LPL Financial Vs. Edward Jones: Choosing Financial Services Firm

When it comes to choosing a financial services firm to help you invest and plan for the future, two big names often top the list: LPL Financial and Edward Jones. Both LPL Financial and Edward Jones offer a range of financial products and services, including brokerage accounts, retirement planning, insurance, and more.

But there are some key differences between these two firms that you should understand before deciding which is the better fit for your needs.

A Brief Comparison Table

Aspects	LPL Financial	Edward Jones
Overview	Large independent broker-dealer; advisors are independent contractors	Large financial services firm; advisors are employees
Advisor Model	Advisors are independent; flexibility in services and practices	Employee advisors; consistency across offices
Product Range	Broad range of investments; can offer non-proprietary products	Narrower range of proprietary, pre-vetted products
Fees	Flexible models; typically lower than industry averages	Simple AUM fee model; fees at higher end of industry average
Support Model	Optional tools and support provided; advisor self-sufficiency	Extensive training and close home office support
Investment Philosophy	Customized portfolios and strategies	Simplified long-term buy-and-hold strategies
Compliance	Strong overall compliance record	Strong compliance overall as an employee model
Financial Strength	Publicly traded firm; $1.3 trillion in client assets	Privately owned; consistently profitable revenue
Better For	Customization, niche services, cost savings	Full-service support, brand reputation, simplicity

Overview Of LPL Financial

LPL Financial is one of the largest independent broker-dealers in the country. Headquartered in San Diego, LPL Financial has over 17,000 financial advisors across the U.S. LPL Financial advisors are independent contractors rather than employees of LPL. This gives advisors flexibility in how they run their practices.

LPL Financial offers a wide range of investment products and services including stocks, bonds, mutual funds, annuities, alternative investments, and more. The firm works with both individual retail investors as well as small to mid-sized businesses and institutions.

Some of the key advantages of working with LPL Financial include:

• Access to a broad range of investment products – With LPL, you get the products and capabilities of Wall Street firms but with the personal touch of a Main Street advisor.
• Flexibility and independence for advisors – LPL aims to empower advisor creativity and entrepreneurialism. Advisors can run their practices their way.
• Robust technology platform – LPL provides advisors with powerful tech tools to better serve clients.
• Competitive pricing – As an independent broker-dealer, LPL can eliminate overhead costs and offer competitive pricing.
• Strong record of compliance and supervision – LPL takes industry regulations and compliance seriously.

Some potential downsides of LPL to be aware of:

• Less hands-on support – Since advisors are independent, LPL does not provide the same level of hands-on support as employee-based firms. Advisors must be self-sufficient.
• Responsibility falls on advisors – Advisors bear the responsibility of running their practices and growing their client base. LPL does not directly provide these services.
• Less consistency across practices – There will be greater variability in client experience between different LPL advisors’ practices compared to a single unified firm.

Also Read: Comparison Between NerdWallet And YNAB

Overview Of Edward Jones

Edward Jones is one of the largest financial services firms in the U.S. with over 19,000 financial advisors. Unlike LPL, Edward Jones advisors are employees of the firm rather than independent contractors. Edward Jones is headquartered in St. Louis and has branch offices throughout the U.S and Canada.

Key features of Edward Jones include:

• Employee-based model – All advisors are employees of Edward Jones and not independent contractors. This provides consistency in client experience.
• Partnership culture – Edward Jones is structured as a limited partnership. Selected advisors have the opportunity to become limited partners.
• Long-term investing focus – Edward Jones places emphasis on long-term investing strategies rather than active trading.
• Hands-on home office support – The firm’s employee-based model allows for significant hands-on support and training from the home office.
• Face-to-face service model – Edward Jones utilizes a brick-and-mortar office model. Advisors meet face-to-face with clients at local branch offices.
• Simple fee structure – Edward Jones uses a simple, transparent fee structure. They do not earn commissions based on transactions or sales.

Potential disadvantages of Edward Jones include:

• Limited product range – Edward Jones offers a relatively narrow range of proprietary mutual funds and securities products. Advisors cannot offer products from outside companies.
• Higher fees and commissions – Due to its employee model, the costs of Edward Jones’ overhead trickles down to clients in the form of higher fees compared to independent firms.
• Limited flexibility for advisors – Advisors must adhere to the firm’s policies and model rather than being able to customize their practices.
• Limited specialty services – Edward Jones is more oriented towards individual investors. Services for institutions, pensions, and businesses may be lacking.
• Older technology platforms – Critics argue Edward Jones’ technology lags behind independents. But they have been making strides in improving capabilities.

Now that we’ve compared the key features and differences of LPL Financial and Edward Jones, let’s dive deeper into how they stack up across some of the factors most important to investors:

Also Read: Comparison Between Edward Jones And Northwestern Mutual.

Detail Comparison Of LPL Financial And Edward Jones

• Client Experience and Services

The most important consideration for most investors choosing a financial services provider is the quality of the client experience and services. How does working with LPL Financial advisors compare to working with Edward Jones?

One advantage that Edward Jones tends to have over LPL is consistency in client experience. Since all advisors are employees of the firm using the same systems and following the same processes, the client experience is uniform across Edward Jones offices. Of course, personality and fit between advisor and client still matters.

With LPL Financial, there is much greater variability between practices. Some LPL advisors closely adhere to the firm’s model while others apply their own unique spins based on their client base and approach. This means doing your diligence to find an LPL advisor that fits your needs and preferences.

In terms of the types of services offered, LPL Financial allows its advisors the flexibility to offer a wider array of products and services outside of LPL’s own proprietary offerings. Edward Jones advisors are limited to the products and services approved by the firm, which tends to be more limited in scope.

LPL advisors have greater freedom in adapting their practices to niche clientele and specialty services. Edward Jones’ model is more built around serving the needs of long-term individual buy-and-hold investors.

• Fees and Costs

The costs and fees charged by a financial services firm will impact your investment returns over time. Both LPL Financial and Edward Jones use somewhat different fee models.

Edward Jones uses a simple fee-based model based on assets under management rather than commissions for trades. This can be more transparent and predictable for clients. However, some critics argue this AUM fee model still poses conflicts when advisors benefit from growing AUM.

LPL Financial allows its advisors to choose between various compensation models including fees, commissions, or a blend of both. Some LPL advisors only work on fees while others earn commissions for certain products. The flexibility enables customization, but you’ll want to understand exactly how your advisor is paid.

On the whole, LPL Financial tends to have lower advisor fees since they lack the overhead costs of employees like Edward Jones. Edward Jones’ fees tend to be at the higher end of the industry average. However, LPL’s fees will differ significantly depending on the independent advisor. Some charge high fees while others are much more cost competitive.

• Range of Investment Products

If you want the absolute widest range of investment products, LPL Financial is likely the better choice. As an independent firm, LPL allows its advisors to offer a vast range of funds, securities, insurance products and alternative investments from hundreds of external companies.

Edward Jones uses a narrower range of pre-screened proprietary products. For example, Edward Jones advisors can only recommend mutual funds and ETFs offered by Edward Jones. The benefit is these products have been thoroughly vetted by the firm. The downside is a lack of flexibility or customization in building portfolios.

LPL puts more responsibility on the advisor to understand the investments they choose to offer clients. Complex alternative investments receive heightened due diligence. Overall, LPL enables its advisors to construct more tailored portfolios specific to client needs.

Edward Jones promotes a simpler more packaged approach based on long-term mutual fund positions.

Also Read: Comparison Between Fisher Investments And Edward Jones.

• Financial Advisor Training and Support

One potential advantage of Edward Jones is its training and home office support available to advisors. As employees, Edward Jones advisors receive structured guidance and mentorship aimed at developing advisors over their entire careers. The home office also handles back-end functions like compliance and technology.

By comparison, LPL advisors are responsible for running their practices like independent business owners. LPL Financial provides optional tools, education, and support to advisors if needed, but the responsibility for success falls on the advisor. Those who excel at self-sufficiency thrive under LPL’s model. Those who prefer structure and hand-holding may do better at Edward Jones.

LPL advisors have total flexibility in how they structure their practices, who their target clients are, and what their specialty areas will be. Edward Jones strongly encourages a face-to-face, long-term, buy-and-hold service model. Deviating from that model is discouraged.

• Compliance and Ethics

With any financial services provider, it’s important to look at their history regarding ethics and compliance. Have there been major incidents of malfeasance or regulatory violations?

LPL Financial has generally maintained a strong compliance record, especially compared to large Wall Street institutions. That said, they did have consent orders related to oversight of email correspondence and record keeping in the mid 2010s. However, LPL has invested heavily in compliance processes in recent years. Their track record is solid.

Edward Jones also has strong marks for compliance and ethical conduct. They promote a highly collaborative culture oriented around client needs more so than sales goals or metrics. Edward Jones works to foster a partnership mindset between clients, advisors and the firm’s leadership.

In summary, both firms take compliance seriously and promote a client-centric business model. LPL leaves more latitude to individual advisors to manage compliance. Edward Jones takes a more hand-holding approach companywide.

• Financial Strength

When choosing between financial institutions, assessing their financial strength provides peace of mind. Both LPL Financial and Edward Jones maintain strong balance sheets and healthy profitability.

LPL went public on the NASDAQ stock exchange in 2010 under the ticker symbol LPLA. Publicly traded companies provide substantial transparency into their finances and performance. As of 2022, LPL had nearly $1.3 trillion in total client assets under administration. The firm has demonstrated steady and consistent profit growth.

Edward Jones is privately owned and does not disclose detailed financial data. However, the firm consistently generates multiple billions in revenue each year. Edward Jones has the financial resources to weather unexpected market downturns. Their advisor model also ensures financial alignment with clients.

Both companies have reputations for financial stability and strength. Neither is at any material risk in the foreseeable future based on their current scale and market leadership.

Also Read: Comparison Between Edward Jones And Morgan Stanley.

Frequently Asked Questions (FAQ)

Conclusion

So, in the battle of LPL Financial Vs. Edward Jones, who comes out on top? The reality is that neither firm is clearly better or worse across the board. Each offers distinct advantages that will appeal to different investors.

Here are some key factors to consider when deciding between LPL and Edward Jones:

If you value	Consider
Wider range of customized products/services	LPL Financial
Cost competitiveness	LPL Financial
Flexibility in advisor practices	LPL Financial
Specialty services	LPL Financial
Self-driven advisors	LPL Financial
Full-service hands-on support	Edward Jones
Employee-based structure	Edward Jones
Training programs	Edward Jones
Simplified products/fees	Edward Jones
Buy-and-hold strategies	Edward Jones
Brand reputation	Both have strong brands

Also watch this about Edward Jones!

Ultimately, choosing between LPL Financial and Edward Jones comes down to your priorities in a financial services provider as well as finding an individual advisor you connect with. It’s possible an LPL advisor may suit your needs better than one from Edward Jones or vice versa. Do your due diligence to understand what matters most to you.

In summary, both LPL Financial and Edward Jones are leading financial services firms with unique strengths and advantages. The ideal choice comes down to your priorities and preferences as an investor.

By understanding the key differences between the two, you can determine which one is the better fit to help you achieve your financial goals.