LPL continues recruiting run with $1B ex-Merrill team

The steady flow of wirehouse advisors to independent firms continued on Tuesday with LPL Financial picking up a team managing $1 billion from Merrill.

LPL, the largest U.S. independent broker-dealer, announced that advisors James P. Debuque and Timothy M. Baltz have turned to its supported-independence unit, LPL Strategic Wealth Services, to open a new Doylestown, Pennsylvania-based practice called Continuity Private Wealth. Both Debuque, who has 27 years in the industry, and Baltz, who has 19, started their careers at Merrill.

The announcement came the same day that industry recruiter Diamond Consultants released a report finding that big wirehouse firms lost a net of 348 advisors in 2023, while their independent rivals gained 563 net. The numbers were the latest confirmation that the appeal of independence remains strong in the wealth management industry.

Many advisors have left large firms in recent years in search not only of the ability to keep more of the money made managing clients' portfolios but also greater freedom to run their businesses as they see fit. The team leaving Merrill for LPL struck the same note in an official statement on the transition.

"By making this move, we now have the freedom to follow a fiduciary standard for our clients without corporate influence," Debuque said in the statement. "We have access to more investment selections, robust financial planning software and a group of specialists who will help us create differentiated experiences for clients."

READ MORE:
Fighting the tides of wirehouse attrition
LPL adding $16B Wintrust program in recruiting grab from Wells Fargo
LPL's Atria deal to supercharge firm's growth past 25,000 advisors
Merrill loses $1.6B team to UBS amid exodus of firm lifers
Another Merrill team decamps to UBS

Jason Diamond, an executive vice president at Diamond Consultants, said LPL was clearly one of the winners in the recruiting game last year. According to his firm's tally, LPL added a net 1,246 advisors in 2023. The second highest gain, at LPL's direct competitor Cetera Financial Group, was only for a net of 487 advisors.

Diamond Consultants arrived at its numbers with help from the research firm Discovery Data, as well as by tracking registrations with the Financial Industry Regulatory Authority, recruitment announcements and similar sources. Its figures don't take into account all moves, but only those involving "experienced advisors," or those with at least three years in the industry.

Diamond said LPL Strategic Wealth Services' "supported independence" offerings have particular appeal to teams that are coming from large firms and are perhaps a bit nervous about going completely independent. The three months before and after a transition are a particularly crucial period, Diamond said, when a firm with LPL's resources can provide help on everything from finding an office and marketing a practice to moving over a book of business and setting up human resources.

"Once you're up and running, you're usually OK," Diamond said. "It's that initial support that goes a long way."

But Kimberly Sanders, a senior vice president of LPL Strategic Wealth Services, said one of LPL Strategic Wealth Services' distinguishing features is the ongoing support it offers to advisors who want it. She said the firm has an in-house strategy team consisting of a marketing expert, a chief financial officer, a bookkeeper, a financial tech consultant and a business strategist.

"So they're doing all the marketing posts, they're doing the lead generation, they're managing all of the blogs and all of the newsletters while the advisors are out recruiting new clients or serving existing clients," Sanders said.

What's more, she said, all of those services are bundled together and can be paid for with a single service fee charged to advisors.

"So there's no ticket charges, no small-account fees, none of those little ticky-tacky fees that drive advisors crazy," Sanders said.

Sanders said LPL has found that supported advisors are generally able to build their businesses faster than unsupported ones.

"So that's really where we're investing our time and our energy and our resources is in that ongoing support," she said.

Diamond Consultants' report predicts more firms will start offering supported-independence services similar to LPL's. Models like LPL's, according to the report, offer "all the benefits of independence but with additional layers of scaffolding and support for things like transitioning the business, compliance and risk oversight, and ongoing middle- and back-office functions."

LPL also noted in its press release that it has developed an array of offerings for the sorts of high net worth clients that Debuque and Baltz tend to work with. The services run the gamut from estate and philanthropy planning to tax assistance, trustee services, investing in alternatives and banking and lending.

According to LPL's press release, Debuque and Baltz started working together 15 years ago by building a practice that specialized in helping affluent clients with estate and tax planning and investing. Joining them at LPL will be Wendy Fratrik as chief operating officer, Nicole Ferrara as a client relationship manager and Lisa Baltz, a wealth management associate.

As good of a year for headcount as 2023 was for LPL, the firm is off to an even stronger start this year. It announced earlier this month that it was acquiring Atria Wealth Solutions, a New York-based brokerage with 2,400 advisors, for $805 million.

Merrill, meanwhile, continues to struggle with advisors leaving. According to Diamond Consulting's report, the firm lost 93 advisors net in 2023. 

That may not have been the worst attrition seen among Merrill's direct wirehouse competitors. Wells Fargo lost 386 advisors net last year.

But it also obscures an important fact. Many of the advisors who have joined Merrill in the wake of recent departures don't necessarily have a great deal of industry experience.

Diamond Consultants found that the 360 advisors who joined Merrill in 2023 had industry experience dating to 2011 on average. At Morgan Stanley, by contrast, the average industry experience for the 453 advisors who joined the firm last year dated to 2006. Morgan Stanley, whose wealth management business leads the industry according to various measurements, was also the only wirehouse to increase its net headcount, adding 185 advisors in total.

Diamond Consultants' report noted that an advisor's years in the industry aren't a perfect indicator of quality, "but generally longer-tenured advisors are more productive."

A Merrill spokesperson declined to comment.

Many of the recent departures from the firm have been to UBS rather than to an independent firm. The Switzerland-based wirehouse announced on Feb. 9 that its private wealth management unit recruited a three-member former Merrill team managing $2 billion in Paramus, New Jersey.

Less than a week before that, UBS said it had picked up a four-member ex-Merrill team managing $1.3 billion in Albany, New York. And in January, two former Merrill teams — one overseeing $1.6 billion and the other $2 billion — were announced as making the move to UBS.

Despite its recent gains, UBS didn't fare particularly well in the recruiting game last year. It ended 2023 with a net loss of 93 in its headcount.

All told, 9,674 advisors changed firms in 2023, according to Diamond Consultants' report. That was up from 9,006 the year before and came out to 806 transitions a month on average.

"While the wirehouse channel, as a whole, was down on a net basis (losing 348 advisors), we still saw plenty of advisors opt to go this route: 1,156 advisors joined a wirehouse in 2023 and moving from one wirehouse to another was the most popular move, beating the wirehouse to regional or wirehouse to independent decision," according to the report.