When advisor E. Martin von Känel left LPL Financial, he felt it had lost its way. Now, roughly a decade later, welcome cultural changes have lead him back to the No. 1 independent broker-dealer, he says.
Von Känel of Patriot Wealth Management decided to look for a new IBD after several shifts in ownership at Cetera Financial Group, the parent of Summit Brokerage Services, he says. He left Summit for LPL, which he says is treating advisors like clients again.
The firm aims to convince more advisors that its resources and more personalized approach can best support them. Three newly unveiled teams bringing six advisors with $575 million in combined client assets amid record recruiting in 2018 show that some are buying into the vision.
As evidence of the better approach, von Känel brings up the fact that Head of Business Development Rich Steinmeier greeted his team and “had a very genuine conversation” with them on their visit to LPL’s San Diego office in August. Steinmeier had only joined the firm roughly a week earlier.
Von Känel and Torrance, California-based Patriot — which manages $120 million in client assets and also includes Director of Operations Monica Herrera and staff members Elizabeth Martinez and Carly Shafik — joined the firm on Oct. 30, according to FINRA BrokerCheck. Patriot spent nine years with Summit.
Von Känel describes Summit as a “wonderful boutique firm” he joined after looking for a firm “that would allow me to be recognized and have a voice” the year before two private equity firms took LPL public in 2010. LPL “had outgrown its ability” to serve its fast-expanding headcount of advisors, he says.
The 14-year LPL veteran enjoyed a close relationship with the executive team after coming to the firm when it had only about 1,000 advisors, compared to more than 16,000 today. Von Känel felt treated like a number by LPL in the past, but he began to hear from advisors who stayed with the firm, he says.
“They said, ‘Martin, you know, you should reconsider LPL because there have been changes,’” von Känel says, mentioning LPL’s transition team as helpful in the movement of the practice’s assets. “I do see it, I do feel it. They are genuine about helping us out.”
In his first interview since leaving his chief digital officer role at UBS Wealth Management USA to replace the retiring Bill Morrissey, Steinmeier laid out how his team of 130 recruiters, field staff and transitional employees is using technology and services to woo advisors in an increasingly competitive space.
LPL has learned it “can never move away from the advisor,” Steinmeier says, referencing CEO Dan Arnold’s repeated calls for transformation of its culture. Identifying organic growth as the firm’s main metric of focus, Steinmeier sees no conflict in the publicly-traded firm’s need to satisfy investors and advisors.
“If we don’t provide the personalized service to where advisors are advocates for our firm, we will never hit those growth numbers,” Steinmeier says. “It is all we talk about. If we cannot be the best firm for advisors to join, it is irrelevant what those discussions are with the analysts.”
Steinmeier’s new approach is winning converts: In the past three weeks alone, LPL has announced Patriot and two other major teams coming to the firm from competitors.
Karl Preheim’s Team Preheim Advisory — which is based in Fresno, California and has $105 million in client assets — left Wells Fargo for LPL in December, BrokerCheck shows.
Michael McCarthy, Andrew Pincus, Gregg Gottlieb and Fred DaVeiga of Regal Wealth Advisors also joined LPL from Kestra in early January. The practice’s offices in New Jersey, South Carolina and Florida manage some $350 million in client assets.
“After looking at the integrated platform, concierge level of support and client-facing capabilities that LPL Financial provides, it was a simple choice,” McCarthy said in a statement. “We believe that LPL can help us meet the demands of our growing firm and help us take our firm to the next level.”
A spokeswoman for Wells Fargo declined to comment on Preheim’s exit, and representatives for Kestra didn’t respond to requests for comment on Regal’s departure. Cetera spokesman Sean Mogle issued an emailed statement on Patriot’s decision to go.
“In today’s marketplace, it’s critical that advisors find a partner that is best suited to their needs,” Mogle said. “We certainly wish them continued success in their new circumstances.”
Incoming recruits with $8.6 billion in client assets came to LPL (or made the decision to do so) in the fourth quarter, Arnold said in prepared remarks on the firm’s earnings call. LPL set a record in 2018 with a total haul of $27.3 billion in recruited assets. Its headcount increased 6% to 16,109 advisors.
A sequential loss of a net 65 advisors from the previous quarter resulted from a major employer-plan focused network’s departure, exits by hybrid RIA practices and moves by low producers, according to the firm. LPL’s acquisition of the assets of National Planning Holdings brought some 1,850 advisors, though.
Both the NPH deal and organic growth of $5.9 billion in net new assets in the fourth quarter pushed up client holdings 2% to $628 billion, despite fourth-quarter volatility in equities. Advisory inflows, which were $5 billion, are growing by an annualized rate of 6.5%, and total inflows are increasing by 3.5%, annualized.
Steinmeier’s team is “bullish” on organic growth, which LPL sees as a measure of the “core health” of its business, he says. Noting the firm’s employees spent 33,000 collective hours at advisors’ offices in 2018, Steinmeier says about 10% of the recruited assets came from advisors referred by their peers.
Capabilities including a newly launched goals-based planning tool, enhancements to the firm’s long-developing ClientWorks platform and proposal generation resources from the $28 million acquisition of AdvisoryWorld in December are making a difference, Steinmeier says. IBDs with 500 representatives typically generate about $100 million annually, he says.
“We spend more than that on technology every single year,” he says.
“With a changing regulatory environment and more complex needs and higher demands from end investors, it’s hard for firms to compete against us,” Steinmeier continues. “If we’re willing to be humble and disciplined and deliver, I think you see those things coming together at a time when, as advisors are demanding more, we’re stepping up with more.”