BOSTON - The future of the investment advisory industry depends on reducing the cost of doing business, said Mark Casady, Chairman and CEO of LPL Financial, in the opening keynote at the Money Management Institute’s 2011 annual convention, which kicked off on Wednesday in Boston.

Casady wasn’t just talking about lowering the direct costs to advisors on items such as technology, but also reducing advisor and money manager fees to their clients.

“It’s a business strategy that makes a difference,” he said.

By cutting fees, advisory services can be made available to middle income Americans, who may have $500,000 to $1 million to invest, as opposed to the $25 million or higher that high net worth individuals have. By using more efficient technologies, Casady explained, advisors can drive down costs.

“In the past we only could work with the very affluent, but by cutting out the number of processes we are reducing costs, which are a big part of the future of the industry," he said.

Casady suggested giving clients a choice of products on the advisory platform, such as variable annuities. Eighty percent of sales of variable annuities, he added, come from advisors not using them currently.

Meanwhile, a big concern in the advisory space is the graying of the industry, since most advisors are in their 50s. With a large number of baby boomers getting ready for retirement, there are a whole lot of assets at stake. And yet there are not enough advisors in the world to handle the influx of clients. New blood, younger advisors, and diversity are the answer. 

“The industry has been flat in at least the last decade,” Casady said. “There are about 330,000 retail advisors and 15,000 RIAs. There is an incredible need to make advisors more efficient in what they do so they can handle larger books of business and bring in new people.”