We are a leader in the retail financial advice market, the nations largest
independent broker-dealer (based on total revenues, Financial Planning magazine
June 1996-2015), a top custodian for registered investment advisors ("RIAs"),
and a leading independent consultant to retirement plans. We provide an integrated
platform of brokerage and investment advisory services to more than 14,000 independent
financial advisors (our "advisors"), including financial advisors
at more than 700 financial institutions across the country, enabling them to
provide their retail investors ("clients") with objective financial
advice through a lower conflict model. We also support over 4,200 financial
advisors who are affiliated and licensed with insurance companies that use our
customized clearing services, advisory platforms, and technology solutions.
Through our advisors, we are one of the largest distributors of financial products
and services in the United States, and are one of the top five firms based on
the number of advisors in the United States.
We believe there is a fundamental need for independent financial advice in America.
We believe investors achieve better outcomes when working with a financial advisor.
We strive to make it easy for financial advisors to do what is best for their
clients, while protecting advisors and investors and promoting independence
and choice through access to a wide range of diligently evaluated non-proprietary
products. This is the sole focus of our business.
Our mission is to enable our advisors to focus on what they do best—create
the personal, long-term relationships that are the foundation for turning life’s
aspirations into financial realities. Our differentiator is the combination
of our capabilities across research, technology, risk management, and practice
management, which together exceed any individual competitor’s offering.
All of these are delivered in an environment unencumbered by conflicts from
product manufacturing, underwriting, or market-making.
We began operations through LPL Financial LLC ("LPL Financial"), our
broker-dealer subsidiary, in 1989. LPL Financial Holdings Inc., which is the
parent company of our collective businesses, was incorporated in Delaware in
2005. LPL Financial is a clearing broker-dealer and an investment advisor that
primarily transacts business as an agent for our advisors on behalf of their
clients by providing access to a broad array of financial products and services.
Through our subsidiary The Private Trust Company, N.A. ("PTC"), we
offer trust administration, investment management oversight and Individual Retirement
Account ("IRA") custodial services for estates and families. Our subsidiary,
Independent Advisers Group Corporation (“IAG”), offers an investment
advisory solution to insurance companies to support their financial advisors
who are licensed with them. Our subsidiary, LPL Insurance Associates, Inc.,
("LPLIA"), operates as a brokerage general agency that offers life,
long-term care, and disability insurance sales and services.
Our Advisor Relationships
Our business is dedicated exclusively to our advisors; we are not a market-maker
nor do we offer investment banking or underwriting services. We offer no proprietary
products of our own. Because we do not offer proprietary products, we enable
the independent financial advisors, banks, and credit unions that we support
to offer their clients lower-conflict advice.
We work alongside advisors to navigate complex market and regulatory environments
and strive to empower them to create the best outcomes for investors. In addition,
we make meaningful investments in technology and services to support the growth,
productivity, and efficiency of advisors across a broad spectrum of business
models as their practices evolve. LPL advisors are part of a community of diverse,
entrepreneurial financial services professionals from whom they can learn and
grow.
We believe we offer a compelling economic value proposition to independent advisors,
which is a key factor in our ability to attract and retain advisors and their
practices. The independent channels pay advisors a greater share of brokerage
commissions and advisory fees than the captive channels — generally 80-90%
compared to 30-50%. Through our scale and operating efficiencies, we are able
to offer our advisors what we believe to be the highest average payout ratios
among the five largest U.S. broker-dealers, ranked by number of advisors.
Furthermore, we believe that our technology and service platforms enable our
advisors to operate their practices with a greater focus on serving investors
while generating revenue opportunities and at a lower cost than other independent
advisors. As a result, we believe that our advisors who own practices earn more
pre-tax profit than practice owners affiliated with other independent brokerage
firms. Finally, as business owners, our independent financial advisors, unlike
captive advisors, also have the opportunity to build equity in their own businesses.
Our advisors build long-term relationships with their clients in communities
across the U.S. by guiding them through the complexities of investment decisions,
retirement solutions, financial planning, and wealth-management. Our advisors
support approximately 4.6 million client accounts. Our services are designed
to support the evolution of our advisors’ businesses over time and to
adapt as our advisors needs change.
Our advisors average over 15 years of industry experience, which allows us to
focus on supporting and enhancing our advisors’ businesses without needing
to provide basic training or subsidizing advisors who are new to the industry.
Our flexible business platform allows our advisors to choose the most appropriate
business model to support their clients, whether they conduct brokerage business,
offer brokerage and fee-based services on our corporate RIA platforms, or provide
fee-based services through their own RIA practices.
The majority of our advisors are entrepreneurial independent contractors who
are primarily located in rural and suburban areas and as such are viewed as
local providers of independent advice. Many of our advisors operate under their
own business name, and we may assist these advisors with their own branding,
marketing and promotion, and regulatory review.
Advisors licensed with LPL Financial as registered representatives and as investment
advisory representatives are able to conduct both commission-based business
on our brokerage platform and fee-based business on our corporate RIA platform.
In order to be licensed with LPL Financial, advisors must be approved through
our assessment process, which includes a thorough review of each advisor’s
education, experience, and credit and compliance history. Approved advisors
become registered with LPL Financial and enter into a representative agreement
that establishes the duties and responsibilities of each party. Pursuant to
the representative agreement, each advisor makes a series of representations,
including that the advisor will disclose to all clients and prospective clients
that the advisor is acting as LPL Financials registered representative or investment
advisory representative, that all orders for securities will be placed through
LPL Financial, that the advisor will sell only products that LPL Financial has
approved, and that the advisor will comply with LPL Financial policies and procedures
as well as securities rules and regulations. These advisors also agree not to
engage in any outside business activity without prior approval from us and not
to act in competition with us.
LPL Financial also supports over 375 stand-alone RIA firms ("Hybrid RIAs")
with over 3,900 advisors who conduct their advisory business through these separate
entities, rather than through LPL Financial. Hybrid RIAs operate pursuant to
the Investment Advisers Act of 1940, as amended (the "Advisers Act")
or their respective states investment advisory licensing rules. These Hybrid
RIAs engage us for technology, clearing, and custody services, as well as access
to certain of our investment platforms. Advisors associated with Hybrid RIAs
retain 100% of their advisory fees. In return, we charge separate fees for custody,
trading, administrative, and support services. In addition, most financial advisors
associated with Hybrid RIAs carry their brokerage license with LPL Financial
and access our fully-integrated brokerage platform under standard terms, although
some financial advisors associated with Hybrid RIAs do not carry a brokerage
license with us.
We believe we are the market leader in providing support to over 2,200 financial
advisors at approximately 700 banks and credit unions nationwide. For these
institutions, the core capabilities of which may not include investment and
financial planning services, or that find the technology, infrastructure, and
regulatory requirements of supporting such services to be cost-prohibitive,
we provide their financial advisors with the infrastructure and services they
need to be successful, allowing the institutions to focus more energy and capital
on their core businesses.
A subset of our advisors provides advice and serves group retirement plans primarily
for small and mid-size businesses. These advisors serve over 32,300 retirement
plans representing $83.0 billion in retirement plan assets custodied at various
custodians. LPL Financial provides these advisors with marketing tools and technology
capabilities that are designed for retirement solutions.
We also provide support to approximately 4,200 additional financial advisors
who are affiliated and licensed with insurance companies. These arrangements
allow us to provide outsourced customized clearing, advisory platforms, and
technology solutions that enable the financial advisors at these insurance companies
to offer a breadth of services to their client base in an efficient manner.
Our Value Proposition
The core of our business is dedicated to meeting the evolving needs of our advisors
and providing the platform and tools to grow and enhance the profitability of
their businesses. We are dedicated to continuously improving the processes,
systems, and resources we leverage to meet these needs.
We support our advisors by providing front-, middle-, and back-office solutions
through our distinct value proposition: integrated technology solutions, comprehensive
clearing and compliance services, consultive practice management programs and
training, and independent research. The comprehensive and increasingly automated
nature of our offering enables our advisors to focus on their clients while
successfully and efficiently managing the complexities of running their own
practice.
Integrated Technology Solutions
We provide our technology and service to advisors through an integrated technology
platform that is server-based and web-accessible. Our technology offerings are
designed to permit our advisors to effectively manage all critical aspects of
their businesses in an efficient manner while remaining responsive to their
clients’ needs. We continue to automate time-consuming processes, such
as account opening and management, document imaging, transaction execution,
and account rebalancing, in an effort to improve our advisors efficiency and
accuracy.
Comprehensive Clearing and Compliance Services
We provide custody and clearing services for the majority of our advisors’
transactions, providing a simplified and streamlined advisor experience and
expedited processing capabilities. Our self-clearing platform enables us to
better control client data, more efficiently process and report trades, facilitate
platform development, reduce costs, and ultimately enhance the service experience
for our advisors and their clients. Our self-clearing platform also enables
us to serve a wider range of advisors, including Hybrid RIAs and their associated
advisors.
We continue to make substantial investments in our compliance function to provide
our advisors with a strong framework through which to understand and operate
within regulatory guidelines, as well as guidelines that we establish. Protecting
the best interests of investors and our affiliated advisors is of utmost importance
to us. As the financial industry and regulatory environment evolve and become
more complex, we remain devoted to serving our clients ethically and exceedingly
well. We have made a long-term commitment to enhancing our risk management and
compliance structure. Our technology-based compliance and risk management tools
further enhance the overall effectiveness and scalability of our control environment.
Our team of risk and compliance employees assist our advisors through:
training and advising advisors on new products, new regulatory guidelines, compliance
and risk management tools, security policies and procedures, anti-money laundering,
and best practices;
supervising sales practice activities and facilitating the oversight of activities
for branch managers;
conducting technology-enabled surveillance of trading activities and sales practices;
for advisors on our corporate RIA platform, overseeing and monitoring of registered
investment advisory activities; and
inspecting branch offices and advising on how to strengthen compliance procedures.
Practice Management Programs and Training
Our practice management programs are designed to help financial advisors in
independent practices and financial institutions, as well as all levels of financial
institution leadership, enhance and grow their businesses. Our experience gives
us the ability to benchmark the best practices of successful advisors and develop
customized recommendations to meet the specific needs of an advisor’s
business and market, and our scale allows us to dedicate a team of experienced
professionals to this effort. Our practice management and training services
include:
personalized business consulting that helps eligible advisors and program leadership
enhance the value and operational efficiency of their businesses;
advisory and brokerage consulting and financial planning to support advisors
in growing their businesses through our broad range of products and fee-based
offerings, as well as wealth management services to assist advisors serving
high-net-worth clients with comprehensive estate, tax, philanthropic, and financial
planning processes;
marketing strategies, including campaign templates, to enable advisors to build
awareness of their services and capitalize on opportunities in their local markets;
succession planning and an advisor loan program for advisors looking to either
sell their own or buy another practice;
transition services to help advisors establish independent practices and migrate
client accounts to us; and
in-person and virtual training and educational programs on topics including
technology, use of advisory platforms, and business development.
Independent Research
We provide our advisors with integrated access to comprehensive research on
a broad range of investments and market analysis on macro-economic events, capital
markets assumptions, and strategic and tactical asset allocation. Our research
team provides advice that is designed to empower our advisors to provide their
clients with thoughtful advice in a timely manner, including the creation of
discretionary portfolios for which we serve as a portfolio manager that are
available through our turnkey advisory asset management platforms. Our research
team actively works with our product due diligence group to effectively scrutinize
the financial products offered through our platform. This includes third-party
asset manager search, selection, and monitoring services for both traditional
and alternative strategies across all investment access points (ETFs, mutual
funds, separately managed accounts, unified managed accounts, and other products
and services). Our lack of proprietary products or investment banking services
enables us to provide research that remains unbiased and objective.