LPL Financial’s absorption of National Planning Holdings could turn it into the giant of the industry, and a top LPL executive says the firm is trying to make its advisors comfortable while filling those shoes.

“Our size and capital structure allow us to invest in things and in ways many of our competitors can’t,” says Bill Morrissey, president of LPL’s business development division. “Now, the challenge is we need to make sure that we shrink the firm for our clients and maintain a personal relationship with them.”

LPL Financial net new client assets

Morrissey, the executive leading LPL’s efforts to retain NPH advisors, spoke after the completion of the second wave of assets and advisors under the $325 million deal. SII Investments and Invest Financial advisors came to LPL on Feb. 17, while National Planning and Investment Centers of America moved in December.

The company pledged to spend up to $160 million more in onboarding costs and financial aid for ex-NPH advisors. CEO Dan Arnold predicted that about 2,000 advisors with up to $75 billion in client assets would come to LPL, which would mean that some 1,200 advisors with $30 billion went to other firms.

The acquisition could push LPL’s headcount above 16,000 advisors, but it has yet to disclose exactly how much of the four independent broker-dealers’ business made the move. Morrissey declined to give any specifics beyond the forecast of around 70% released in the firm’s last earnings after the first wave.

LPL’s size as the nation’s largest IBD and a publicly traded firm prompted many NPH advisors to go elsewhere. At the end of the transition, though, LPL unveiled a list of 74 practices each with at least $100 million client assets that came over from SII and Invest, including five with more than $1 billion.

LPL’s expected 70% rate of retention “shows that the bulk of NPH advisors opted to give LPL a chance,” says IBD recruiter Mark Elzweig. However, he adds, the real test of the acquisition will come in six months to a year.

“As LPL grows, what will be the reaction of existing LPL advisors? Because their size has been an issue for some of their advisors already,” Elzweig says. “Basically, the NPH advisors are giving LPL a test drive. But eventually, they’ll all make decisions if they want to stay with the home team or not.”

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LPL, which has headquarters in Boston, San Diego and Charlotte, listed six risk factors about the NPH deal in filing its 2017 annual report this week. Potential problems include cost overruns, delays, unsuccessful onboarding and choices by clients not to maintain accounts with LPL.

The firm also mentioned “disruptions to our business due to [the] transaction, which could make it more difficult for us to maintain relationships with our financial advisors and their clients,” as well as “our ability to retain the former NPH advisors and facilitate growth in their practices.”

Morrissey says that the second wave of the transition went more smoothly than the first, noting that an acquisition the size of the NPH deal always creates some complexities.

The nationwide courting of NPH advisors consisted of individual meetings, roadshow presentations, regional meetings and town halls. LPL tapped its most seasoned business development officers and executives like Morrissey and National Sales and Consulting President Andy Kalbaugh, Morrissey says.

Twin brothers Robert and Thomas Fross of Fross & Fross Wealth Management, one of the firms on LPL’s list of large ex-NPH practices that joined the firm, singled out Kalbaugh and Arnold for praise for their attention during the transition. The asset transfer process, which normally takes weeks, took a few days, the Fross brothers say.

Twin brothers Robert and Thomas Fross of Fross & Fross Wealth Management opted to join LPL from SII Investments after the NPH deal.


They had decided in November to bring The Villages, Florida-based firm to LPL from SII. The four advisors of the practice manage $550 million in assets under advisement, and the Fross brothers also run a coaching firm called Platinum Advisor Strategies.

The February stock market slide and new client login procedures posed some disruption, but LPL’s technology and level of service, even on weekends, made the task easier than they thought it would be, they say.

Where LPL’s size has turned away some ex-NPH advisors, the Fross brothers say its research, tech tools and receptive staff show the benefits of affiliating with a large firm.

“These employees, as we talk to them, they’re so gracious and willing to help. That’s not what we expected,” Thomas Fross says. “You think about this incredible bulk of transition that they had to do in a short amount of time. But they don’t come across that way. They come across as, ‘We’re here to assist you in any way possible.’”

The team said they didn’t see LPL’s Aug. 15 acquisition of NPH’s assets coming, and Morrissey says many NPH advisors told him they never would have left the firm if not for the deal. He declines to generalize about the most common queries they had for LPL.

“Once the advisors got through the initial shock of the transaction, I think each and every one of them went through their own litmus tests and their own due diligence questions to make sure that they’re aligning with the right firm,” Morrissey says. “We were fortunate in that we recruited a lot of great advisors.”

Tobias Salinger

Tobias Salinger

Tobias Salinger is an associate editor for Financial Planning, On Wall Street & Bank Investment Consultant.