A new corporate effort to capture market share among the mass affluent is behind the changes in top management announced last week at LPL Financial LLC.
On May 1, LPL president Esther Stearns will become chief executive of a new subsidiary, LPL New Venture, which will focus on recruiting and training hundreds of registered representatives and financial advisers to serve clients less affluent than those now served by the company's independent advisers.
Replacing her as president will be chief financial officer Robert Moore, who joined LPL in 2008, three years after the firm was acquired by private-equity managers Hellman & Friedman and Texas Pacific Group. Those owners led LPL through several acquisitions of smaller broker-dealers, eventually doubling the number of LPL-affiliated reps and advisers before the company's initial public offering in November 2010.
Chairman and chief executive Mark Casady said in an interview Friday that LPL's torrid growth over the past decade made the changes and expansion of the firm's management necessary.
“When I joined the firm 10 years ago, we had 700 employees, and we now have 3,000,” he said. “You need a much bigger team to manage that.”
Mr. Casady added: “You can't have an old guard and a new guard. You need everyone together.”
Ms. Stearns, who joined the company in 1996, and another longtime LPL employee, former chief communications officer Kandis Bates, are “very excited to get the new venture off the ground,” he said. Ms. Bates will serve as chief administrative officer of the new operation.
Joan Khoury, a former Bank of America Corp. executive, was named chief marketing officer of LPL Financial in February.
Mr. Casady declined to specify where LPL will look for new advisers, but he acknowledged that traditional wirehouse training programs focused on creating brokers who were effective as employees rather than as independent contractors.
“We've spent the last 18 months trying to do this in a much different mode,” he said.
OPEN POSITIONS
Nor would Mr. Casady say where new reps and advisers will go once they're on board.
“There are more open positions for advisers there, and they need more bodies,” he said, estimating that LPL could fill “a couple of hundred” such positions immediately with new brokers.
Mr. Casady said that banks and credit unions in particular want to expand sales of securities products.
“I won't reveal the secret sauce, but in a matter of months, [the new advisers] will have a place to go,” he said.
Outsiders said that management changes were to be expected in a company that has evolved in the past decade from a closely held private firm to a publicly traded one with a market capitalization of $4 billion.
Mr. Moore is “the right man for the job,” said Brad Hintz, a longtime securities industry analyst now with Sanford C. Bernstein & Co. Inc.
“He has a face that the institutional community is very comfortable with. And LPL has aspirations to ultimately take on Charles Schwab [& Co. Inc.] on the RIA side,” Mr. Hintz said.
Bill Dwyer, another LPL veteran and president of national sales, also will have new responsibilities. Along with his current duties, Mr. Dwyer will oversee the firm's relationships with product sponsors.
Mr. Casady said that Mr. Dwyer also will take some of the burden from his shoulders in connection with the company's lobbying efforts.
“Some of our biggest threats are in Washington,” Mr. Casady said. “I've spent a lot of my time doing this, and now Bill is taking my place.”
LPL is affiliated with 13,000 independent reps and advisers.
bkelly@investmentnews.com
