By Andrew Welsch

LPL Financial is closing the gap with the wirehouses when it comes to banking and alternative investments, according to CEO Rich Steinmeier.

This effort should boost LPL's appeal with financial advisors who serve wealthy clients, Steinmeier said at the Bernstein Strategic Decisions Conference.

Both alternative investments and banking have become key growth areas for wealth management companies looking to drum up more business with existing clients and serve a wider range of customer needs.

LPL's once lackluster capabilities in those areas hindered its ability to recruit certain advisors, Steinmeier said. "Probably the No. 1 reason wirehouse advisors would have disqualified us was our banking capabilities and how narrow they were," Steinmeier said. "And so we're building that out, and that will take that off the table by mid next year. But alts was the second."

The term wirehouse refers to the large national brokerage firms Merrill Lynch, Morgan Stanley, UBS, and Wells Fargo. Steinmeier is familiar with UBS, having worked there before he joined LPL in 2018.

He said LPL has pursued a three-part strategy for alternative investments. First, the company began working with SS&C to gain the ability to hold alternative investments, a broad category that includes hedge funds, private equity, and private credit. Having that ability allows advisors who have clients invested in alternative investments to bring those investments to LPL.

Second, LPL is making more alternative investments available for advisors. Or as Steinmeier put it, "basically having access to inventory that they can purchase." Third, the company has also made it easier for advisors to invest their clients in alternatives through measures such as e-sig.

Earlier this year, LPL launched a new alternative investment platform, LPL Alts Connect, and said it was expanding a longstanding relationship with iCapital, a fintech and alternative investments platform.

Steinmeier said the firm's improving alternative investment capabilities benefit the company's existing 29,000 financial advisors, some of whom may not have been using alternatives as much as their wirehouse peers. Steinmeier said LPL now has a 22-person team "that works out there directly with advisors inside of our ecosystem to help them utilize alts inside of a portfolio as they construct them."

The executive provided less detail about the company's efforts in banking. Unlike its wirehouse rivals, LPL isn't owned by a bank. It also doesn't operate a bank itself. It does offer advisors some banking and lending services and products, sometimes in partnership with banks.

The San Diego-based company is one of the nation's largest wealth managers, with approximately $1.8 trillion in brokerage and advisory assets. It has been growing through recruiting as well as acquisitions. Earlier this year, LPL said it would buy independent broker-dealer Commonwealth Financial Network, which has about 2,900 advisors and $285 billion in assets. Steinmeier said at the conference that the acquisition is a "watershed deal" for LPL, pointing not just to Commonwealth's size but also its well-regarded brand and services for advisors.

Write to Andrew Welsch at andrew.welsch@barrons.com

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May 29, 2025 15:58 ET (19:58 GMT)

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