When LPL Financial, the nation’s largest independent broker-dealer, sought to improve its highly successful Model Wealth Portfolio platform, its advisors made a couple of requests: make it easier for us to select securities and to rebalance our client portfolios.
John Moninger, LPL’s executive vice president of Advisory and Brokerage Consulting Services, says the new offering certainly accomplishes this.
“The securities selection and rebalancing is off your plate," he said. "We think it’s a really unique efficiency game without taking (advisors) out of the game.”
To that end the firm added more strategists to the platform – including Morningstar, J.P. Morgan and LPL’s own research arm – and dropped the minimum investment from $100,000 to $25,000.
The smaller buy-in is enabling high net worth clients to more finely diversify their holdings across a variety of investing themes from tax efficiency to global investing to tactical investing, which involves more short-term trades. Thus far, LPL has not seen this new offering substantially drop the size of accounts on the platform.
“We were running maybe roughly $225,000 to $250,000 in terms of the average account sizes being used,” Moninger said, adding that he has seen this average size drop only about $10,000 with the new offering. “For the most part, characteristics are holding up which is beautiful. It’s not cannibalizing the fact that bigger accounts are coming in.”
The most exciting piece of the new offering, in Moninger’s view is that, it frees up advisors’ time. Moninger says he’s not sure how many strategists ultimately will be offering on the platform. LPL wants to keep the number somewhat restricted so as no to confuse and overwhelm investors with a huge number of choices, he adds.
“This is really about investor content first and helping advisors understand the great choice they have, but not creating complexity,” he said.
Right now, the platform offers eight strategists using investing themes that will be readily understandable for clients.
“We said we have to speak in client language and build toward client needs,” Moninger adds. “You gotta get the client conversation right. This allows the adv to very explicitly have a conversation about how do we solve for the things that [clients] are most worried about today.”