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Due Diligence Suite

LPL Financial Research

Investment Philosophy

LPL Financial is an opportunistic, all-market, all-weather, due diligence provider and portfolio manager. Through their investment and portfolio recommendations, LPL Financial aims to avoid downside and capture upside. To this end, LPL Financial is conservative when markets are tough and aggressive when markets are rising. Through a very broad investment mandate, they believe this is the only way to effectively provide recommendations for their advisors and their clients.

LPL Financial’s mission is to be a trusted partner to their advisors who provide investors with choices to help meet their financial goals. In this endeavor, LPL Financial’s sole motivation is to provide stellar due diligence and investment management advice — as a partner for those advisors who manage client assets themselves or as a portfolio manager for those advisors who want to leverage their experience.

Role and Structure

Over the years since LPL Financial’s inception, they have had to adapt to changing market conditions as the investing playing field continues to evolve with new participants, products, and investment ideas. Consequently, they have evolved the role and structure of the LPL Financial Research Team to help satisfy the needs of their advisors and clients.

Now, the LPL Financial Research Team serves two primary roles:

  • To provide due diligence
  • To provide investment management advice

To serve these two roles, they have a number of Research staff with qualified analysts, many of whom have received advanced degrees or well-known designations to ensure you receive professional advice. Additionally, they have their own dedicated communications, marketing, and service teams.

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Research as Due Diligence Provider

The LPL Financial Research team believes that not all investment managers and products are appropriate for everyone. As headlines have made clear to all of us, some investments are not appropriate for anyone, as they are based on fraud or fiction. Some investments appear sound, but are really based on luck instead of skill — and, at some point, luck does run out. Other investments are appropriate for those who understand the complexities and issues involved and are financially and emotionally willing to take on those risks. Their goal is to help vet the vast universe of available products and provide guidance about which ones they believe are sound and what type of investor they would appeal to.


Research as Portfolio Manager

When LPL Financial acts as an investment manager, they provide advice in the area of asset allocation models and complete portfolio construction. From there, you and your advisor can decide how to best leverage this advice, in conjunction with our due diligence advice, to help build the portfolio that best meets your needs.


What Does LPL Financial Research Do?

Portfolio Construction and Management

The Portfolio Strategy Group within LPL Financial Research is responsible for the construction and management of all recommended portfolios that the team offers. Portfolio Strategy is charged with combining the best ideas at each end to create recommended portfolios that regularly beat their respective benchmarks and meet their specific mandates.

To accomplish this goal, the Portfolio Strategy Group has developed its own set of proprietary tools and processes for portfolio construction and management. There are two main facets of the Portfolio Strategy process: construction through combination analysis and management through dashboard analysis.


Types of Asset Allocation

One key concept in money management is asset allocation, in which you divide your money among different asset classes such as stocks, bonds, and cash. This is important because, when investing in multiple asset classes, your portfolio may perform better over time and it may minimize the risk of underperformance. Market conditions that can help one asset class to perform well may cause another to have average or poor returns over the same time period. However, a portfolio consisting of a diversified group of investments may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing potential gain.

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Quad-Core Methodology

Overall, the four-pronged Quad-Core methodology is intended to provide a more diversified approach to portfolio management. Its purpose is to attempt to mitigate any biases within the LPL Financial Research process.

Quad-Core Methodology:

  • LPL Financial Research Opportunistic Ideas
  • Diversifying Strategies
  • Counterbalancing Alternative Strategies
  • Hedging Strategies

This methodology is meant to go beyond the traditional fundamental, valuation, and technical analysis we conduct. At all times, portfolios that utilize the Quad-Core methodology will be comprised of ideas from each of the four categories. However, the allocation among the four portions will fluctuate over time, depending on market conditions and outlooks.