Intro: LPL Financial Reviews | What You Need to Know About LPL Financial (Pros, Cons, Services, & Ratings)


LPL is a financial brokerage firm with offices in California, Massachusetts, and South Carolina. It is a huge company. Their network includes over 14,000 financial advisors and roughly 700 financial institutions. LPL provides technology, investment advisory services, and more to financial advisors and firms all over the country. 

There are plenty of LPL Financial reviews out there. This article aims to look at all the information taken from these LPL Financial reviews and come up with a definitive LPL Financial review that will tell you everything you need to know about the company.

For our LPL Financial review, we will cover what LPL Financial is, the company’s history, and their current performance, as well as pros and cons, complaints, services offered, and other LPL Financial reviews and ratings.

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What Is LPL Financial?

To look into whether LPL Financial is safe, we first need to answer the question: What is LPL Financial?

LPL Financial is the largest organization of independent financial advisors in the United States. It aims to help its customers with a range of financial services including:

  • Equities
  • Bonds
  • Mutual funds
  • Annuities
  • Fee-based programs

LPL Financial advisors don’t actually work for the company. Instead, the advisors are essentially contractors. This means that even though they are working under the name LPL and are fielding LPL emails and are falling under LPL compliance, LPL Financial advisors have to pay for their office space and hire their own staff. The brokers can then earn a high amount of commission on sales they make and LPL takes a cut.

LPL Financial claims this setup also benefits the consumer because, unlike certain banks and companies, they don’t have certain investment products that they have to sell to their customers. This means that, in theory, the firm is able to offer the best possible product for each customer.



History

LPL Financial has a fairly long history. Like many companies of its size and age, it has had a few ups and downs. The company started from a merger between two different brokerage firms—Linsco and Private Ledger—in 1989, which is where the name “LPL originated.

Both companies had a fairly long history before the merger, with Linsco having formed in 1968.

Since its formation, LPL has grown and now has offices in Boston, Charlotte, and San Diego, as well as advisors working all across the US.

Source: Pexels


Current Performance

In the fourth quarter of 2016 (end of year), LPL Financial reported the following Key Performance Indicators (KPI):

  • Total brokerage and advisory assets of $509 billion
  • Total net new assets inflow of $2.5 billion
  • Net income $42 million

Despite these numbers, there have been indications that not everything is right in the land of LPL. In 2016, a slump in stock prices, a class shareholder lawsuit, and turnover among top executives are a few of the major problems plaguing this company. During fall of 2016, there was even talk of a potential sale

Whether all of this will affect the users of LPL Financial’s service is, of course, a different matter.

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LPL Financial Review — Pros

LPL Financial has plently of pros. They provide the following reasons for why their service is beneficial. 

Does Not Offer Own Financial Products

Because LPL Financial does not offer proprietary financial products, their brokers are under no pressure to recommend certain investments. This means you should be able to invest in the most suitable products for you.

Access to Vast Amounts of Research

Despite the fact that their brokers work independently, being a part of LPL’s network means the advisors have access to the independent research of a much bigger company. This provides their advisors with access to the information and resources they need to offer clients the best products. 

Regulation

Again, while each advisor is working independently, they still have to work to LPL Financial’s regulations. This should stop things like fraud or the wrong products being pushed on people.

Wide Variety of Products on Offer

LPL Financial has the ability to offer a whole host of different financial products. This means that customers have a wide variety of products to choose from and should be able to find the ones that suit them most.

Available Across the Country

LPL's size makes it accessible to people across the country. This allows it to reach as many potential customers as possible. It is also very easy to find an advisor through the use of their “find an advisor” tool.



LPL Financial Complaints

Despite the size of the firm, or perhaps, because of its size, LPL is noticeable for the number of complaints it has attracted. While it does seem like the majority of its customers are happy, there are certainly some who are not so satisified.

Here is a look at some of the biggest LPL Financial complaints taken from LPL Financial reviews found on the Web.

Customer Service

In 2016, LPL Financial complaints seemed to suggest that the customer service available was fairly poor. People seem to think that doing small things such as sending and receiving forms took a lot longer than it should have with a company of its size. Since then, the Better Business Bureau has closed these complaints 

Reputation for Poor Supervision

One of the pros of this company was that it provides independent brokers with the infrastructure of a larger firm. This provides them with access to resources in addition to oversight. Unfortunately, it was deemed responsible for "widespread supervisory failures" and ordered to pay a fee. 

This occured a couple of years back, but since it was rather recent, it is important to note.



Losing Money

One of the main complaints is that people who have invested money using LPL Financial services have lost money. Of course, as this is a service that invests your money, it is important to remember that losses can happen no matter what company is investing your money.

Furthermore, as each LPL Financial advisor is essentially working independently within the company, the specific service you receive is likely to come down to where you are based and which representative you choose.

The best advice to deal with this is to have a detailed discussions with your financial advisor about what your risk tolerance is and what you can afford to lose in a worse case scenario. Secondly, make sure you choose an LPL Financial advisor with a good reputation and who understands exactly what your monetary needs are.

Legal Complaints

The next LPL Financial complaint—and the one that is probably the most worrying of all—is that the company has had a fairly high number of legal battles and industry reprimands.

The reason for these reprimands comes down to the brokerage structure of the company. The fines were given because LPL Financial had failed to sufficiently monitor investments in a number of key areas. This included the sale of certain non-traditional exchange-traded funds (ETFs), certain variable annuity contracts, non-traded real estate investment trusts (REITs) and other complex products.

In addition, there have been a couple of high-profile legal cases brought against specific LPL Financial advisors.

One of these is the case of Donald Chouinard, who was accused and convicted of running a Ponzi scheme that lost some of his customers (and therefore LPL customers) money. It should be noted that LPL did agree to pay out $1.3 million for failing to supervise its brokers correctly.

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Services Offered by LPL Financial

Source: Pexels

The important thing to remember is that all LPL Financial services are run through their large network of advisors spread throughout the country. As such, each of the many LPL Financial advisors will offer a slightly different service, product, and customer experience.

What LPL Financial services does, however, is support, regulate, and back their advisors to give them the best chance of success. The advantage of choosing an LPL Financial advisor is that they have a huge company behind them, so the advisors have larger resources to draw from, as well as someone checking up on what they are doing.



This also means that you can escalate a complaint if there are any issues. In the case of Donald Chouinard, LPL Financial paid out $1.3 million. 

LPL Financial advisors are able to offer the following products to their customers:

  • Mutual funds
  • Annuities and other tax-efficient investments
  • Domestic and international securities
  • Insurance
  • Fee-based asset management programs
  • Estate and financial planning
  • Trust services
  • Group retirement planning
  • Exchange-traded funds (ETFs) and exchange-traded notes (ETNs)

Using these investment products, an LPL Financial advisor can come up with an investment portfolio especially suited to the customer’s needs.

One of the things that LPL Financial services boast about is the fact that as they offer no investment products themselves, and they instead invest in other people’s products, so they have no conflict of interest when it comes to building your portfolio.

As the LPL advisor will be working with the backing of the LPL company as a whole, they will have access to all of LPL’s research and financial planning products. This theoretically gives them an advantage over smaller individual financial advisors.



LPL Financial Reviews and Ratings

There are a number of LPL Financial reviews and ratings on the Web. Again, it is worth remembering that due to the structure of the business, the service you get will depend on the specific advisor you have or the area you are in.

Topratedfirms.com has consistently displayed unhappy reviews from customers about LPL Financial. In a few cases they specifically refer to the LPL Financial infrastructure, noting that their actual advisor was not the problem. This eliminates the possible line from LPL that people will have different experiences with their network of independent advisors.  

Financial services ratings company Moody’s recently downgraded their LPL Financial rating to a rating of Ba3 in 2015. Moody’s stated that the reasons for the LPL Financial rating downgrade are due to LPL’s increased appetite for shareholder-friendly actions, as this leverage can create credit risks.

They did, however, say that they expect the rating to be stable in the future. The reasons for this stable rating are:

  • Franchise strength
  • Franchise stability
  • Predictable margins compared to other similarly rated companies

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Future Outlook for LPL Financial

In December 2016, LPL Financial Research published "Outlook 2017: Gauging Market Milestones". Their research anticipates investment success in 2017 due to the following factors:

  • A Republican president and a Republic Congress
  • An accelerating U.S. economy charged by energy sector profits
  • Dual mandate dynamic of the Federal Reserve

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