For advisor Christopher Hill, LPL’s partnership with fee-payment-processing firm AdvicePay couldn’t have been more timely. The Boulder, Colo.-based financial planner and managing partner of Ambient Financial Advisors spent the beginning of 2020 relaunching the 36-year-old business started by his father, Jeffrey Hill. Ambient was opening a new chapter in a long-running transition, as the LPL affiliate moved away from a self-described “basic brokerage”–style business to a “planning-centric” practice.
But the transition had exposed a problem: working with a larger broker/dealer meant hoops to jump through when it came to receiving payment for the financial planning the father-son duo was doing for clients.
For every invoice received by a financial planning client, the client had to send a check to Ambient, which in turn forwarded it to the LPL home office with a copy of the written financial plan. LPL then processed the payment and rolled it into Ambient’s commission statement.
It was a cumbersome process that left clients scratching their heads about the payment-processing capabilities of Ambient and LPL, not to mention the slowness of rectifying compensation and work completed by the Hills.
In early May, that all changed. Ambient was part of a pilot group allowed to test out what would later become the LPL-AdvicePay partnership, announced on Tuesday. It's a first-of-its-kind move for financial planning payment processing, said Hill. As one of the first advisors to kick the tires on the partnership, he said it had completely changed his practice.
For the first time, his firm is able to charge on a monthly, not quarterly basis. Of the 80 or so clients his firm has at any given time, about 15 of them have already been transitioned to AdvicePay. He’s also been able to sign up new clients this month, and clients are eager to use the new system, he said.
Clients who are paying for planning, new or existing, will no longer have to do so with a check. They can instead pay with a credit card—leaving their assets in place. Ease-of-use for Hill’s clients is particularly important: He specializes in “introducing order and stability to the financial turmoil associated with a significant grief event.” For clients already facing uncertainty because of an untimely death, or even those planning for cognitive decline in their later years, not having to write a check is one less thing to worry about.
The credit card payment still goes to LPL and is rolled into Hill’s commission, but the process is much smoother, he said. Plus, Hill gets paid more often. Monthly payments from clients translate into monthly payments for Hill.
In fact, Hill has seen an uptick in business related to the coronavirus pandemic, so the timing of LPL and AdvicePay’s partnership was all the sweeter. “This is our big breakthrough,” he said. “Plenty of our clients have been waiting for this moment as well.” He estimates that 75% of his business time is spent planning with clients, so smoothing out the payment process is a weight off his shoulders.
The deal with LPL isn’t just another enterprise deal, said Alan Moore, AdvicePay’s CEO and co-founder. “This is a sign of where the industry is actually at,” he said, in that firms like LPL “are already doing a ton of fee-for-service planning. This isn’t new for them.”
What is new is that reps are more easily able to charge and produce revenue from planning. The old way of mailing checks was “kind of an embarrassing process from a client perspective,” added Moore.
Besides providing an easier payment experience for clients, AdvicePay’s platform actually promotes better client communication, added Hill. Advisors using AdvicePay are responsible for making sure clients understand how much they’re paying and what they’re paying for, which could come as a shock for advisors used to collecting cut-and-dried commissions. Changes to payments have to be approved by clients, which Hill sees as an opportunity for him to explain his value to his clients.
For its part, LPL is aware that regulatory and market changes mean the firm has to change, too. “More advisors are adopting planning in their practices to be able to expand their value with clients, by providing a holistic view and solving their clients’ more complicated problems,” said Rob Pettman, an executive vice president in LPL's investor and investment solutions division, in a statement. “With an expanded role comes an even greater need for technology to drive [advisors’] practices.”
For advisors like Hill, the abstract concepts of high-level business decisions at AdvicePay and LPL have already translated into tangible improvements for his niche-focused firm.