LPL recruiting loans jump again in 2020

LPL Financial continues to spend mightily when it comes to recruiting financial advisers and registered reps, and this week reported forgivable loans to recruits at the end of 2020 of $419.2 million, an increase of 24% compared to a year earlier.

LPL made the disclosure in its annual report, which it released on Tuesday. The largest independent-contractor broker-dealer with more than 17,000, LPL for decades has been a recruiting powerhouse but in the past few years has spent lavishly yet selectively to attract advisers and their client assets to its RIA and custody platform.

LPL had a net addition of 823 reps and advisers in 2020, and finished the year with 17,287. Forgivable loans are one of the most common ways broker-dealers use to attract recruits.

Earlier this week, InvestmentNews reported that LPL was flexing its financial muscle in its competition with Cetera Financial Group to recruit certain advisers from Voya Financial Advisors. Cetera said this month it was buying the rights to Voya's wealth management business, and advisers often are inundated with pitches from headhunters during such acquisitions.

Some Voya advisers could receive recruiting offers, in the form of nine-year forgivable loans, from LPL that more than double Cetera's offer.

Prior years have seen a steady increase in forgivable loans to recruited advisers at LPL. At the end of 2019, forgivable loans to LPL advisers were $338 million, and at the end of 2018 $233.3 million, according to those years' annual reports. A year earlier, the loans were $159.9 million.

The forgivable loan balance at the end of last year at LPL is the difference between the total "Advisor Loan" amount $547.4 million in the annual report and the "Repayable" amount of $128.2 million. In prior years, LPL published the "forgivable" adviser loan balance as one figure.