LPL Financial's newest client win to its retirement platform is one of the largest fee only RIAs in the country and one of its direct competitors on the regular planning side of its business, Ronald Blue & Co. in Atlanta.
A couple of years ago, few would have envisioned a partnership between the country's largest independent broker-dealer, with its recent regulatory troubles, and a strictly independent RIA, especially a large one like Ronald Blue, known for casting its planning in biblical terms.
But business realities set in. After Ronald Blue's retirement plan business hit $1 billion in assets under management, the company realized it needed a much stronger solution than it possessed in-house to serve its clients -- especially given the rules with which it has to comply to provide different levels of fiduciary service. Its retirement business now includes 100 clients and accounts for 12.5% of the firm's total $8 billion AUM.
"It just became too much," says Vince Birley, chief strategy officer of Ronald Blue. "I started looking around to see who had built that model. LPL kind of stood out for us."
LPL launched its retirement business in 2010 by acquiring the assets of National Retirement Partners. The idea was to get a larger piece of the retirement plan market, partly by helping advisors meet their fiduciary requirements. Since then, LPL's Retirement Partners group has grown to include nearly 41,927 retirement plans with $123 billion in assets under advisement, supported by approximately 5,600 advisors, the firm says.
The complexity in managing retirement assets is only expected to increase, especially after a new governmental report estimated that Americans lose $17 billion annually to bad advice on their retirement savings.
"The transition of Ronald Blue clients to the LPL platform is a solid win," says Bill Butterfield, wealth management analyst with Aité Group, "and should help attract other RIAs to their platform."
Ronald Blue concluded it wouldn't compromise its independence, fee only structure or culture by making this recent move, which already is providing a huge boost in service to clients, Birley says. "The co-advisory agreement is that LPL is providing fiduciary services to the plan and we are proving the relationship management side of it," he says. "There is no increase of fee to our clients. There's just a split of that fee."
NEW LPL OPPORTUNITY
The retirement platform operates through LPL's RIA and not its commission-driven BD.
The move already is rapidly increasing Ronald Blue's retirement plan business, the firm says. And, it's positioned LPL to attract more of its RIA competitors to its retirement plan platform.
"I think it does open up an opportunity for us," says David Reich, head of LPL's Retirement Partners division.
Moreover, to make its deal with LPL work, Ronald Blue created a unique structure by continuing to work with Todd Timmerman, the same advisor who has handled its retirement plan business for the past 15 years. Timmerman, now affiliated with LPL's RIA, left his former employer Principal Financial Group to start his own firm, Retirement Plan Analytics, in Charlotte, N.C., with the help of Ronald Blue.
Timmerman says that with plan cost benchmarking, fee benchmarking and fiduciary governance training, and other services, the firm can offer a client with a small $2 million 401(k) plan like the dental practice he met with this week the same level of services traditionally reserved for billion-dollar clients.
Few others in the industry would have that kind of a toolbox, Timmerman notes. "That is what Ronald Blue wanted to be able to offer" to all its clients from those with $1 million plans on up in size.
It remains to be seen just how attractive LPL's platform may be to other large RIAs.
Brent Brodeski, CEO of Savant Capital in Rockford, Il., says that Savant Capital has built its own retirement platform that is more robust than LPL's and that, in theory, could have vied for Ronald Blue's business.
"This is one of our core competencies," Brodeski says. "We assume a lot higher fiduciary role than what LPL offers."
Indeed, of Savant's $4.5 billion in AUM, he says, roughly $670 million is in its plan sponsor business. Twelve of the firm's full-time employees work exclusively in this area, he adds.
"Most firms couldn't or wouldn't do that," he says.
Brodeski says that the lines between competing firms in general "are blurring over time." In fact, they market their platform to other RIAs, although he's not looking for explosive growth.
"We're not interested in working with hundreds of relationships, but finding a few key partners who can really provide a more robust platform," he says.
'LPL IS NOT THE ADVISOR'
In partnering with the largest independent broker dealer, Birley says, Ronald Blue knew they were incurring at least some risk, if only in perception.
"I think the bigger companies you work with the more headline risk you will have," he says.
By working with a trusted advisor in Timmerman and using only LPL's platform, Birley says that Ronald Blue is confident the partnership would offer an exponential increase in its ability to serve clients, without any meaningful downside risk.
"LPL is not the advisor. They are the platform," he says. " As long as you are making the best decisions for the client, then we don't have too much of a concern about who we are going to work with."
Charles Paikert contributed to this story.
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