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.

Back to the beginning

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. 

The unconventional becomes conventional

LPL became a pioneer in the financial services industry not only through its support of advisor independence, but also by anticipating trends and exhibiting a willingness to embrace and advocate the unconventional. By creating Strategic Asset Management (SAM) in 1991, LPL devised a means to group mutual funds together in one convenient account with advisor compensation based on an asset percentage annual fee rather than commissions.

To support SAM, LPL inaugurated its own research department in 1992. Initially created to provide detailed, professional advice and guidance to advisors working with the SAM program, LPL Research has grown and matured into one of the largest and most tenured research groups among independent brokerage firms.

When the growing trend of personal computing intersected with the dawn of the Internet and digital communications, LPL saw an opportunity to further strengthen the independence of its advisors by providing them with the ability to access and process information just like a broker at a wirehouse. Adoption of the Internet in the late 1990’s set the stage for future offerings, such as customized advisor websites, fee-based investment platforms in the form of the Independent Advisors Group (IAG), and online workstation functionality through BranchNet.

Industry innovation for the individual

LPL ushered in the new millennium by adding significant power and ability to its investment platform by becoming self-clearing in 2000. Not only did this give the firm complete control of order processing, but it also provided advisors with client information perspectives that were once exclusive to brokerages.

By 2006, the former due diligence group supporting SAM had transformed into a research division that provided objective investment information to advisors. Practice management efficiencies for advisors were introduced through LPL’s Business Development team and in 2008, an integrated advisor solution platform was developed to support Registered Investment Advisors (RIAs) and Hybrid advisors managing assets under their own RIA.

With growth and innovations, LPL Financial has indeed become a large corporation, but it has never forgotten its founding principles, which serves to keep it grounded and approachable so it can relate to its advisors. By thinking small and catering its business operations to the individual advisor and their clients, LPL has accomplished far more than merely growing its business — it has championed the interests and independence of those it serves.