- Wednesday, October 16, 2024
LPL Financial, one of the largest wealth managers in the U.S., has introduced a new affiliation model specifically designed for financial advisors catering to high-net-worth clients. The newly established unit, known as LPL Private Wealth Management, is set to reshape the way advisors operate by hiring them as W2 employees instead of independent contractors. This move marks a significant departure from LPL Financial's predominantly independent contractor-based framework.
Building upon their existing range of affiliation options, which include the employee channel called Linsco launched in 2020, LPL continues to expand their offerings for financial advisors. The addition of Private Wealth Management aims to attract advisors from major national brokerage firms and private banks who specialize in serving the wealthiest clients. Along with enhanced flexibility, LPL promises higher compensation for these advisors. In fact, W2 advisors can potentially receive up to 70% of the revenue they generate, according to Gary Carrai, the Executive Vice President of Advisor Business Lines at LPL.
The motivation behind this novel model is to create an environment where advisors feel empowered to serve their clients as they see fit. LPL recognizes the importance of flexibility for advisors when it comes to meeting the unique needs of high-net-worth individuals.
With over 22,000 advisors and managing more than $1.24 trillion in assets, LPL Financial's launch of Private Wealth Management reflects their commitment to providing innovative and tailored solutions for financial advisors operating in this specialized market segment.
LPL Expands Services for High Net Worth Clients
LPL Financial is stepping up its efforts to cater to high net worth clients by enhancing its offerings and introducing new capabilities. The company is specifically targeting advisors who serve clients with $5 million or more in investible assets, surpassing the commonly accepted $1 million threshold used to define this category.
The focus for LPL is to strengthen its expertise in banking and lending, insurance, alternative investments, and other areas. As part of this initiative, LPL has assembled a tax strategy team to provide support to advisors. Anna Howard, Senior Vice President of Private Wealth at LPL, highlights that the company plans to launch a family wealth unit and a lifestyle platform in order to further assist clients. The lifestyle platform will address various concerns such as college admissions and private jet travel.
The timing of these new offerings is strategic as the high-net-worth client segment is currently the fastest growing in wealth management. Carrai, a spokesperson at LPL, suggests that nearly half of the advisors serving this segment are currently affiliated with private banks or large national brokerage firms. As a result, LPL believes there is a significant opportunity to expand its market share within this space.
In addition, LPL intends to extend the capabilities of LPL Private Wealth Management to all its advisors. The company aims to make these services available to advisors across different models, moving away from exclusivity for W2 advisors.
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