LPL Financial's IPO & Its Impact: Beating the Brokerage Competition

In 2007, it acquired three broker-dealers from Pacific Life.

The Pros, and Cons, of Going Public

"Access to the capital markets will help the firm obtain the needed funds to continue to upgrade technology and grow its business in the coming years," noted Elzweig.

But there are some negatives to going public, too, experts point out. "As a public company however, if the firm has a bad quarter, the whole world will know," said Elzweig.

In addition, "The ability to run the company changes," said John Rooney, managing principal of privately held Commonwealth Financial, which has about 1,300 advisors. "As a public company, you are numbers driven, and that will mean that the decision-making process aligns accordingly."

For Commonwealth, says Rooney, "Our decisions don't have to be purely profit maximizing and can incorporate the interests of our community. That's a big deal for us. In other words, they will have a fiduciary duty to shareholders in being a public company. For a private company, that duty is to your employees and advisors."

Other experts say that since its sale to the private-equity firms in 2007, LPL Financial has very much been run like a public company. For instance, it has been filing K and Q statements (see related story on the financial details on LPL's filing).

"They have been moving their business plan along during this time," noted Murphy. "They integrated operations and became fully self clearing. They were smart in using this time to their advantage."

As Roame and other experts see it, LPL Financial's IPO could easily shift its position in the brokerage industry: "This is a defining moment for the independent broker/dealers and for LPL," said Roame. "This announcement is another threat to the dominance of the wirehouses."

IPO Timing

The date of LPL Financial's market debut has net yet been set. But it will trade with the ticker LPLA.

Richard Bove of Rochdale Securities says that, in terms of market timing, LPL Financial's IPO "is a big surprise."

The ability to sell stock right now is uncertain, the investment veteran says, and IPOs are being pulled left and right. "More IPOs were pulled in the month of May than in December 2008," he explained.

"To come with a financial offering now is, if you will, gutsy. I do hope it's a major success because it will indicate there's money out there for money instrument companies," he noted.