LPL Stakes $41B Super OSJ Private Advisor Group

LPL Financial has acquired a minority stake in Private Advisor Group, the Morristown, N.J.-based registered investment advisor and office of supervisory jurisdiction of LPL with over $41.3 billion in client assets. LPL joins Merchant Investment Management, which made a minority investment in PAG in 2021. 

PAG’s legacy leadership team, which includes six owners, retains majority ownership and control of the RIA. 

Frank Smith, CEO of PAG, said the firm decided to bring on the LPL investment to become more aligned with the firm, which custodies roughly 90% of the RIA’s advisory assets and serves as its broker/dealer. The firm’s nearly 800 advisors still have a significant amount of commission-based brokerage business with LPL. PAG’s relationship with LPL goes back 28 years. 

“As we continue to evolve, one of the things that became very important to us was, how do we move from this position of championing each other’s business to being really invested in each other’s success?” Smith said. “This investment helps solve for that, where we now are very deeply aligned with them and that we’re both seeking the same outcome, and that’s creating value for the independent advisors that are partnered with us.”

PAG also wanted to bring on a capital partner that was an operator in the wealth management business, which Merchant is not, Smith said. 

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“They’re operators in this business as well,” he said. “It was important to us as we continue to look at ways we create succession, continuity and protect the legacy of Private Advisor Group that we look internally first for those types of opportunities.”

LPL and PAG will also be able to share resources across firms more easily. 

“With this investment with LPL, it allows us to share in the resources of each other’s firms in a way that we haven’t been able to do at scale before by just being business partners,” Smith said. “Now that we’re invested in each other, we have the ability to take the best-in-class from both firms and deliver that in a unique way to the marketplace.”

Some examples of that include helping advisors roll up into the PAG ecosystem and think through succession planning and transitions. 

“LPL has exponentially built scale around those functions,” Smith said. 

“LPL invests in our advisors and partners a variety of ways. Private Advisor Group has long been an important part of the LPL ecosystem,” said Jen Roche, senior vice president of communications and public relations at LPL, in a statement. “This strategic partnership underscores our confidence in their leadership, vision and approach to supporting advisors. Designed to enhance the experience of advisors and clients alike through shared resources, technology and operational support, this alignment allows for continued growth well into the future.”

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PAG will continue to operate with its current leadership and be multi-custodial. In addition to LPL, it also uses Schwab, Pershing, Fidelity, Interactive Brokers, U.S. Bank, SEI, AssetMark Trust, TIAA-CREF and National Advisors Trust Company, according to its Form ADV. 

LPL has a number of programs designed to provide capital to advisors and firms affiliated with the broker/dealer. That includes its liquidity and succession program, launched several years ago. Under that program, the IBD acquires practices with principals nearing—but not yet at—retirement and commits to spending 10 to 13 years supporting a next generation that will eventually have the option to take control without the steep price tag—or any cost. 

LPL has been in talks with some affiliated RIAs and OSJs about an “equity plus” concept, a minority investment offering, according to published reports. But it's not a structured/branded program. 

Smith said PAG’s minority arrangement with LPL is unique to his firm. 

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Smith was named CEO of the RIA about three years ago, in a planned transition from Robert “R.J.” Moore, who now serves as executive chairman, alongside PAG co-founder Pat Sullivan.

PAG was founded in 1997 by John Hyland and Sullivan, who remain owners.