LPL adding $16B Wintrust program in recruiting grab from Wells Fargo

Fresh off LPL Financial's giant deal to acquire Atria Wealth Solutions, the firm unveiled another mega-recruit in the bank-based channel of wealth management with Wintrust Investments.

At least 85 financial advisors managing $16 billion in client assets at the wealth programs of Chicago-based Wintrust Financial — Wintrust Investments and the private client unit of another subsidiary, Great Lakes Advisors — will move to the LPL Institution Services division in the first quarter of 2025, the firms said Feb. 23. In a span of 10 days between the Wintrust and Atria announcements, LPL has announced incoming groups of about 2,500 advisors with $116 billion in client assets leaving rival custodial units at Pershing, Fidelity Investments and Wells Fargo.

READ MORE: LPL's Atria deal to supercharge firm's growth past 25,000 advisors

The wealth components of Wintrust going to LPL's brokerage, registered investment advisory firm and custodian differ from Wintrust's Retirement Benefits Advisors division, which will be acquired by OneDigital Investment Advisors in a separate deal from last week. The new business to LPL includes $13 billion of brokerage and advisory assets from Wintrust Investments and $3 billion out of the $17 billion in advisory holdings from the Great Lakes RIA.

That transition next year represents only the latest outsourcing decision reflecting the rising compliance and technology challenges facing regional and national banks that previously operated their own standalone brokerages and RIAs. Wells Fargo's custodian, Wells Fargo Clearing Services (formerly known as First Clearing), had been a "great partner since 2005," Wintrust Wealth Management CEO Tom Zidar said in an interview.

Wintrust began examining new potential wealth relationships about a year and a half ago in light of "some pretty aggressive growth goals" for a company that started 30 years ago and is currently the largest bank headquartered in Illinois, he said. LPL's annual technology spending of several hundreds of millions of dollars and many recruiting grabs from banks and credit unions in recent years stood out to Wintrust.

"We felt like this was the right way to tap into that scale," Zidar said. "We knew that they could do that, they could deliver on their promises with respect to partnering with banks. They differentiated themselves in those two ways — the technology investment and their commitment and ability to understand how to work with banks."

Representatives for Wells Fargo declined to comment.

In addition to 15 community bank subsidiaries with more than 170 branches in the northern Illinois and southern Wisconsin region that constitute the bulk of its publicly traded parent company, Wintrust Wealth Management also owns the Chicago Trust Company and the Chicago Deferred Exchange Company. In 2023, Wintrust Financial generated record annual net income of $622.6 million on revenue of $2.27 billion, its latest earnings report showed. The four wealth management subsidiaries collectively managed $47.1 billion in assets under advisement at the end of 2023, when their combined non-interest revenue rose 3% to $130.6 million.

The OneDigital deal involves a "different customer base" of $2.6 billion in assets managed on behalf of corporate 401(k) and other retirement plans from the retail wealth management and private client units going to LPL, Zidar noted. The two unrelated deals happened in successive weeks by coincidence as the bank's wealth arm seeks to get bigger through organic means, as well as acquisitions and new hires, he said.

"We're a bank but we're a growth company," Zidar said.

READ MORE: LPL's Rich Steinmeier on Prudential, AI, tax and 'reimagining' the firm

The Wintrust deal comes as another big recruiting win for LPL, which is picking up the equivalent number of advisors and assets of an entire midsize competitor every year. In 2023, recruiting and M&A deals pushed up LPL's advisor headcount by 1,385, or 7%, to a record 22,660. Besides the major Atria and Wintrust moves and smaller transitions announced on a near-daily basis, the firm is tacking on 260 advisors with $6.5 billion in client assets from Crown Capital Securities and another 2,600 with $50 billion from Prudential Advisors this year.

"Wintrust advisors offer deep expertise and exceptional personal attention to their clients, and we are pleased to work with Great Lakes Advisors to make their investment strategies more broadly available to the full LPL advisor ecosystem," Christopher Cassidy, the head of institution business development at LPL, said in a statement. "Through this strategic relationship, LPL will enable Wintrust advisors to further differentiate their offerings, as they will have access to a cutting-edge platform that supports the changing needs of their clients and their businesses."

Despite rivals' moves — Ameriprise notched a big win from Comerica Bank last year and Osaic acquired the bank-based teams of Infinex Investments in 2022 — LPL has scored the most recent recruits and M&A deals among institutional programs with Commerce Bank, BMO, Financial Resources Group Investment Services, M&T Bank, CUNA Brokerage Services and People's United Bank. The firm counts more than 1,100 enterprises of all kinds among its ranks of advisors, and it is planning to expand its footprint at banks and credit unions even more.

READ MORE: LPL's profits climbed 26% despite soaring expenses

In an answer to an analyst's question about enterprise programs on LPL's last earnings call, CEO Dan Arnold explained how the firm initially "targeted larger banks" starting in 2020 and brought about $85 billion in client assets to its platforms, according to the transcript. The firm has since boosted its potential opportunity for enterprise recruits to $2.5 trillion in assets by adding "insurance companies or product manufacturers that operate wealth management solutions" to its outreach, Arnold said.

"We believe with our experience, reputation and capability set, it's a compelling solution that helps continue to strengthen that pipeline and offer up an interesting durable growth opportunity as we move forward," he said. "With the Prudential announcement, it was a catalyst for additional inquiries, exploring the question, 'So why aren't they outsourcing?' And we continue to progress in these discussions and explore others. They're still in the early stages, but we do believe this part of the pipeline will continue to evolve as well."