In April, BlackRock added independent broker dealer LPL to the roster of large financial firms signed up for its FutureAdvisor digital advice platform.
Though the firm had the resources to build its own digital platform, LPL Chief Information Officer Victor Fetter says it weighed a number of factors before deciding on the asset manager’s digital offering — a process that he adds every firm has to engage in.
"Automation is efficiency, quality and cycle time," Fetter says. "The reason that's important is it gives our advisers time back. If they can save staff time and go shake the trees and grow their business, we all win."
In the first part of an edited transcript of the interview, Fetter explains LPL's decision to add robo advice to its network.
What's LPL's current approach to technology?
We've been on a technology journey for a number of years now and I think it's important to note that it has really been customer-led. The reason I say customer-led is that we are approaching technology differently, in that we want the advice, the feedback, the counsel, of our advisers and we want to be collaborative in that process.
Automation is efficiency, quality and cycle time. The reason that's important is it gives our advisers time back. If they can save staff time and go shake the trees and grow their business, we all win.
ClientWorks is our digital wealth management platform, and ClientWorks is the replacement for a solution we know as Branchnet. It is the core platform our advisers use to deliver advice. We have about 6,000 advisers that are currently participating in that platform today, with various features that are turned on and off for certain number of them, because, again, being customer-led gives us an opportunity to get their feedback around what's working, what's intuitive, where we can refine some things, and really when we get to next year we anticipate that being fully rolled out.
Then when you think about robo, you think of robo as a complementary offering to everything else we do. When you think about the prospects of automated advice, it's not going to be for every adviser. It's going to be for certain segments of advisers that are interested in that and having a complementary service. They may want to have it for some segment of their clients, but you may have other advisers who say, "Look, that is just not my model. I am serving a different audience, and I am going to elect not to have an automated advice offering." That's something we are working on.
We have been in discussion about the automated advice platform with our advisory council for some time now. They have given us great feedback on a number of solutions that we put forth. Never in there was there a failed investment where we tried to build it ourselves.
Why add a digital advice platform?
Look at areas like processing transactions. The industry at large years ago was faxing forms back and forth. Now an e-signature is coupled with an automated platform and you can see the velocity and the quality of those transactions going through the system much faster. Bringing those tools into the marketplace has freed up an adviser’s time.
If you look at where we’re going, you see that coming through in the automated advice platform. You see us overhauling our account open process — again, just trying to make the process of opening accounts more seamless — and you see that coming through the engagement portals we make for our advisers to engage with our investors. The online portals, you see things happening there around how we show performance results, how we show mapping against goals, how we report on performance and ultimately go green, all through that lifecycle.
You’ll see a lot of evolution happening. I think the opportunity for advisers is they’ve got to embrace those tools in their business, and what we’re doing at LPL is walking alongside them to say, this is how you can change your business.
We have something called technology ambassadors and we’ve asked advisers to name an ambassador that can keep up with marketplace technology, and more importantly what we’re doing at LPL so they can reap the benefits of that in their practice. We do that with training, we do that through our business consulting team; all those resources come to bear to make sure all our advisers are maximizing the tools that are available.
Is it difficult for advisers and financial firms not to see technology or any innovation as a threat?
We’ve proven through our big data and analytics work in-house the correlations between adoption and utilization of technology and business growth, and that’s been pretty helpful to help advisers understand — I’m not sure if you can make an exact linkage, but if you can say, ‘Look at the broad book of business and here’s people we see using technology to its maximum, and here’s what their growth pattern looks like, could you join in the same journey?’
Quote"You’ll see a lot of evolution happening. I think the opportunity for advisers is they’ve got to embrace those tools in their business."
We did something recently that we call the adoption index. Everybody knows their credit score, and everybody knows , “How much do you need to retire? What’s your number?” I said is there a way that we can translate that into, ‘How efficient your practice is in using technology?’
We took a number of our capabilities and we matched them up, and said, “Based on how well you’re using technology, this is your index.” What that does is give advisers a benchmark for their offices and you see advisers rallying around this and setting new goals for their own practice efficiency. They can take advantage of technology in a different way and free up that time and grow the business.
Is that what you recommend for advisers who might feel some trepidation or confusion about what’s happening in the industry?
It is. We want our advisers to feel like they’re being supported, and we could’ve picked many different adoption measures. We chose four or five just to start the conversation, and I think that it is important. I think advisers are overwhelmed. You hear about robo advice today, or this fintech, or this startup, or this solution; how many CRM providers or goal-plan providers are out there? They get overwhelmed, so what we want to do is say, “We don’t want you to be the chief technology officer; we want you to give good wealth management advice.” That’s the role we want to play; take that complexity out and give them a simple platform to run their business.
As a technologist, would you tell advisers that they don’t have to be chief technology officers, but they do need to be knowledgeable about technology from the practitioner’s perspective?
Oh yes, they have to be knowledgeable, and we fully support them in being aware of what’s going on. What we’re advocating is that we are going to bring the solutions in an integrated fashion to help you maximize your business so that you don’t have to figure out how to stitch it all together yourself.