By George C. Miller of Shustak Reynolds & Partners, P.C. posted on Wednesday, October 2, 2019.

George C. Miller

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 105)
Direct: (619) 501-8270
Email: [email protected]

What was old is new once again.  LPL Financial, the nation’s largest independent broker-dealer, recently announced plans to debut a new “employee-based” advisor channel.  As part of the roll-out, the firm acquired Florida-based Allen & Co., which has 30 financial advisors and approximately $3 billion in assets under management.  Unlike its 16,000 other affiliated financial advisors, who are considered “independent business owners” separate and apart from the firm, the new channel will offer financial advisors the option of working as traditional employees, similar to financial advisors who work for Charles Schwab, Fidelity or TD Ameritrade. 

The move is somewhat peculiar, as it is contrary to LPL’s longstanding stated philosophy.  The firm grew exponentially over the past 30 years primarily by touting its “independent” model and recruiting financial advisors away from traditional wirehouse firms.  According to LPL, the new channel is intended to appeal to a subset of advisors who are “independent-minded” and looking for a change but who are not ready to go fully independent. 

Independent advisors typically are responsible for all aspects of managing their business, including securing office space and equipment and hiring and managing employees.  In exchange, they receive a significantly higher payout, typically in the range of 80-90% of their gross revenues.  Employee advisors, meanwhile, are paid substantially less–typically in the range of 35%-45% of their production–but in exchange are provided office space and presumably all tools and support needed to conduct their business.  

Shustak Reynolds & Partners has extensive experience in representing brokers and financial advisors in recruitment, employment and wrongful termination disputes, promissory note claims, and FINRA arbitrations and regulatory proceedings.  Contact us today for a complimentary consultation. 

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. 
We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. 
Partner George C. Miller can be reached in the firm’s San Diego office at (619) 696-9500. 

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