June 8, 2021
Barbara Herman Quoted
By Diana Britton

While LPL Financial has custodied assets for registered investment Advisors since 2008, it was largely to support the fledgling hybrid advisory business of its registered reps. But as it has across the industry, that advisory business has grown fast; according to Cerulli, LPL is now the third-largest RIA custodian in the marketplace.

Barbara Herman, senior vice president at Diamond Consultants, said she believes the merger of Schwab and TD Ameritrade has left a gap in the marketplace, one LPL has an opportunity to fill.

But she thinks the firm is more likely to appeal to hybrid advisors who like the simplicity of having LPL for brokerage clearing as well as RIA custody. She added that some large groups left LPL in the past due to service issues, so the firm’s proactive service approach here could be promising in retaining advisors who eventually want to drop their FINRA licenses.

“If they are looking to either attract to the platform or, I believe, equally retain advisors as they grow through the lifecycle of the business, a dedicated service team would be critical,” Herman said. “The needs and the requirements for a fee-only RIA business are different—from a compliance standpoint, from a sophistication standpoint. They need a different service team.”

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