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eHarmony for Advisors? LPL Amps Up Matchmaking Services

LPL Financial expects to begin matching advisors who want to buy and sell their practices at three to four times the current rate to help advisors both grow practices and sell them at strong valuations.

To do so, the country’s largest independent broker dealer expects to have a portal up and running, probably under the name AdvisorHarmony, as early as next year that will allow advisors to sift through potential partners on their own.

“It’s not too dissimilar – I hate to say it – to how an online dating profile would work,” says Jeremy Holly, a senior vice president in LPL’s Independent Advisor Services, who has taken a lead role in the design of the program. “We kind of created this matching algorithm, if you will. We are leveraging our internal CRM (customer relationship management systems) to have that data to match it up.”


The name AdvisorHarmony started as a somewhat tongue-in-cheek joke when LPL ran a comical video at its national conference last week in San Diego. It was a play on the name of the well-known dating site eHarmony which, like AdvisorHarmony, uses proprietary algorithms to match people who want to get married. By contrast, large dating sites like Match.com force members to search for their partners among millions of profiles.

“We don’t want to put [advisors] together unless we believe there’s a high possibility that they are going to hit it off,” Holly says. “That’s the reason we did a riff on eHarmony.”

The name has proved so popular internally at LPL and among advisors that LPL went out and bought the domain.

In the video at LPL’s meeting, two ‘advisors’ – actually a man and a woman who both work in LPL’s home office – played the part of advisors effusing about their new relationship in a faux AdvisorHarmony commercial. Holly played the role of the AdvisorHarmony founder pitching the service (it was his return to the big screen after his appearance as an extra in Spike Lee’s He Got Game in 1998).

The bit drew huge laughter and applause from the audience.


“It seemed like half the crowd got it. The other half thought it was a joke,” Holly says. “We spent some time saying, ‘No, this is real.’” After the general session, Holly lead a breakout session explaining the nuts and bolts of the program later that same day to an overflow crowd.

The program is very real indeed, with LPL providing dowry loans.

In the past two and a half years, LPL has loaned a total of about $5 million to help fund about 30 deals between advisors.

Loans of an average size of $170,000 are used to pay for half of the down payment on a practice. The total down payment, often more than $300,000, typically represents a third of the total purchase price of a practice.

That means most of the deals brokered by LPL thus far have resulted in valuations of $750,000 to $1 million. The payout periods tend to be between two and three years on balance, depending on the specifics of the transaction. LPL expects buyers to come up with at least half of the down payment in order to have some skin in the game.


Many sellers, Holly says, are sole proprietors who by definition are running practices that have typically built up little enterprise value over the years. In some cases, these solo advisors might otherwise be at risk of having to shutter their practices at retirement.

“That’s exactly what I’m telling advisors who are sole proprietors,” Holly said. “I’m saying, ‘Hey, you can actually realize value for what you’ve created. There is a market.’”

LPL expects the program to draw a large jump in interest because, prior to last week’s meeting, it has not yet advertised the program.

LPL’s matchmaking “is something that’s always happened in an unorganized fashion,” according to Holly. “What we’ve been trying to do is create some formality around it.”

In the last three months alone, one LPL employee has created 50 profiles for advisors looking to buy or sell. Right now, buyers far outweigh sellers.


LPL expects the program to contribute to its own growth in a number of substantial ways, Holly says: by increasing the organic growth rate of its 13,300 advisors, by keeping sellers in the LPL network, by attracting potential buyers to LPL in order to have access to target acquisitions and help in getting them done, and, finally, by making a return on the loans.

The loans are typically offered at the prime rate plus two points, according to Holly.

Fittingly, Holly, who is getting married on Saturday, designed much of the program during his engagement. Although he and his fiancé didn’t meet on a dating site, LPL did serve as a passive broker: "I met her here a few years ago,” he says.

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