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LPL's 'focus on profitability' may have led to split with Resources Investment

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The latest casualty of LPL Financial’s emphasis on profits may have been its relationship with Resources Investment Advisors, a large office of supervisory jurisdiction.

The IBD says it has "terminated" its connection with the OSJ.

"With Dan at the helm, there really is a laser sharp focus on profitability, at all levels in the company. We are starting to see that," says the CEO of another large LPL OSJ, who asked to remain anonymous, referring to LPL's new CEO, Dan Arnold.

LPL spokesman Jeffrey Mochal attributes the split to "business decisions," but did not respond when asked if profitability drove the rupture.


Despite the departure of three large OSJs — including Carson Wealth Management Group and WealthPlan Partners, both of Omaha, Nebraska — in the past two months, LPL said its retention rate remains high, at 95%, Mochal added.

Based in Leawood, Kansas, Resources Investment manages more than $4 billion in client assets, largely in 401(k)s for corporate clients. John David, the firm's vice president, confirmed the departure, but did not name his firm's next IBD.

Out-of-date technology may have been a contributing factor, says WealthPlan cofounder Brent O'Mara. WealthPlan announced in November that it was leaving LPL for Securities America after 30 years with LPL.

"Large offices such as ours cannot be constrained by outdated technology infrastructure," O'Mara says. "The challenge with LPL is its closed-circuit platform. … [In contrast,] the major custodians like TD Ameritrade and Schwab offer plug-and-play platforms that allow us to purchase new technology and start using it as soon as it comes to market."

Mochal counters that LPL has been "and will continue to invest heavily in technology. In our third-quarter earnings call we said we wanted to make investments that drive growth in 2017, and that is largely technology spend to help improve the adviser experience. We also said we are planning to invest even more in technology in 2017 versus 2016."

O'Mara says that affiliating with a new IBD and the two custodians already has allowed WealthPlan to cut its fees to both advisers and clients by 30%.

After much speculation, Carson Wealth confirmed earlier this month that it is leaving LPL to join Cetera Advisor Networks, one of the firms run by former LPL president Robert Moore. Moore is now CEO at Cetera Financial Group.


In the last year, LPL "has really focused on who are good partners," the LPL super OSJ leader says, speaking about LPL's large enterprises generally and not about Resources Investment in particular. "Everyone that is big thinks they are a good partner, and that isn't always the case. If you really want to be a partner, you really do need to consider your part in the process. Some firms are net takers.

"I just know there is friction between a lot of the large enterprises," the CEO says, adding that Arnold seems more eager to clearly sever those ties that no longer make sense for both parties.

For some large firms, the feeling apparently is mutual.

O'Mara says he expects to see more of them leave LPL.

"From the feedback from many of our peers," he said, "it may accelerate."

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