Bank, is bringing 30 financial advisors with $4.4 billion in client assets to LPL’s Institution Services unit next year, the firms said on Nov. 22. Commerce’s move marks the second incoming bank-based wealth program of at least $1 billion in client assets that LPL has unveiled this month. Prior mega-recruits M&T Bank, BMO Harris, CUNA Brokerage Services and People’s United Bank have collectively brought roughly 865 advisors with $77 billion in client assets to LPL in the past two years. 

The wealth manager amassed an estimated 8% of the available market share among banks and credit unions through those four transactions alone, pushing up its footprint to 1,100 institutions and 16% of the business in the channel, according to LPL’s third-quarter earnings presentation. With new affiliations beyond such traditional areas of LPL’s business and technology spending amounting to $220 million in 2022, the firm’s headcount now tops 21,000 representatives. 

For the banks and credit unions, LPL helps them rise to the challenge of “competing with the JPMorgans and the Wells [Fargos] and the Bank of Americas,” Ken Hullings, LPL’s senior vice president of enterprise business development, said in an interview. Expenses and complexities stemming from regulation and tech can turn into LPL’s problem, and the banks can focus on working in the communities that are already familiar with them, he said.

“Advisors are demanding more, clients are demanding more, the cost to run a wealth management business, a broker-dealer and [registered investment advisor] continue to go up,” Hullings added. “What we hear from our prospects and from our clients a lot is, ‘Hey, we love our brand, our clients love working with our bank. We want to leverage that to deepen the relationships with our clients.'”

Much like the M&T Bank and BMO Harris moves last year, Commerce is shutting down its brokerage arm to use that of LPL and its RIA and custodian. With $33.3 billion in assets and $27.4 billion in deposits, Kansas City, Missouri-based Commerce is one of the 50 largest banks in the country, according to the firm’s website. Its net income increased 6% to $122.8 million in the third quarter, due to rising revenue tied to interest rates, Commerce’s third-quarter earnings statement shows

“Commerce Financial Advisors has always been focused on helping our clients meet their financial goals through a tailored investment strategy, and LPL is the right partner to help us meet and exceed our client’s investment goals,” Commerce Trust CEO John Handy said in a statement. “LPL’s integrated wealth management platform and focus on user experience will provide tremendous value to our advisors and allow them to deliver an advanced service experience to our clients.” 

LPL is taking advantage of “their size and their strength and their stability” and the fact that the firm “has created so many different channels” to recruit successfully across the industry, according to Jodie Papike, president of advisor and executive placement firm Cross-Search. Those qualities set it apart from competitors often focusing on certain niches of the industry.

“They’re appealing to all different types of advisors. Their ability to pivot and be more of an open architecture type of firm makes them appealing to almost every type of advisor in this space now,” Papike said. “LPL has been able to expand and adapt over time to having all these different ways that they can recruit.”

The firm’s rapidly growing footprint among banks and credit unions represents the latest phase of its longtime presence in the channel. CEO Dan Arnold joined LPL as part of the 2007 acquisition of UVEST Financial Services Group, a former wealth management services provider to credit unions’ investment programs. LPL has identified 20 to 30 more prospective recruits among other institutions that are still using their own brokerages and RIAs, Hullings said.

In a video from LPL’s investor day last week, M&T Head of Affluent Markets Matt McAfee explained what prompted the firm to move its 210 advisors and $22 billion in client assets.

“We knew we had a somewhat undifferentiated client experience,” McAfee said. “Some of the things we put clients through were, frankly, a little bit challenging and time-consuming. So we really wanted to create a best-in-class experience for the end client.” 

Read More: LPL recruits $4.4 billion wealth program of Commerce Bank

2022-11-22 20:10:59

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