LPL Investment is the holding company for LPL Financial, one of the largest brokerage firms in the US. The company offers technology, training, infrastructure, and research, as well as stocks, bonds, mutual funds, annuities, insurance, and other investment products and services to more than 12,500 financial advisors across the US. It doesn't create or sell its own investment products, but provides access to those of other firms. LPL provides similar services to about 650 community banks and credit unions across the US. It also performs clearing and custody services for financial professionals and institutions. LPL went public in 2010.
The company raised some $470 million from its IPO, and used some of the proceeds to repay debt. The stock offering also gave the company a source of new capital to possibly fund new acquisitions. However, charges related to the IPO contributed to a net loss for the year despite an increase in revenue. Private equity firms Hellman & Friedman and TPG Capital retained ownership of 60% of LPL (30% each) following the offering. The firms also have board representation, with two directors each serving on LPL's nine-member board.
The losses didn't stop the company from pursuing new acquisitions, though. In 2011 it bought Concord Capital Partners, which provides technology-based investment and research services and has more than $10 billion in assets under management. Concord's software and architecture broadens LPL's offerings to its clients; for example, it allows LPL to serve as a custodian of personal trust assets within banks.
After reporting losses in 2010, LPL turned profitable again in 2011. That year it earned $3.5 billion in revenues and $170.4 million in net income. The company had a record first half of the year in terms of commission and advisory revenues (they grew by about 9% and 19%, respectively), but turbulent market conditions impacted LPL negatively in the second half of the year. Asset-based fees, transaction fees, and other revenues all also grew in 2011.
LPL has more than $330 billion of brokerage and advisory assets in some 4 million client accounts. The company courts the mass affluent customer market, which it considers to be households with $100,000 to $1 million of investable assets. To that end, affiliate The Private Trust Company provides wealth transfer and retirement account custody services for high-net-worth individuals and their families. In 2012 LPL announced plans to buy Fortigent, which provides research and consulting services to advisors serving wealthy individuals.
The company sets itself apart by collecting revenues from diverse and recurring sources. Sales commissions and advisory, asset-based, transaction, and other fees all contribute to LPL's bottom line and allow the company to not rely so heavily upon fickle financial markets. It typically retains 10% to 15% of commission and advisory fee revenue from advisors in exchage for its support services. The company formed new division LPL Financial Retirement Partners, which services retirement plan sponsors, their participants, and high-net-worth individuals, after acquiring assets of National Retirement Partners in 2011.
Also that year, the company consolidated operations, absorbing its UVEST subsidiary (which it had acquired in 2007). The move was both a cost-cutting measure, as well as one that allows more clients access to LPL's platform. – less