So much for targeting middle-class investors.
LPL is shuttering NestWise, the once-hyped unit that was launched just 16 months ago to serve less affluent customers, and has laid off 40 NestWise employees. Among them is former LPL president and COO Esther Stearns, who was serving as NestWise's chief executive.
The unit had not met expectations for growth, says LPL spokeswoman Betsy Weinberger. The unit reported only 120 clients and $130,000 in assets under management on a Form ADV from last October, although Stearns says those numbers are outdated. (She declined to provide current figures, however.)
NestWise, which currently serves clients via online video connections and in-person meetings, will cease operations on Sept. 1. There are resources at LPL that will continue to support those customers, Stearns says. They are all getting information on how that will work.
Of course, Im sad, says Stearns. I was loving being a part of trying to create this new solution. My belief is that our industry can and needs to and should be doing a better job at serving the middle class. There is a crying need.
Stearns joined LPL in 1996, becoming COO in 2004 and then president of the company in 2007. She left that role, she said, for the opportunity to build a business serving middle-class clients, many with less than $100,000 to invest.
LPL has made it clear that the company is focusing resources back on its core mission as a company, Stearns says, referring further questions about the shutdown to LPL. They are going to have to represent their decision-making process, she says.
Weinberger declined to answer several specific questions on that subject, but wrote in an email: The NestWise program was extremely valuable in terms of developing workflow technologies and learning about advisor development and training, However, LPL Financial believes financial resources earmarked for NestWise can be more effectively deployed in other areas of the business, and will be redeployed into our core business consulting activities for both advisors and institutions for training development.
The move comes shortly after LPL brought in a number of new executives to help the company, now the fifth-largest financial services company nationwide, improve its overall services to advisors.
LPL has urged NestWise employees to apply, if interested, for jobs elsewhere at the company. Stearns says she is leaving LPL.
NestWise was launched to compete against middle-class planning services like LearnVest and Edelman Financials Edelman Online.
Without naming those specific firms, Stearns says she greatly admires other ventures out there that are trying to deliver planning services to average Americans. Im open to ideas, she said. I really want to see how the thinking evolves here. Im really supportive of those companies who are still trying to figure this out.
As recently as March, NestWise released the results of a survey showing that nearly half of all middle-class households spend all their income every month. Our industry has to a great extent underserved this demographic, but were doing them a great disservice, Stearns said at the time. There is a growing need for access to high quality, personal financial advice.
Stearns now sounds slightly shell-shocked at the abrupt end of both LPLs strategy to serve the middle class, as well as her 17-year career at LPL.
I really have no specific plans, she says. Somebody said to me yesterday that there is always a way to help people. Ive got to find the right one for me. Im still mission-focused on serving middle class Americans, but I dont have any specific plans right now.
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