Despite a continuing wave of mega-recruits to LPL Financial from banks and other financial institutions, one credit union's wealth management program dropped the firm for a midsize rival.
Level Four Group — a Dallas-based firm owned by accounting firm Carr, Riggs & Ingram CPA and Advisors that left LPL in 2020 after acquiring its own brokerage — recruited the three financial advisors with $200 million in client assets of the wealth unit of Roanoke, Virginia-based Freedom First Credit Union. Level Four CEO Edmon "Jake" Tomes and Freedom First program manager Steve Devlin spoke with Financial Planning last week in their first public discussion of the move after the credit union's brokerage change at the beginning of the year.
The switch to Level Four enables Freedom First's evolution into the "advisor of the future," Devlin said.
"There are a lot of things we can do to really improve the quality of financial life for our clients, but you've got to have the right partners," Devlin said. "We can really tap into expertise in areas where we may know a little but we don't know everything."
Freedom First's wealth program had operated as part of Level Four's branch for more than five years before Tomes' firm, which has 225 advisors and $9.25 billion in client assets, left LPL.
"Steve was one of our talented advisors and even part of our advisory board that I had with independent advisors," Tomes said. "We had that history together, and I'm very excited about the new commitment together to grow."
Representatives for LPL, Freedom First's former brokerage, and Reading, Pennsylvania-based Good Life Financial Advisors, the credit union's prior registered investment advisory firm, didn't respond to requests for comment. On LPL's first-quarter earnings call last week, CEO Dan Arnold announced that incoming wealth programs from Bank of the West and Commerce Bank will add $11 billion in combined client assets to the firm's Institution Services arm later this year.
With its bank and credit union relationships spanning around 1,100 financial institutions nationwide after welcoming massive recruits in recent years, LPL does "a really good job" supporting the programs, said Eric Armstrong, the co-founder of Compass Consulting, which works with wealth programs and banks. That huge size poses "a bandwidth issue for smaller programs" that's "starting to materialize a little bit," for those of Freedom First's size, he said.
LPL is "vastly bigger than everybody else," Armstrong said. "They are a behemoth, but that's the Achilles' heel."
Freedom First launched its wealth program in 2009, and, since the opening, the credit union has grown fourfold to its current size of $1 billion in customer deposits across Southwest and Central Virginia, according to Devlin. In addition to him, the program includes wealth advisors Jason Fletcher, Robert Earls and Ryan Raphael, as well as Director of Operations Michelle Hayden, client service representative Reeta Fletcher and insurance consultant Erica Jackson. The team formally joined Level Four in late January, according to FINRA BrokerCheck.
Level Four is angling to take advantage of the giant transitions in the bank and credit union channel by adding more programs to the current group of a dozen already working with the midsize firm, Tomes said. He's had "conversations with a lot of bank and credit union executives lately," he said.
"We hope to fill some of that gap in the marketplace because of how much consolidation there's been," Tomes added. "They may not have the strategic partner that can really design a growth strategy inside their institution."
