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LPL CEO: The crucial pivot advisors will have to make

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BOSTON — Advisers must use automation and behavioral management alongside portfolio and planning services to be competitive in the future, according to LPL CEO Dan Arnold.

“If you’re providing [all three] then your pricing is going to be a whole lot stickier,” Arnold told reporters on Monday at the annual Focus conference.

“Maybe I have to discount my pricing 10% to 15%. But if we can give [planners] automation that helps them scale their practice, maybe I could handle 30% to 50% more clients. We’d all take that trade.”

Arnold gave hints about the firm’s plans for the coming years, discussing both an upcoming app for clients and the possibility of an Alexa-like gadget for advisers.

The chief of the largest independent broker-dealer offered a hopeful view amid gloomy predictions of lower adviser headcounts, downward pressure on fees and robots replacing humans. Advisers will have to “expand the value proposition” by going beyond their traditional services, though, Arnold said.

“The third scenario that I really like is when advisers are doing portfolio construction, they’re doing planning, but they’re also doing the behavioral management piece of it, where I’m spending time making sure we built a plan and I help the client execute it,” Arnold said.

He added, “That’s where we see this pivot, this evolution for advisers, where we want to make planning more mainstream.”

LPL recently unveiled a no-load mutual fund platform slated for next year, along with lowering fees and adding more investment options in its separately managed accounts. The app will show clients a live scorecard based on their goals, and Arnold gave his support for an automated service for advisers.

Asked about the prospect of advisers one day using an Alexa-like virtual assistant to help them manage their practices, Arnold gave a thumbs up.

"I think whether it's that or whether it’s a similar type of technology where you see data meeting artificial intelligence ... that's where we see real opportunity to continue to evolve this business and reshape the value proposition."

LPL wants to connect data and artificial intelligence “to create an enhanced investor experience," he added.

Executives’ other plans for 2018 and beyond include a focus on training new advisers, in addition to the firm’s traditional recruiting. LPL will next year begin a pilot experiment with as few as 20 to 30 advisers designed to identify the best prospective advisers and connect them with mentors, Arnold said.

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