LPL launches W-2 private wealth channel, aiming at wirehouses

Following up on plans announced a year ago to launch a private wealth affiliation channel, LPL Financial has finally produced the offering. 

The independent broker-dealer giant announced Wednesday that it had created LPL Private Wealth Management, an affiliation channel for W-2 employees specializing in high net worth clients. The firm had shared with FP in Nov. 2022 its plans to launch the channel at some point in 2023. 

LPL is not subtle about its plans to specifically target the wirehouses with this model, which is launching as other firms supporting advisors leaving wirehouses, such as Dynasty Financial Partners, capitalize upon the industry-wide momentum of breakaway advisors. 

"We see a market need to provide an alternative for wirehouse advisors working with high-net-worth clients," Anna Howard, SVP of private wealth at LPL, said in a statement. 

READ MORE: LPL to launch private wealth advisor affiliation model in 2023

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Gary Carrai, executive vice president of advisor business lines at LPL, added in a press release that wirehouse advisors who join LPL's new channel can earn "up to 50% higher payouts than the average wire." 

The news comes as Morgan Stanley prepares to raise its compensation hurdles in 2024, meaning advisors will have to work harder to get paid the same amount they are making today. However, Bank of America's rival wirehouse Merrill Wealth Management is softening some of its less popular compensation grid rules for 2024 as it responds to advisor feedback. 

"Private Wealth allows advisors the same full support of working in a wirehouse, without the common downsides of grid changes, growth targets, household minimums and proprietary products," Carrai said. 

Currently, only $130 billion of the firm's AUM is in the high net worth segment, LPL said in a press release. LPL's total client assets reached $1.24 trillion in the third quarter. 

The new offering joins LPL's highly successful Linsco channel as its second W-2 offering. Private Wealth Management offers "focused resources such as advanced estate and philanthropy planning, income tax strategy, trustee services, robust alternative investment platform, banking and lending solutions and complex life insurance planning," the firm said in the release. 

Advisors in the new channel will primarily serve households with $5 million or more in AUM, an LPL spokesperson said in an email, adding that "We have qualifying advisors in Linsco who will automatically be able to access Private Wealth benefits, capabilities and the community. For example, PB Fam is part of the group." The payout for Private Wealth Management is 64% to 70% for qualifying advisors, the spokesperson said.