Brrr...LPL Cites Bad Weather for Recruiting Slowdown
Even independent broker-dealers say the nations especially cold winter is hurting business.
LPL Financial says the pace of new advisors affiliating with the firm has slowed from the levels of late 2013 "in part due to disruptive weather," according to Reuters. In addition to frigid weather canceling meetings with prospects considering joining from other firms, a bank with about 40 brokers dropped
LPL, the company said in an update on its business operations.
LPL disclosed the recruiting slowdown in a presentation to investors that was webcast from a Sanford Bernstein conference, according to Reuters.
The firm, which was ranked number one in the 2013 Financial Planning FP50 survey of the nations largest independent broker-dealers and had more than 13,600 advisors in its network, typically attracts between 400 and 450 advisers annually.
But according to LPLs earnings report released in February, the number of advisors grew by 2.4% with the firm attracting a total of 321 net new advisors in 2013, with 110 of those joining in the fourth quarter.
This comes on the heels of a major shakeup in the IBD world. Nicholas Schorchs RCS Capital agreed to acquire Cetera Financial Group in January. When the $1.15 billion deal is completed, it will make RCS Capital the equivalent of the second-largest independent broker-dealer in the country -- after LPL -- by number of advisors.
Other independent B-Ds are also looking beyond organic growth to merging or acquiring small to mid-sized broker-dealers. Advisor Group CEO Erica McGinnis has said that due to the increasing cost of individual advisor recruiting, the firm is looking to acquisitions to grow. We've spent a lot of time focusing on one-by-one recruiting: rep by rep, branch by branch. And that is hugely important. But the cost of recruiting is going up. We need to have an acquisition strategy, McGinnis recently told Financial Planning.
INDEPENDENT CHANNEL GROWTH
Meanwhile, according to recent research from Boston-based Cerulli Associates, the independent channel is expected to continue gaining marketshare. Cerulli projects that independent and dually registered RIAs will reach a 26% marketshare in assets by the end of 2016 compared to 21% today.
Kenton Shirk, an associate director at Cerulli, says that in the past "breakaway brokers" leaving the wirehouses have helped fuel asset growth in the independent space. And though there may continue to be substantial departures, they are unlikely to reach the level of departures between 2009 and 2011.