Five years after starting its RIA custody business, LPL Financial LLC is holding its first-ever conference for affiliated RIAs this week in San Diego.

From the launch of the business in October 2008 with just nine RIA firms, LPL now serves 240 firms with more than $55 billion in assets.

Why wait five years before hosting a conference?

“We have a big enough community now, and advisors want to be part of that,” said Matt Enyedi, head of LPL’s RIA Solutions unit.
The meeting is open to the firm’s top 100 RIA firms, and features sessions on practice management, succession planning and the markets, as well as using LPL’s resources.

The firm on Tuesday is also launching a new outsourced compliance service, called the RIA Compliance Advantage Program.

LPL’s custody unit caters to hybrid advisors coming from the traditional brokerage world who want their own RIA firm. Of the $55 billion in assets, about 60 percent of that amount are advisory assets, the rest brokerage.

All the RIA Solutions firms are independent RIAs working under their own ADVs. Close to 90 percent custody all their assets at LPL.

“We’re certainly a multi-custodial offering because that’s what you do in this business,” Enyedi said, but many hybrid advisors want an integrated platform.

Hybrid firms using traditional custodians must use a separate broker-dealer, putting the brokerage and custodial providers at odds in competing for the advisor’s business, Enyedi said.

“We’re the only one who can be really agnostic” in serving hybrids, he added.

But the largest player in the independent broker-dealer space still has a challenge in being seen as a force in RIA custody.

LPL is still “fighting” to be known as a custodian, he said. “Since we’ve been so long known as a broker-dealer, we have to make it really clear that we’re a custodian” as well,  Enyedi said.

LPL says its average RIA firm has $250 million in assets, compared to $136 million for the industry overall.

Many of the larger RIA firms are following rollup strategies--buying smaller practices and incorporating under them under one firm.

Earlier this month, LPL landed its latest aggregator, the Scottsdale, Ariz.-based Householder Group, a large hybrid OSJ that supports 40 independent practices nationwide. Householder advisers handle about $1.2 billion in assets, following a structured marketing program developed by CEO Scott Householder.

These types of firms “tend not to be so heavily fee based,” Enyedi said, “but in the aggregate they might have $500 million [or more] under management. It’s a great RIA firm.”

LPL’s top source of recruits come from the independent broker-dealer channel, but some of  those advisors are struggling, he said. “What you’re going to see [is advisors] more often aligning with these rollup firms.”

The new outsourced compliance program should help RIAs who may be daunted in dealing with the complex regulatory environment, Enyedi said.

“The industry has gotten a little lax, when you look at RIAs getting audited once every 11 years and only 8% annually,” he said.  “When you look at the industry, people probably aren’t living up to their compliance responsibilities as well as they might need to. Our advisers are saying they want help.”