Lpl ipo
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[quote=indythankgod]
We are liable for ourselves. OSJ stands for office of supervisory jurisdiction. We are real business owners like attorneys and cpa's. We are just using LPL's software and support. Also, 5 guys producing 100K is like 1 producing 500K in the firms eyes. Who cares. Here there is no squeeze to force people to produce more so that you can add more GP's and LP's and keep everyone happy. LPL rocks!!!
[/quote]
Indy, I agree, and I know what an OSJ is. However, there definitely is some incremental cost to having more FA's. So in your example, you are saying it makes no difference to LPL whether they have 10,000 FA's producing $4B in revenue, or 50,000 FA's producing the same amount. We're talking scale here. There is a BIG difference in cost to LPL. And FWIW, that's not a knock on LPL or the model, I am just trying to better understand the model, its scalability, and how public ownership will affect LPL's desire for small producers in the future.
[quote=indythankgod]
We are liable for ourselves. OSJ stands for office of supervisory jurisdiction. We are real business owners like attorneys and cpa's. We are just using LPL's software and support. Also, 5 guys producing 100K is like 1 producing 500K in the firms eyes. Who cares. Here there is no squeeze to force people to produce more so that you can add more GP's and LP's and keep everyone happy. LPL rocks!!!
[/quote]
Except shareholders now. That's what I'm saying. When the bean counters come in and look at cost per rep, don't you think they are going to try and figure out how to reduce that number.
I never said you weren't business owners. I'm just saying that while you can fire LPL anytime you want, now that the company needs to increase the bottom line, things may change.
I think we are all (except indythankgod) are saying more or less the same thing. Its just what is the number.
It is more profitable for an indie b/d to have one 500k producer than 5 100k producers. That should be obvious. But its also more profitable to have 5 100k producers under 1 OSJ than 5 100k producers with each being their own OSJ. Only one audit, i would think everything would run thru the branch manager, or ops manager who would be the one point of contact for the B/D.
Also, there is an incremental cost to the B/D for each advisor, yes. But its not as much as an employee model, because the all the cost of the fixed overhead attributable to the branch shifts from the b/d to the FA.
Nevertheless, i think that whatever the number, there will be a number under which folks will be forced to partner with an osj or pay a maintenance fee. At my B/D that number is $250k. At LPL it may be different.
The problem with much of the debate about producing minimums here is that with LPL, reps are carrying their own overhead which is not the case in the wirehouse world. Yes, there is some liablitiy but much of that can be control by selection and auditing, fees/pricing and through mandatory E&O outlays.
The models are so different.....A $100,000 producer in a UBS office-- takes up space, turns on the lights, and uses resources in mailing, phone, equipment, etc that are bottom line costs to the firm. At LPL-- all of those things are paid by the RR.
It's been a while since I've heard much about the LPL public offering... think they're pulling back or have they pulled back? I know there can be no official word on it during the quiet period, but what's the sentiment on this board??
Why are any of you discussing guys who make $100k? They are pointless and so are you. And when did being public lead to the end of a business model? EDJ people don't forget your corporate numbers are easy to view with an internet connection.
LPL will be just fine, just as Raymond James is.
If so, is LPL going to make a move yet this year or is this wishful thinking for FAs at LPL looking to cash in on options?
I'm not in any position to cash in on options.
My thought after reading the article is many of the brokerages are undercapitalized to some extent.
I know little except for this; many FAs who joined LPL over the years are holding mass quantities of LPL options. Word from them is that they are generally unhappy with the service levels they recieve and will depart for greener pastures once the IPO happens as they can realize the value of their options. I'd not be surprised to see 10-15% of the larger FAs head out if and when this event finally happens. It'll make some of them rich and some of them at least feel a bit bolder about their futures in the business.
Interesting, why do I always miss out on this stuff? Timing I guess.
Anyway, if some leave, LPL won't like it. But I won't mind. LPL is growing very fast and getting on the too big side.
LPL Financial's IPO is the story of the American Retirement Dream Fulfilled. This IPO is not unlike the IPO of Apple or Microsoft for their respective industry. Todd Robinson, Mark Casady, Jim Putnam and countless others followed the desires of the American investing public for independent advice, fee for service, non-proprietary products and superior technology.
LPL now embodies the American Retirement Dream and is the antidote for the American Retirement Crisis.
Read my blog for more insight.
http://www.wealthvest.com/blog/wade-dok ... ommentary/
Wade Dokken
President
WealthVest Marketing
Thanks for the post American Flag. Good article. Begs the question I posed earlier.. if many LPL reps will cash in on the IPO, could a good sized wave of movement out of there post IPO also be in the works? Lots of firms like FiNet or RIAs like Hightower would pay substantial $ to get the whale producers at LPL.
LPL built an incredible brand over 20 some years. Todd Robinson's vision, combined with some exceptional management talent in Jim Putnam, Mark Lopez, Bill Dwyer, Joh Easton, Ester Stearns, Stephanie Brown and of course, Mark Casady, created this great firm. Todd gave a tremendous amount of the company away in style of generosity and love of his employees.
Read more in my blog:
http://www.wealthvest.com/blog/wade-dokken/lpl-ipo-roadshow-presentations-prospectus-management-presentation-expected-pricing-11172010/
Wade Dokken
President, WealthVest
http://www.wealthvest.com
Burton I understand your question but don't think you really understand the LPL Model so here goes. First off most huge producers if they wanted to go RIA only would probably have already done it. Ron Carson who does north of $13 million in production annually uses commission products in his menu of offerings to clients. I am sure that if RIA would be more profitable for him he would have already gone. Most LPL advisors aren't 100% fee based. Obvisously the ones that are when they get big enough become dually registered or RIA only. Most wirehoue advisors don't go to LPL or indy because they have been brainwashed that the name of the company on the card means more to clients than the personal relationship. While in the first ten years of a reps career a brand name most certainly makes a huge difference in the HNW and UHNW market the realtionship and understanding of a clients situation is most important. So what happens wirehouse advisors build a book of mass affluent and HNW clients over time become successful and instead of wanting to become a Entrepreneur and Business Owner they take a nice check of 200% production of whatever and go to a new firm for a decade. Bring over 90% of their clients don't tell the ones they don't like that they left the firm and are done with them. After nine years the advisor has grown their book increased production the firm they went to merged with a new firm they don't like. So guess what take a check go to a new firm and repeat process. As an indy advisors are responsible for all overhead, marketing , branding etc. LPL's costs for advisors is what it is whether they are doing seven figures or 300k. As long as the rep has a clean compliance record and produces recurring revenue LPL is making money off the rep. Going public will actually help in the competition for higher end clients because the number one issue very wealthy people have with an unknown brand name is if things go wrong they know a large institution has recourse to make them whole. That argument is now gone with LPL being a "big public company". I would like to point out the vast majority of LPL advisors are in rural areas and tend to be solo practiioners. Our office is different we are a cooperative group with four principals each with an area of expertise who work on common clients and operate under the same brand name. We are in a major market and compete against all the wirehouses, regionals, RIA, and boutique private banks from time to time. From my perspective LPL will be very similiar to RJ minus the bank which is a good thing since the wirehouses ability to manufacture product caused two boutiques (Bear, Lehman) to disappear, Merrill and Wachovia to be acquired, UBS to have more outflows of advisors and assets than any other wirehouse and Morgan to need an injection from of capital to stay alive. And let's not forget Citi which basically became a penny stock. I think you get the point when your entire business is supporing independent advisors that's a good business model to be in.