Anyone use LPL financial?

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Topic Author
Silas
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Anyone use LPL financial?

Post by Silas »

My wife has a sizable inheritance coming (unless there is some catastrophe in the market) and may want some advice and guidance from a professional advisor.

(I manage my own finances, but she is in control of her's)

One of my co-workers uses LPL financial. Does anyone here use them? How does it work? Do they have a brokerage arm, or do they manage your funds in another brokerage?

Are they any good?
Bella
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Re: Anyone use LPL financial?

Post by Bella »

I have recently been asked to review my parents' account at LPL. I very quite upset to see they have 11 mutual funds with most of them having 1% or higher expense ratios. Two of them even had front end loads of 5.25% On top of that, they pay 1.4% and 1.5% on these accounts.

After reviewing the account, I asked to meet with their FA. I presented my findings and asked if it was necessary for them to be in 11 MFs and if they could do better with few funds and lower expense ratios. The response I got was baffling. I was told these were stripped down funds and since they were institutional shares, there were no fees, only the advisory fee. I asked about the management fees and she just repeated what she already said. I then asked about passive investing and she told me LPL believes active is better. I asked if she there was incentive for her to choose specific MFs in the account and she flat out said 'no' there was no incentive. I also asked for a comparison of my parents' accounts vs. the applicable benchmarks and after spending several minutes looking for this information online, I told her we should move on. The final thing I inquired about was their AA. At ages 74 and 73, I thought 22% in stock MFs was too risky for them. I was told they needed income to keep up with inflation, buy my point was they didn't have time to make up for capital losses if the market had a downturn.
Lastly, I went home and looked up the expense ratios again for their MFs and sent a link to the FA asking her what I was missing in her explanation there were no management fees. She followed up two days later (after telling me she'd have it the next day) and told me all MFs have management expenses which is what I was saying the day before.
By my calculations, my parents are paying 1.45% in advisory fees, plus and avg of 1% in management fees for a portfolio that returned 2.6% last year which includes their required minimum distributions.

This may not reflect on LPL as a whole, but although I was not surprised, I was disappointed in what I feel is my parents' money not being managed with their best interests in mind. As a side note, when I began this review in December, I shared Bogleheads with my Dad and we're in the process of evaluating if he wants to make a change, simplify, and manage himself with BH philosophies.
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JDCarpenter
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Re: Anyone use LPL financial?

Post by JDCarpenter »

Swim Away.

LPL ~ Edward Jones.

Use the search tool and you'll come up with discussions. (Or search the broader net.)

Here is a good discussion from 2014: viewtopic.php?t=139518 Grt2bOutdoors summed things up well in a post on that thread: LPL Financial is a network of financial salesman masquerading as "advisors"

____
Edited to fix typo.
Last edited by JDCarpenter on Tue Mar 07, 2017 11:23 am, edited 1 time in total.
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Doom&Gloom
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Re: Anyone use LPL financial?

Post by Doom&Gloom »

My MIL had some investments with them through her "wealth management" guy at the local bank. My wife began helping MIL with a lot of her life as she began to lose her sight, and later obtained her power of attorney. DW then set up access to all of MIL's accounts online to keep others from rifling through her mail.

DW is not well-versed in financial matters, so she asked me to help her figure it out. I was appalled at the investments, costs, and churning--when I could figure anything out at all as there is not a lot of transparency (at least not with her account.) The churning was the bank guy's responsibility--not LPL's as far as I could tell. Of course MIL has complete faith in her "wealth management" guy and would not listen to any suggestions about moving her assets :oops:

I would avoid LPL like the plague.
sbaywriter
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Re: Anyone use LPL financial?

Post by sbaywriter »

Yes back in just before the dotcom crash when I didn't know anything - or at least the advisor was affiliated with them in some way. The advisor I went to did not charge me any advisory fee except I think for the planning session, but put me into 4 - 5 American funds with 5 + percent front loads.
Topic Author
Silas
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Re: Anyone use LPL financial?

Post by Silas »

Thanks for the insights: sounds like LPL is to be avoided.

I guess the question becomes, what wealth management firms are any good?
bloom2708
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Re: Anyone use LPL financial?

Post by bloom2708 »

Silas wrote:Thanks for the insights: sounds like LPL is to be avoided.

I guess the question becomes, what wealth management firms are any good?
The best course of action is to do it yourself with very low cost, broad index funds at a low cost firm like Vanguard or Fidelity. Financial advisors and firms make money by taking some of your money to do exactly what you can do yourself.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
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goingup
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Re: Anyone use LPL financial?

Post by goingup »

I don't know LPL financial, but there are some precise terms to use to understand costs.
Advisory fees are AUM (assets under management) fees. This is % charge of portfolio. A 1% advisory fee on a 1mil portfolio is $10K/yr.

If there is an advisory fee, the front-end loads on funds may be waived. This is important to determine. Are loads waived?

Expense ratios (ERs) of funds are very important too. Vanguard has rock-bottom ERs on funds. Many mutual funds have expensive ERs which can be 1% or more. Find out which funds an advisor will use.

So if an firm charges a 1% advisory fee and uses funds with an average ER of 1.5%, it will cost 2.5% per year to manage your account. That is $25,000 per year on a 1m portfolio.
Jack FFR1846
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Re: Anyone use LPL financial?

Post by Jack FFR1846 »

Consider a target date fund. Put it all in there and be done with it.
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snowshoes
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Re: Anyone use LPL financial?

Post by snowshoes »

LPL Financial = Started by Susan Kaplan, financial saleswoman of notoriety in BOS originally. LPL Financial is now what Susan Kaplans "The Money Show" on BOS radio for about a decade or so, morphed into after they were sanctioned for something or other, I forget what, look it up. Its now a publicly traded co. in business for profits, from its clients. Good luck!
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Silas
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Re: Anyone use LPL financial?

Post by Silas »

Agreed that one should do it himself (I do), but my wife controls her money, and disagrees (to some extent)

While stock and mutual fund investing is pretty basic, we will also be doing a lot of bond investing, preferreds, convertible preferreds, covered calls, etc. I am almost 50, so straight-up stock investing isn't really any option. I will need income for retirement.

I suppose we could do all that other stuff ourselves as well, but I am not an expert.
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David Jay
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Re: Anyone use LPL financial?

Post by David Jay »

If you want an advisor, I would recommend a robo-advisor like Vanguard Personal Advisory Service. Expenses matter, PAS charges 0.3% and they will pick the funds for your wife. If she ever wants to 'roll her own", there is no issue. Just cancel the service and keep your funds at Vanguard.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
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JDCarpenter
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Re: Anyone use LPL financial?

Post by JDCarpenter »

Silas wrote:Agreed that one should do it himself (I do), but my wife controls her money, and disagrees (to some extent)

While stock and mutual fund investing is pretty basic, we will also be doing a lot of bond investing, preferreds, convertible preferreds, covered calls, etc. I am almost 50, so straight-up stock investing isn't really any option. I will need income for retirement.

I suppose we could do all that other stuff ourselves as well, but I am not an expert.
Why the complexity, rather than a target fund or a two/three-fund portfolio? If you guys have knowingly arrived at a full understanding of these products and reasonably concluded why and how they fit into your plans, you are in pretty stratified territory at which many advisors are going to be unable to meaningfully assist. We are a bit older than you and will be living entirely off our portfolio (at least for the 13 years until Social at 70), and see no need whatsoever for anything other than stock index funds (I'm a small value tilter), and basic bond funds.

If your spouse is deadset on an advisor, I'd second David Jay: she could use Vanguards PAS for a relatively inexpensive advisory function. Or, go with a true fee only advisor/fiduciary--if you can find one you are comfortable with. From prior threads, people have had difficulty in finding such an advisor, but they do exist. The garrett planning network is said to be a good source for finding those types of advisors.
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Topic Author
Silas
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Re: Anyone use LPL financial?

Post by Silas »

Vanguard looks pretty good (Vanguard Personal Advisory Service, etc.). Obviously fees are huge, especially when you are investing conservatively.

The goal with her money is ultimately income, and to a lesser degree, total return. We wouldn't be looking for pure growth and speculation.

So bond mutual funds with low expense ratios (Vanguard) would be part of the picture, closed-end funds, and some individual bonds and preferreds. Might be some laddering involved, but that would be years away, as investing in individual bonds right now doesn't make a whole lot of sense.
NotWhoYouThink
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Re: Anyone use LPL financial?

Post by NotWhoYouThink »

In your earlier post on a related topic (how to manage an expected future inheritance) you seemed to believe that managing a 7 digit portfolio requires more complexity than managing the portfolio you have now,. And that buying a laddered individual bond portfolio somehow mitigated interest rate risk that bond fund would have.
viewtopic.php?f=1&t=173430&p=2625170#p2625170

Have you studied the wiki since then? Your comments that
While stock and mutual fund investing is pretty basic, we will also be doing a lot of bond investing, preferreds, convertible preferreds, covered calls, etc. I am almost 50, so straight-up stock investing isn't really any option. I will need income for retirement.
and
The goal with her money is ultimately income, and to a lesser degree, total return. We wouldn't be looking for pure growth and speculation.
indicate to me that you are not yet of the mindset that a simple portfolio that is diversified, low cost, and risk-appropriate for your situation is what you are looking for. Or at least not of a mindset that such a thing can be had. Simply, that is.

Much of the advice you will see here is that you can derive income from total return, and that doing so will likely provide better results than focusing only on income.

What other income will you have in retirement? Pensions, SS? Maybe if you look at your other resources to fund your retirement, you can get away from the over-emphasis of income.

Since this is your wife's money you are talking about, what does she think? I think I recall your income was pretty high already. Adding income to that, rather than investing for capital appreciation, may be counterproductive from a tax and total return standpoint.
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Silas
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Re: Anyone use LPL financial?

Post by Silas »

My income isn't that high right now: about 120k

I will likely have 1 million+ from my side of the family in inheritance (again, if there is no calamity in the financial world).

My wife will be getting around 3.5 million from her side (parents are in mid-80s and one is dying as we speak)

I have some money in an IRA and will be getting SS

If everything goes according to plan, the idea is to pay off the house and structure the investments to produce income and total return with very little risk. I absolutely cannot endure a 2008 or 2002 market scenario again at my age, as it would take 8-10 years to recover (or more), and I still need to fund college for two kids (I have some money in a 529 plan as well)

My wife likes stocks a lot more than I do, and ultimately, it is her decision. This is a tough market environment because valuations are very high (average P/E of SP500 is high, P/S as well, etc.) and there is a lot of geopolitical uncertainty. That's why we were toying with the idea of an advisor to help us, but we might be better off doing this on our own.
NotWhoYouThink
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Re: Anyone use LPL financial?

Post by NotWhoYouThink »

Most people who have "a guy" that manages their finances is happy with their guy, and will recommend him to friends and family. The successful guys are friendly and confident and supportive. This goes for E. Jones, Wells Fargo, UBS, Merrill Lynch, Raymond James, etc., and probably applies to LPL. Everybody you know likes his guy. Everyone liked Bernie Madoff, too. Until they didn't.

People on this board tend to look under the hood, and we find that those guys managing our friends' money charge high fees, or churn, or put money in high expense/high load funds. But if the market goes up and you keep contributing, or at least don't need to spend much, your guy looks great, and you are happy.

So what to do with your inheritance? The wisdom of this board will say, either
- Study up a little and manage it yourself, or
- If you don't want to do that, put it in an all-in-one fund that matches your needs. Maybe 20% stock/80% fixed income for very low risk tolerance, or
- If you really want "a guy", go with Vanguard PAS, which has a low fee and will keep you in low-cost funds, or
- Try to find a financial planner through the Garrett planning network that will charge you a one-time fee to set you up in a reasonable investment portfolio, and another one-time fee any time you want to talk about updating it.

Good luck.
amateurnovice
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Re: Anyone use LPL financial?

Post by amateurnovice »

LPL is a large "sprawl" brokerage with offices all over the place. They specialize in allowing investment advisory firms ("RIAs") use their services, custodial or brokerage. You're likely to find someone who uses a DBA or has their own RIA and uses LPL as their securities broker or custodian. However, you may not realize they're affiliated with LPL without reading the fine print or asking them, that's if they're part of an RIA or using a DBA. LPL is slowing losing business due to upper level mistakes and regulatory fines. I would try to find a different broker.

You might be better off using a local RIA firm that can give you a local office to talk with. RIAs are usually registered through your state jurisdiction's securities agency or the SEC if over $100,000,000 in AUM. If you are near a big city (250,000 people or more) you're likely to find an SEC IA that can take on your assets and provide you with human contact if you have any complaints. It can provide some peace of mind knowing that if something happens to you, your wife or heirs will have someone to meet in person to get to their assets. Of course, RIAs usually charge an asset management fee as a percentage of the account or portfolio. If the contract says "fees are negotiable", having them settle on a fixed rate less than 1.5% or 1% might be possible, especially if the account is large enough. This fee will be in addition to any custodial fees or fund expense ratios.

You should review the firm's brochure (a required document) to see what kind of investing they offer (mutual funds, macroeconomic event, DFA, stock-picking, fixed income portfolios, etc.). Doing research before you actually move any assets to them or any other brokerage by using FINRA's BrokerCheck would be wise. Make sure you use someone that doesn't have a checkered past.
bloom2708
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Re: Anyone use LPL financial?

Post by bloom2708 »

On $3.5 million a 1% Assets Under Management fee is $35,000/year.

That is not a small amount of money. An advisor will pick funds that are good for him and (sort of) you.

$35k staying in your account each year (and growing) over 10, 20, 30 years is a very non-trivial amount.

You CAN do this yourself.

1. Simple - Target Date fund. To be conservative pick the 2020 or 2025 version (year based, they get more conservative as the year approaches)
2. Simple + - LifeStrategy fund. Pick 40/60 or 20/80 - fixed allocation percentage
3. 2 fund - Total US Stock Index + Total US Bond Index - set the mix of stocks/bonds to your risk preference. 40/60, 50/50, etc
4. 3 fund - Total US Stock Index, Total International Stock Index, Total US Bond index
5. 4 fund - Add Total International Bond index - This is the components of the LifeStrategy funds at Vanguard
6. <continue to add funds to taste> At this point you are moving away from simplicity to add small components (REIT) or tiltes (small cap)

Read, read and read. It is an important exam to study for.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
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fire5soon
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Re: Anyone use LPL financial?

Post by fire5soon »

Run, don't walk, away from them.
A man is a success if he gets up in the morning and gets to bed at night, and in between he does what he wants to do. - Bob Dylan
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Silas
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Re: Anyone use LPL financial?

Post by Silas »

I will talk to her and try to convince her that

a) most of this we can do ourselves
b) at the very most, we would use Vanguard Personal Advisory Service, with its .003% fee

The 2020 or 2025 target date funds are a good idea as well. I can probably use that and similar total-return investments until close to retirement age.
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JDCarpenter
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Re: Anyone use LPL financial?

Post by JDCarpenter »

Silas wrote:My income isn't that high right now: about 120k

...
Only on Bogleheads. :wink: I smile at this, as I sometimes feel the same way with my income--and even when combined with DW. (So far, I've managed to avoid a post stating that, but my life is far from complete!)

But, outside of this forum, that is indeed quite high.

Sorry, couldn't resist--and it is not intended as a slam on you. Just a commentary on our forum. :beer
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Longtermgrowth
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Re: Anyone use LPL financial?

Post by Longtermgrowth »

A number of banks around here use LPL for their wealth management division. They have AUM fees in excess of 1.5% here. In a couple of family members experiences, across a few different banks, the salesperson will attempt to sell the largest variable annuity they can; since that's what they make the largest commission on.

If a salesperson wants most money put into a variable annuity, instead of making within 10 or 20 basis points of the Total US Stock Market Index dividend yield in AUM fees, that's saying a lot about huge expenses and unsuitability of most variable annuities for the majority of investors.

As already mentioned, would need to keep an eye on the selection of funds with loads and possible churning even if having avoided the variable annuity trap.
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Topic Author
Silas
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Re: Anyone use LPL financial?

Post by Silas »

true lol

however, I live in Illinois, where a $300,000 house is modest and carries with it a $10,000 property tax --the highest in the country (where I am anyway)

we also have a 10%+ sales tax in Chicago, and even a state estate tax (needless to say, no one retires here)

so 120k is middle-class at best here
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JDCarpenter
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Re: Anyone use LPL financial?

Post by JDCarpenter »

Silas wrote:true lol

however, I live in Illinois, where a $300,000 house is modest and carries with it a $10,000 property tax --the highest in the country (where I am anyway)

we also have a 10%+ sales tax in Chicago, and even a state estate tax (needless to say, no one retires here)

so 120k is middle-class at best here
Yeah, youngest son and his wife life in the Loop and we used to live in the other end of Illinois (st. louis suburbs). Didn't have the real estate prices, but everything else was the same (including DW's malpractice coverage, which was at same rate as Cook County). Still miss some friends from there, and our house, but nothing else. :D
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goingup
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Re: Anyone use LPL financial?

Post by goingup »

NotWhoYouThink wrote:Most people who have "a guy" that manages their finances is happy with their guy, and will recommend him to friends and family. The successful guys are friendly and confident and supportive. This goes for E. Jones, Wells Fargo, UBS, Merrill Lynch, Raymond James, etc., and probably applies to LPL. Everybody you know likes his guy. Everyone liked Bernie Madoff, too. Until they didn't.

People on this board tend to look under the hood, and we find that those guys managing our friends' money charge high fees, or churn, or put money in high expense/high load funds. But if the market goes up and you keep contributing, or at least don't need to spend much, your guy looks great, and you are happy.

So what to do with your inheritance? The wisdom of this board will say, either
- Study up a little and manage it yourself, or
- If you don't want to do that, put it in an all-in-one fund that matches your needs. Maybe 20% stock/80% fixed income for very low risk tolerance, or
- If you really want "a guy", go with Vanguard PAS, which has a low fee and will keep you in low-cost funds, or
- Try to find a financial planner through the Garrett planning network that will charge you a one-time fee to set you up in a reasonable investment portfolio, and another one-time fee any time you want to talk about updating it.

Good luck.
Nice post. Solid advice.
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goingup
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Re: Anyone use LPL financial?

Post by goingup »

Silas wrote:I will talk to her and try to convince her that

a) most of this we can do ourselves
b) at the very most, we would use Vanguard Personal Advisory Service, with its .003% fee

The 2020 or 2025 target date funds are a good idea as well. I can probably use that and similar total-return investments until close to retirement age.
Good plan.

VPAS is .30% AUM however. On a $3m balance that is $9,000 per year. That is a very reasonable fee for advisory services, but I wouldn't pay it. :)
aude
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Re: Anyone use LPL financial?

Post by aude »

Stay away from LPL. I have a neighbor who is an LPL rep. On the plus side, she is free to sell her clients whatever she wants. On the minus side, she happens to think that private REITs and the like are appropriate. Lots of churning, variable annuities and whole life insurance too. It's basically Edward Jones without the centralized management.
ken-pilot
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Re: Anyone use LPL financial?

Post by ken-pilot »

18 months ago I was looking to invest. I have had a long history with Thrivent Financial for Lutherans but a friend also mentioned to invest in LPL. After 12 months my Mid Cap in Thrivent yielded an average gain of 22%. LPL in the same period yielded a loss of .05% In the last 6 month LPL yielded a gain of 4%....however it is producing a substantial loss each of he last 3 days. Both Thrivent and LPL were set at a moderate aggressive portfolio. Tomorrow I am pulling the plug on LPL. Everyone...you can go with LPL is that is your desire...however if you are looking for a good return on your funds.....don't hold your breath..you might die of from lack of oxygen first.
OmG Im late
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Re: Anyone use LPL financial?

Post by OmG Im late »

It appears everyone is under the assumption that LPL is the advisor of their accounts, but they're not. Your advisor is an independent advisor or bank employee advisor who is handling your investments. LPL is the broker dealer your advisor uses to place your trades that either you chose or if he has discretion, he chose on your behalf. The advisory products fee is actually set by YOUR advisor. Not LPL, but there is a cap fee they allow an advisor to charge. The Managed Advisory types (only 3) are actually managed by the actual money managers of the product. So basically all I'm saying is, it's not LPL it's the person YOU chose to be your advisor.
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