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LPL Financial CEO: Fiduciary rule could lower profits but boost market share

The proposedfiduciary standard for retirement savings advisers could make some services lessprofitable but help LPL FinancialHoldings Inc. gain market share, Chairman and CEO Mark Casady said April28.

Retirementproducts make up 30% of LPL Financial Holdings' assets, the executive said duringa conference call to discuss first-quarter earnings.While the U.S. Departmentof Labor's rule change could shift more retirement services away from brokerageto advisory business, LPL Financial Holdings believes it will have more assets tooffer.

"Thatmarket share overcomes the cost of the changes that are made, and if it doesn'tdo it in the first year, it certainly does it in the second or third," he said.

The companymade several changes inits services in preparation for the new fiduciarystandard for retirement advice. It will need more time to wade through the pages of the rule changeto better determine its impact on business, but Casady said he is comfortable withthe implementation costs the company built into its operation for the next two years.

During the call, an analyst noted that the new standard couldmake the business environment harder for smaller advisory companies and asked ifthe rule change could open up M&A opportunities. Casady said the best use ofcapital would be to deploy it for recruiting and organic growth. M&A would bethe next best choice, he said.

"We agree that things like this tend to squeeze cost structuresfor smaller competitors," the CEO said, adding that the new standard will likelylead to more acquisition choices, but that opportunity would depend on the prices.