BOSTON — Advisors from LPL Financial are facing pressure on three fronts: They must adapt to quick-changing technology, comply with an uncertain regulatory structure and live with reduced fees.
The mix makes for a challenging time, advisors said at the Focus conference held earlier this month by LPL, the nation’s largest independent broker-dealer.
Technology has transformed the industry, bringing innovations such as robo-advice and tools that ease advisors’ administrative burdens and help them adjust to the Department of Labor’s fiduciary rule. Like other BDs, LPL has sought to adapt, spending $77 million in 2016 on technology designed to cut down advisors’ work through outsourcing, automation and an upcoming app.
Advisors with LPL join a chorus of those arguing for optimism amid tech-induced turmoil, even as they admit the difficulties moving forward.
Advisors are grappling with “so much disruption and change because what we are required to do now is so much more,” says Sarah Carlson, founder of Spokane-based Fulcrum Financial Group. She praises LPL’s new robo offering, Guided Wealth Portfolios, for helping advisors serve smaller investors like their clients’ children.
“You’ve got to take on that child, but that child has $10,000 in assets,” Carlson says. “It takes just as much effort to help someone who has $10,000 as it does to help someone who has $1 million.”
MORPHING AND EVOLVING
Carlson and several LPL advisors speak at least once a quarter with Brad Hearn, LPL’s executive vice president for business consulting. He and other execs shared the firm’s tech plans at the conference, in a presentation marked by applause when they revealed streamlined client account statements.
“Our industry has evolved and morphed. You spend a lot of time on those non-revenue generating activities,” says Andy Kalbaugh, the firm’s divisional president for national sales and consulting. “I do think independent advisors have more challenges to work with, because they’re their own bosses.”
Advisors’ anxiety about the future has fallen in the past year, says Kalbaugh, adding that the firm is working “to give them more arrows to work with.”
LPL last month announced a no-load mutual fund platform to go with lower-cost separately managed account services and with Guided Wealth Portfolios, which is slated for launch later this month.
LPL is “meeting the challenge," according to Albert Cavazos, the president of San Antonio-based AC Financial. He and his daughter Alexandra, a two-year employee of the firm, remain confident about advisors’ future viability, they say.
“We’re very excited about the services that we offer and the value that we can bring to our clients’ lives,” Alexandra Cavazos says. “A personal connection with an advisor is invaluable compared to technology alone.”
BEWARE CHANGES TO SOFTWARE
Lower fees have taken a toll on both the industry and LPL though, says Carlson. She notes that she now takes on training new employees herself rather than relying on any costly internal training like the three-year program she completed at the start of her career.
LPL advisors’ new ClientWorks customer management software, in the process of replacing the Internet Explorer-based Branchnet, is a “more versatile” program, according to Carlson. But not everyone will relish that shift, she says.
“There are some people who don’t embrace change easily,” Carlson says. “It’s kind of like how Microsoft changes their software and how that’s received.”