Changes in service agreements could lead to departures
- LPL Financial is adding new restrictions to its service agreements with some large registered investment advisor practices
- The move could have significant implications for the custody market
- LPL is targeting large independent RIAs on its platform
- The new terms include the right to veto any sale of more than a 10% stake in the firm to an outside investor
- LPL is also requiring targeted OSJs to notify and obtain authorization before moving assets off its platform
- This could lead to an exodus of OSJs to rivals such as Pershing, Fidelity, Schwab, and Goldman Sachs
- LPL may try to retain advisors by offering enticing offers
- The ultimate goal for LPL may be to break up the large OSJs that have become competitors
- Prominent industry attorney Brian Hamburger is representing most of the largest OSJs as they consider their legal options
LPL Financial is making changes to its service agreements with large registered investment advisor practices, which could have significant implications for the custody market. The company is targeting large independent RIAs on its platform, adding new terms that include the right to veto any sale of more than a 10% stake in the firm to an outside investor. LPL is also requiring targeted OSJs to notify and obtain authorization before moving assets off its platform. This move may prompt an exodus of OSJs to competitors such as Pershing, Fidelity, Schwab, and Goldman Sachs. LPL may try to retain advisors by offering enticing offers. The ultimate goal for LPL may be to break up the large OSJs that have become competitors. Prominent industry attorney Brian Hamburger is representing most of the largest OSJs as they consider their legal options.
Factuality Level: 7
Factuality Justification: The article provides a detailed overview of the changes LPL Financial is making to its service agreements with some large registered investment advisor practices. It includes quotes from individuals familiar with the matter and mentions potential implications for the custody market. However, the article lacks perspectives from LPL Financial itself to provide a more balanced view of the situation.
Noise Level: 3
Noise Justification: The article provides a detailed analysis of the changes LPL Financial is making to its service agreements with large registered investment advisor practices. It discusses the potential implications for the custody market, the motivations behind the changes, and the reactions from industry insiders. The article stays on topic, supports its claims with quotes from relevant sources, and offers insights into the possible outcomes of these changes.
Financial Relevance: Yes
Financial Markets Impacted: The article pertains to the custody market and the potential impact on large registered investment advisor practices that use LPL Financial’s services.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses changes to LPL Financial’s service agreements with large registered investment advisor practices, which could have significant implications for the custody market. However, there is no mention of an extreme event or its impact.
Public Companies: LPL Financial (LPLA), Pershing (Not available), Fidelity (Not available), Schwab (Not available), Goldman Sachs (GS)
Key People: Brian Hamburger (Prominent industry attorney)
Reported publicly:
www.barrons.com 
