LPL Financial has retained about 70 percent of NPH advisors in its first transition wave, company officials said Wednesday.
LPL plans to move NPH reps over in two waves, one group in the fourth quarter and one in the first quarter of 2018. The first wave of advisors set to transition to LPL—about half of NPH advisors—had to notify NPH earlier this month about their intentions.
On a webcast Wednesday, LPL chief executive Dan Arnold said the 70 percent coming over represented about 80 percent of the production within that first group.
The 30 percent going elsewhere was not a surprise, Arnold told investors and analysts on the webcast. “We went into this knowing it would be a competitive environment,” he said.
LPL didn’t want some of the NPH reps for compliance reasons, he said, and some took offers from competing firms or may not have looked into LPL’s capabilities, he said.
The upcoming second wave has a higher mix of advisors who work with financial institutions, Arnold said. “We feel good about the engagement, the activities that are going on, in order to secure those [second wave] advisors,” Arnold said.
The retention rate so far appears to be in line with what LPL expected. Under the terms of the deal, LPL will pay NPH additional fees if it brings on board 72 percent or more of NPH advisor production.
Additionally, LPL said Wednesday that a platform-fee reduction announced this week in its flagship advisor-directed Strategic Advisory Management (SAM) program will cost the firm about $3 million per quarter.
Administrative fees for advisors with $50 million or more in advisory assets custodied on the LPL corporate RIA will see fee reductions beginning next year for the SAM program.
The new fee levels will be set at 5 basis points for advisors with $50 million to $100 million at the firm, while advisors with more than $100 million will pay 3 basis points. The change amounts to a cost reduction of about a third, the firm said.