LPL Financial has grown to be the largest broker/dealer* by thinking small — never forgetting that its business centers on building individual relationships, rather than groups or collectives.
There are many large entities in the financial services industry. Many achieved their growth through mergers, acquisitions and public offerings as major financial institutions combined with wirehouses and insurance concerns to provide as many services as possible under one large roof. Their growth is typically propelled by expanding their power and reach to advance its own interests and control its own destiny.
For the financial advisor associated with such large operations, it’s fairly common for individual emphasis, attention and personalization to get lost in the shuffle as the corporation pursues its growth objectives. An advisor’s business centers on personal relationships with clients, but this may not correlate with their relationship with a financial colossus, whose attention might be chiefly centered on financial units, groups and other business associations.
Conversely, LPL Financial, which operates as the nation’s largest independent broker/dealer*, has consistently maintained its guiding principles in support of individual advisors, their aspirations, independence and client needs. It has grown its business by thinking small — never forgetting that its business centers on building individual relationships, rather than catering to groups or collectives. Learn more by downloading the white paper, The Art & Science of Scaling.
This ethos can be traced back to the creation of two financial services concerns in 1968: Life Insurance Securities Corporation, a mutual fund brokerage set up by seven insurance companies in Boston, and Private Ledger, a financial planning firm pledged to treat their clients in the same manner as their friends. Both entrepreneurial companies were quite uncommon for their time, as each advocated a holistic approach to service individual client needs.
At a time when few paid attention to the concept of financial planning, Private Ledger founder Bob Ritzman sought to offer a large group of mutual funds and securities to advisors by creating Private Ledger, Inc. in 1971, a broker/dealer subsidiary which did not emphasize a particular product. Anticipating the eventual desirability of independent practice, Todd Robinson, who himself escaped the product bias of a brokerage, purchased Linsco in 1985 to offer advisors who experienced similar circumstances the chance to strike out on their own.
As many firms sought to furlough brokers and reduce commissions after the Black Monday stock market crash in October of 1987, the popularity of independent advisory practices began to grow. In the midst of rapid industry change and advisor displacement, LPL Financial was formed from the merger of Linsco and Private Ledger. The entrepreneurial vision of both firms was fused to form a guiding principle that supported the best interests of its advisors and their clients while making constant improvements to its operations.
There is no assurance that the Advisory platforms discussed are suitable for all investors or will yield positive outcomes. The purchase of certain securities will be required to effect some of the strategies. Investing involves risks including possible loss of principal.
*As reported by Financial Planning magazine, June 1996 – 2017, based on total revenue