LPL Financial

LPL to Create a New Fee-Only Offering

While the IBD currently provides a way for advisors to drop their brokerage license, the firm is considering a new and improved model for fee-only RIAs.

There are a lot of changes happening at LPL Financial, the most recent being the firm’s plan to launch a new offering for fee-only registered investment advisors. While the firm currently provides a way for advisors to drop their FINRA license and continue to custody their assets with LPL, it is currently working on a “more compelling and competitive offering out in the marketplace,” CEO Dan Arnold said, speaking on an earnings call Thursday.

“If we're not either competing in where advisors are moving from one model to another, that would give us a challenge to think about that differently,” Arnold said.

Some other broker/dealers are building out their offerings to allow for fee-only advisors to stay on their platforms. Commonwealth, for example, is helping more advisors abandon their FINRA registrations, adding more model portfolios and financial-planning tools. Wells Fargo recently detailed its plan to serve RIAs.

In its fourth-quarter earnings, LPL announced it had its best year yet in terms of recruited assets. The firm brought in $8.6 billion in recruited assets during the quarter and $27.3 billion for the year. 

“The primary drivers of our improved outcomes were enhancing the performance of our business development team as well as aligning our transition assistance with financial returns. We believe these types of structural changes will drive more sustainable and repeatable results going forward,” Arnold said.

Fourth-quarter brokerage and advisory assets were $628 billion, up 2 percent year over year. Advisor head count was 16,109, down from 16,174 last quarter.

Arnold said the firm had about 30 advisors leave from a small group of hybrid firms “that we weren’t strategically aligned with.” The firm also had some low-producing advisors depart at the end of the year, and about 50 advisors left who were previously with Independent Financial Partners, an office of supervisory jurisdiction that is launching its own b/d in the spring. The firm’s b/d application was just approved by FINRA

During the earnings call, Arnold also outlined the firm’s efforts to deliver new capabilities to its advisors. One effort has been to “digitize the five primary workflows and advisor practices.” That includes the firm’s acquisition of AdvisoryWorld, announced in early December. Other efforts include embedding a planning-based approach into ClientWorks, its advisor workstation, and improving ClientWorks overall. WealthManagement.com recently detailed the significant turnaround advisors have seen in the firm's technology in the past year. 

Arnold also discussed the firm’s new approach to service, which advisors previously complained about, shifting to a focus on customer care. The firm recently brought on Dayton Semerjian, previously with CA Technologies, as managing director and chief customer care officer, to shape the new service model.

“The new model will leverage artificial intelligence and other digital solutions to ensure they get the right information in a consistent way that is more accurate and more accessible. This gives us the flexibility to improve the use of our human resources,” Arnold said. “Instead of a call center model, we can shift to more of a case management model, where highly skilled and highly trained professionals are accountable for managing our advisors’ inquiries from start to finish.” 

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