Even as LPL Financial pitches itself as a place where practices of all sizes can enjoy a home, some advisors are still finding they’d be more comfortable somewhere a tad smaller.
That’s the case for KRM Investment Counsel, a four-person advisory firm with $350 million under management that has moved over to the hybrid RIA and broker-dealer Arkadios Capital from the LPL-affiliated Wintrust Wealth Management. Justin Klestinski, a founder and partner of KRM, said his firm joined Arkadios late last year, when LPL was in the midst of bringing on Wintrust’s wealth arm from its affiliation with Wells Fargo.
When LPL announced in February 2024 that its institutional arm would begin providing custodial, advisory and brokerage services to Wintrust, Klestinksi and his partners knew they had a decision to make: They could keep their current status as direct employees of Wintrust or they could go independent and start their own firm.
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They chose Arkadios in part because of its size.
“Arkadios is an employee-owned firm,” Klestinski said. “It was a better fit for the way we approached our clients. And it really gave us a meaningful beachhead in the organization, being with a small firm.”
LPL’s growth spurt
LPL’s recruitment of Wintrust’s wealth business is just one in a string of deals inked in recent years on the firm’s way to becoming easily one of the largest in the industry measured by both headcount and assets under management. Its latest big transaction, its planned purchase of Commonwealth Financial Network this year, promises to add as many 2,900 advisors to its current stable of more than 29,000 and $285 billion to its currently more than $1.7 trillion.
Last year, LPL announced in February 2024 that it was buying Atria Wealth Solutions, bringing roughly $100 billion in assets under management and an additional 2,200 advisors. And in a deal similar to its bringing on Wintrust’s wealth arm, it was chosen the year before by the wealth management unit of the insurance giant Prudential to be its provider of RIA, brokerage and custodial services.
With Commonwealth, LPL executives have said they plan to go out of their way to retain the firm’s distinct characteristics and make advisors there feel at home after the transition. LPL has said it expects to retain at least 90% of Commonwealth’s headcount and asset tally.
Rival firms meanwhile have been quick to reach out to Commonwealth teams with their own recruiting pitches. In an open letter published on his firm’s website this month, Cetera Wealth Management President Todd MacKay made a direct appeal to Commonwealth advisors.
“My personal view is that when an independent business owner is faced with the uncertainty of change, those who inventory what’s best for themselves, their teams and their clients capture the opportunity best,” he wrote. “As you ponder what LPL’s acquisition of Commonwealth means for you and your clients, I want to personally share why in my heart I believe Cetera can be the best home for you and your team.”
A spokesperson for LPL’s industry rival Ameriprise also acknowledged interest in recruiting Commonwealth advisors.
“In the current environment, advisors are attracted to the strength of the Ameriprise value proposition, our stability and track record of navigating uncertainty,” the spokesperson said.
Earlier this week, Ritik Malhotra, the founder and CEO of the wealth management firm Savvy Wealth, posted on LinkedIn has sent out “Acquisition Relief Boxes” containing cookies, brownies and aspirin to Commonwealth advisors.
“Transitions shouldn’t cause headaches, and moving to Savvy won’t,” Malhotra wrote. “Commonwealth advisors: if you care about what your firm once stood for and want to shape the future of wealth management, we’re ready for you.”
Sticking with the status quo
Ron Edde, an industry recruiter and the president and CEO of Millennium Career Advisors, said one advantage LPL clearly has in retaining teams is that advisors are usually reluctant to go through the hassle of moving from one firm to another. However, Edde said, advisors at Commonwealth or Wintrust’s wealth arm are going through a transfer whether they like it or not.
But acquisitions or big recruiting deals usually involve less red tape than small breakaway moves from one firm to another, he said. And on top of the promise of less hassle, Edde said, LPL is no doubt offering generous retention deals.
Edde, who has both LPL and Commonwealth as clients, said his advice to Commonwealth advisors is to at least give LPL a try.
“And if LPL keeps its promise to let Commonwealth remain more or less a standalone entity, it’s going to take a lot to pry them out of there,” Edde said. “They are going to stay with the system they know and the people they know.”
Mark Elzweig, also an industry recruiter and a consultant at Mark Elzweig Company, said advisors should recognize there often is a tradeoff to going to a smaller firm.
“They need to make sure that those firms have the full-service platform and all the resources they need,” Elzweig.
No private equity in the picture
For Klestinski and his partners at KRM, part of the appeal of Arkadios was its lack of ties to private equity. After they decided against affiliation with LPL — a publicly traded company — they shopped their business plans around to various other wealth managers.
Arkadios was one of the few with no backing from private equity, the driving force behind a great deal of industry consolidation in recent years. Klestinksi shares a common concern about private owners: that they’re merely in the industry for the short-term.
“A lot of organizations are simply interested in accumulating assets and turning around selling them to a third party,” Klestinski said.
Arkadios was founded in 2016 by David Millican, who had formerly run an RIA affiliated with the independent broker-dealer Triad Advisors. Arkadios came in at the No. 1 spot last year in Financial Planning’s “IBD Elite” ranking of the fastest-growing firms after its annual revenue increased by nearly 25% year over year to top $97.9 million.
Arkadios, which has its headquarters in Atlanta, now has $13 billion in assets under advisement and 250 advisors in 75 offices in the U.S. and Puerto Rico. Its gains have come in great part from picking up teams from even faster-growing industry rivals.
In June last year, for instance, Arkadios announced it had recruited Gulf Coast Wealth Management, a 15-member team that had previously managed roughly $850 million through an affiliation with LPL. The founders of Arkadios have also relied heavily on their former ties to Triad Advisors, while also turning to UBS, JPMorgan Securities and Capital Group to fill out their firm’s ranks.
The founders of KRM Investment have themselves drawn heavily on their roots at JPMorgan Private Bank to make their firm what it is today. Klestinski moved from JPMorgan to Wintrust in 2012, just a year after Rapp had done the same. Another of their partners, Alex Marmitt, joined them at Wintrust from JPMorgan in 2023. The fourth member of their firm, Office Manager and Senior Financial Associate June Dinardo, was at Wintrust from 2009 to 2024.
Back to the RIA world
Klestinksi said he spent the early years of his career in the RIA industry before joining JPMorgan as a private banker in 2009 and then Wintrust three years later. The advisory business thus wasn’t entirely unfamiliar to him; but it had also changed greatly during his 15-year sojourn in the banking and broker-dealer worlds.
Klestinski said he and his partners — who also have ties to JPMorgan Private Bank — interviewed several firms before choosing Arkadios. He noted that KRM specializes in working with ultrahigh net worth investors and said he and his partners were looking for a partner that would give them freedom to make recommendations they think best suit those clients’ needs.
Klestinksi said he and his partners prefer to diversify portfolios using options strategies rather than private equity, private credit and other sorts of alternatives gaining popularity among many wealth managers. Alts, he said, too often come with barriers to pulling money out.
Paul Pilcher, director of corporate strategy at Arkadios Capital, said in a statement their decision to join Arkadios, “underscores the value of our platform for elite advisors seeking the freedom to tailor solutions and deepen relationships.”
