Fourteen years ago, financial advisor Carmen Cercone met briefly with LPL Financial representatives.
"I wasn't impressed," he recalled in an interview.
Seven or eight years ago, when he spoke with them again, it was in another brief meeting that failed to impress Cercone, who was considering a move for his practice when he learned that the firm he was then registered with was about to be sold to LPL.
Fast forward to this Monday: Cercone's business,
Today, "LPL looks like an entirely reinvented, reinvigorated state-of-the-art broker-dealer," said Cercone, who is the founding partner and director of estate planning at Watermark.
"I was really quite shocked."
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The news comes after
Meanwhile, smaller rival firm Kestra Financial has faced questions in recent months about its ability to sustain its growth and manage its private equity-driven debt. Kestra sold off a
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While
A push from the younger generation
LPL won over Cercone's team after they considered 10 options in total, beginning around January 2022, said Cercone. Cercone sent out letters to the 10 broker-dealers and all of them responded; they eventually narrowed it down to two options and finally went with LPL.
Cercone acknowledged that his business had grown with help from Kestra over the years, thanks to the firm's role as "a phenomenal business partner," and said they had been "very attentive" to his team. When his firm joined Kestra in 2016 as Watermark Wealth Strategies,
"I just don't think they had enough on the shelf, to help us grow to the next level," Cercone said of Kestra, adding that in particular, "Our client experience with Kestra is not world-class. It's always been a problem for the younger advisors — they wanted more comprehensive (support)."
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Still, Cercone had been in favor of staying. But LPL's value proposition proved too attractive to ignore, for those younger advisors on the team. Cercone, who is 63, said he had historically made the group's decisions together with a senior business partner at the firm, but as he
"The younger guys … are the future of the firm. So I had to think about what was best for them. And they wanted to make the move," he said.
"They wanted to have state of the art," Cercone said of the younger advisors. "They were really impressed by LPL's technology, by their platforms, by all the vast amount of resources LPL could bring. Even though we may not use very many of them, there's so many to choose from."
The quality of a firm's technology has become "a key driver of advisor moves," said industry recruiter Mark Elzweig in an email about the move. "It directly impacts both the client and advisor experiences."
In particular, it had been a hassle to prepare for client meetings, Cercone said. "Our staff had to access two or three different sources, just to put together the information that we can now get from LPL in one place."
LPL was "one of the first companies to launch their self-clearing platform, many, many years ago," said industry recruiter Jodie Papike, the president of Cross-Search, in an interview. "And they've worked out pretty much most of the kinks with that. … Everything is integrated because they're self-clearing. So all the systems are talking to each other. That makes them really attractive."
"We're proud of the support we delivered to Watermark throughout our seven-year relationship," said Stephen Langlois, president of Kestra Financial, in an emailed statement. "From investment platforms to technology services, from succession and monetization to trust services and back-office support – we've built a full ecosystem that delivers deep value and scale, fully equipping advisors to provide the best possible outcomes for their clients."
Aggressively growing with support for aggressive growth
Papike added that LPL had been one of the most aggressive recruiters in the market, which likely also was a factor in the move. "They have more recruiters across the country than most firms do. Which just gets recruiters in front of advisors and teams of advisors more frequently," she said of the firm, adding that it also has been known to pay high transition deals.
Certainly for Cercone, the charm factor from LPL had been high. He said his experience of the LPL recruiters this time was that they appeared "dynamic" and "very transparent" as well as comfortable to be around. What sealed the deal for his final decision was a meeting with Rich Steinmeier, a senior executive at LPL who he found especially impressive.
Most of all, LPL's "vast" size and resources, including its bigger footprint and advisor network nationwide, painted a rosy picture for Cercone's team of possibilities for growth and hiring.
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"We're going to try to bring on some other independent advisors who want to be a part of a larger firm where there's a little more interaction and exchange of ideas," Cercone said. In addition, the team — which is a full-service outfit that specializes in helping mostly high net worth retirees and near-retirement clients, and their next-generation heirs, with estate planning, retirement planning and comprehensive financial planning services — is looking to add some servicing representatives. Watermark
A couple of "isolated situations" with Kestra last year also contributed to the decision to move, said Cercone, who didn't elaborate. "They just made us feel a little uneasy."
LPL's multitude of affiliation platforms "makes it fairly seamless for a lot of folks to engage in a myriad of ways," said Thom Powers, the director of business development for recruiting firm Elite Consulting Partners, in an interview about the move. Powers said that with LPL's attractive flexibility of options leading to its immense size, "size begets size" in its case — and it creates opportunities for advisors to grow inorganically by buying and selling practices.
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"And whenever you have more choices, I say it's like selling a house. If 10 people want your house, it's worth more," he said. "You have a lot of opportunity, both from a purchasing perspective as well as a succession or sunsetting."
In Watermark's case, Cercone said, the firm is planning to add another office in California — where "there might be opportunities to bring or recruit Kestra people that would like to be attached to a large firm to us." But whereas the Texas-based Kestra "had very little West Coast representation," LPL is more established there.
Finally, Cercone said, it had been a comfort to move from a privately owned firm like Kestra to a large publicly traded one of LPL's size.
Some of his advisors had owned shares of Kestra and were confident that it had been financially "okay," he said. But in LPL's case, "The fact that the company's publicly traded alleviates the need for us to have to do additional due diligence" to ensure it remains a stable home for their clients going forward.
"Although I have no reservations about Kestra, the fact that they are private equity-owned always concerned me," he said.
Kestra tried to keep Cercone engaged, and he met with their executives around three times before finally deciding to leave for LPL. In the end, "I wanted to find a reason not to make a move and couldn't."
