Financial adviser changing brokers

Kayzmum

Kayzmum

Recycles dryer sheets
Joined
Oct 27, 2017
Messages
85
Our accountant of 20 years referred us to his financial advisor. A couple of days ago my husband got a call this financial advisor's office informing him they are changing their broker dealer and are switching from Cetera to LPL Financial. I Googled and found nothing but complaints about LPL Financial, but I don't like to go entirely by what I read by net surfing. Anyone have any experience with or heard anything about either of these companies?
 
Both are well-known in the industry. I don't have experience with either one, though.
 
I’m embarrassed to say that LPL was our last FA (that we dumped 18 months ago in favor of Vanguard). We used LPL for 5 years.

The whole time we were with them I just didn’t quite trust our FA. For example, FA pitched a LTC plan to us that was a $100k each upfront buy-in. At the time this was 25% of our savings. I researched online for this product and found a comment from an insurance guy that said he really like the product because he got a really large commission and he usually recommended it to folks who had enough $ to not really notice the cost and who really didn’t need it. Needless to say, we didn’t bite.

Advisor fees were high at 1.3%. We moved to LPL from ML. At ML we had been invested in discrete stocks, so I felt their fee was earned. I assumed that LPL would pick stocks as well, but they just put us in high expense ratio ETFs, so we paid twice on a portfolio that just barely beat the market, before fees.

I have other horror stories, but I think you get the idea. I still kick myself for all of the money wasted on fees to these bozos. Feel free to PM me if you have more questions.
 
I had LPL back when I had a FA. We got switched to them from Putnam back when Putnam was having problems. Personally I don't see any problem with them vs. any other FA based broker. But I've been much happier since I fired my FA and broker and started DIYing it.
 
LPL Financial? Where/when did I hear that name? Oh yeah, that was my baptism into the world of financial investments and accounting. Dear in-laws had signed up with an FA who was a nice guy and went to same church as one of their daughters.

Eventually in-laws enlisted my help, to get them away from the FA and his partner. The partner actually undermined the FA, and then talked them into a second AUM contract. There was plenty of churning IMO, and in-laws sensed something was wrong. We overcame all of that.

The problem is not necessarily LPL Financial, as I'm sure they do what is required by law on reporting. The problem is the FA who puts you in some array of investments, charges you fee, and you also have other fees not readily seen.

Like most on this forum, we manage our own stuff. You may not be able to do that, so you'll just need to trust your FA, or find another solution.

Some investors pull the plug on this sort of stuff, and go with Vanguard, Schwab, Fidelity, etc. and do not pay fees for management of their accounts.
 
OP, you won't find many here on this forum endorsing any FA firm. (some, a few, but not many). Sure, most of us might have used an FA at some point, but eventually moved to DIY with the low cost index funds available via Vanguard, Fidelity, etc.

LPL is no better, no worse, than others, just ensure you are fully aware of any fees. If anything, I'd expect a good FA to setup a chat with you to proactively discuss any changes and/or concerns. FA's usually have a flat cut, like say 1% of managed assets. A Vanguard balanced total market index fund (and many similar) is around 0.05%.
 
I'm in the minority here. I have no problem with using a FA. I manage 1/2 of my investments, and he manages the other 1/2 for 65 bp.

Having two philosophies of investing fits my risk tolerance, and if anything ever happened to me, my wife will have someone that we trust that can immediately take care of her.

If I were twice as wealthy, my FA would likely manage 100% of it. There are two times when cost shouldn't be much of a factor in my opinion:

1) When you need help and encouragement to invest. There's nothing wrong with paying for advice.
2) When you are so wealthy, paying a fee doesn't damage your goal.

All that said, for you, there is nothing different between the two firms. Even their client software (which is awesome) is the same. It's just branded differently.
 
I am involved in the investments of a couple of nonprofits where DW was or is a board member. Last year we ran a procurement exercise to select an FA for one of them, to run about $4M. The winner turned out to be someone "representing" LPL. LPL is really just a back office for the FA, handling custody, printing the monthly and quarterly reports, etc. and making sure all the SEC and FINRA boxes are checked. I did run a brokercheck on them and there seemed t be no more problems than I would expect at a big outfit. They seem to specialize in being a back office for FAs. (https://lplfinancial.lpl.com/about-Us.html)

Re internet anecdotes, the old rule applies: The plural of "anecdote" is not "data." Probably every big company has a few screaming lunatics using the internet to vent. IMO, anyway.

So, I think a bad experience or a good experience is really the fault of or credit to individual FAs. My guess is that while LPL has the compliance responsibility it will be somewhat weaker, simply due to distance, than the compliance regime at a name-plate broker like Morgan-Stanley, Schwab, etc. where a compliance officer is just down the hall from the reps. But I don't see that as a big negative. It's always caveat emptor, regardless of the name on the door.

So ... after a year of experience with this FA I have seen nothing that gives me any concern about the LPL relationship.
 
Our FA does changes once a year to maintain asset allocation. He manages 1/8 of our net worth. The rest is DIY. We really don't care what broker he uses. We maintain the relationship in case DW needs help in the afterlife. (After DH that is!)

I carry $500k is term insurance to cover the added costs, lower returns.
 
I have seen FA's switch firms because they got in trouble at the old firm and were asked to leave. So every switch of a firm is a red flag to investigate. And it's not necessarily the firm, but it is the FA themselves.
 
LPL is the largest independent brokerage I believe.

People telling their horror stories of bad products and high fees has nothing to do with LPL. That was their choice of financial advisor. LPL just does the back office stuff.

If you like using an FA it means nothing to you if they use LPL or TD or Schwab or whatever. I wouldn't worry about it myself.
 
However, if your FA switches to another brokerage in the middle of the year, expect to receive two separate sets of tax documents in the year of the change. Don't file your tax return until you have both sets of documents.
 
LOL! said:
I have seen FA's switch firms because they got in trouble at the old firm and were asked to leave. So every switch of a firm is a red flag to investigate. And it's not necessarily the firm, but it is the FA themselves.
Click to expand...
+1 This is excellent insight.

There was a guy who popped up here briefly as "The Technician." He's now gone traveling but while he was here he posted his FA website and I was able to brokercheck him: brokercheck.com showed that he had lost on four serious customer disputes with settlements ranging from $50K to $450K. "Breach of Fiduciary Duty" figured prominently in the complaints. Notification of his fourth one was received by his employer 3/16/2015 and his employment with them is listed as ending "4/2015." So he probably got canned as LOL! speculates.

A problem, though, might be that brokercheck doesn't seem to list disputes until they are resolved. So if the FA committed one big sin, it might not be listed immediately and his/her record would look clean. I'm guessing that the firm that fired him/her might not be willing to provide any information either, though it might be worth a phone call. Nevertheless, brokercheck will expose repeat offenders even if it is not completely up to date. We should all probably be running brokerchecks every year or so for anyone where we have an investment relationship.
 
Is it just me or is this kinda a strange first post (and as of now only)?
 
RE2Boys said:
However, if your FA switches to another brokerage in the middle of the year, expect to receive two separate sets of tax documents in the year of the change. Don't file your tax return until you have both sets of documents.
Click to expand...

This happened to me last year and it was an accounting nightmare. Luckily the previous company had switched to online data transfer so saved me a ton of time inputting information.
 
Dump the FA now.

I assume that brokerage shifting is another way that fees are generated. I have no reason to believe it is anything more than an incentive based switch for the ADVISOR. Certainly not for you.

Welcome to DIY land.
 
bloom2708 said:
... I assume that brokerage shifting is another way that fees are generated. I have no reason to believe it is anything more than an incentive based switch for the ADVISOR. ...
Click to expand...
Just curious: What is your basis for making this assumption?
 
Rustward said:
You did not answer his question. What is your basis for the assumption?
Click to expand...

Experience. Call me out and prove me wrong.

I just made a simple statement. I'm frequently wrong.

If it isn't about the clients money and fees, then I'm wrong.
 
bloom2708 said:
Dump the FA now.

I assume that brokerage shifting is another way that fees are generated. I have no reason to believe it is anything more than an incentive based switch for the ADVISOR. Certainly not for you.

Welcome to DIY land.
Click to expand...

That is ridiculous speculation.
 
bloom2708 said:
... If it isn't about the clients money and fees, then I'm wrong.
Click to expand...
I think you're probably wrong. All AUM agreements that I'm familiar with don't have the FA charging any extra fees. Trading fees, custodial fees, etc. are all covered by the FA and/or the broker (LPL). And with the specific nonprofit deal I'm familiar with, the FA is not allowed to buy any LPL products into the portfolio since that could be a breach of fiduciary duty. So I don't know how the backoffice firm could reach into the client's pocket. Never say never, of course.

The client may even benefit. The LPL monthly statements are generated with content and format that can be tailored to the client's wishes. For example, we asked for a quarterly analysis of the bond tranche's ratings (AAA, BBB, etc.) and it was a simple matter of the FA checking a box to have this section of the report generated. And one I like a lot is that we asked for and easily got total return numbers separately for the equity and the fixed-income portions of the portfolio. This makes benchmarking incredibly easy. Other reports I have seen (Schwab, Fido, Morgan Stanley, ... ) only give a total portfolio blended return, which is essentially useless for benchmarking.
 
bloom2708 said:
Tough crowd. I surrender. It isn't about fees.

:(:blush:
Click to expand...
The FA is creating risk. Risk their clients walk away because of changes. Having been in IT in this industry, no change is transparent, and may further upset the FA's clients.

IMO: Either the FA was kicked out of the last brokerage or they're migrating to a "better" platform.
 
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