LOS ANGELES — In a risky recruiting strategy that could invite lawsuits, advisor Ron Carson is openly trying to lure advisors away from LPL Financial, the largest U.S. independent broker-dealer.
His sales pitch includes a nationwide speaking tour, in which he tempts advisors with a new, streamlined technology platform.
For more than 20 years, Carson had been LPL's top producer, but he left in early 2017 to join another large IBD, Cetera Financial Group. Now, he has crafted a personal appeal to entice other LPL planners to follow suit. He started delivering the message at the first of 13 day-long advisor workshops planned to take place around the country.
"I can't tell you how great it is to talk to you, fellow LPL-ers. I've missed you," Carson says in a video posted last month on LinkedIn, promoting the first conference in downtown Los Angeles, held on January 26. "I was at LPL for 28 years. I had some of the best memories ever. I built a great business, but the time came where I had to move on for the benefit of my existing clients, internal stakeholders and the people I needed to serve.”
“I want you to come and find out why I left LPL,” he adds. “I also want you to come and find out why our partner firms are growing nearly 40% a year in [assets under management]."
Even before Carson launched the public appeal, numerous advisors reached out to him last year, says Joe Steuter, Carson's vice president of marketing. Of 20 firms that joined Carson last year, 11 came from LPL, says Steuter. Carson has 45 affiliated firms in more than 60 locations nationwide.
The strategy is also risky, one recruiter says.
"You kind of set yourself up for potential lawsuits when you do targeting like that," says Jon Henschen, who helps place advisors with IBDs and who thinks Carson is walking a thin ethical line. "It’s a political hot potato."
However, given that a year has elapsed since his departure from LPL, Carson has become more free to talk about his former IBD, notes Steuter.
"There are a lot of things Ron couldn't say last year," he says. This year, by contrast, "Ron isn't afraid to speak to why he left LPL. He would like to be able to tell that story."
LPL did not respond when asked if it is planning any legal action against Carson. When a reporter asked Carson, during the Los Angeles conference, if he was concerned about being sued, Carson's executive vice president, Aaron Schaben, shot him a look that seemed intended to warn him off the subject.
"No," Carson said in response, "We believe in the law of abundance."
Carson quickly moved on to a discussion of the $52 million his firm has spent in developing a new technology platform over the last five years.
One independent expert, who viewed a demo at the request of Financial Planning, called it a potential game-changer.
"What they did was brilliant," says Brian Edelman, a cybersecurity expert and founder of Financial Computer in Bloomfield, New Jersey, which counts single-advisor RIAs, custodians and broker dealers among its clients. "I'm beyond impressed."
Carson says his firm wanted to replace the "brittle" technology stack that’s common at "broken dealers" like LPL, with a new and highly functional offering that works like a "genie in the bottle."
The intent is to optimize all the features of products offered by custodians and other third-party vendors and tie them together in a client-facing program that syncs directly with the back office. That way, advisors won't have to go to multiple online portals to log into separate systems that perform different tasks, Steuter says. Right now for example, Salesforce is fully integrated with heightened features not available elsewhere on the back end, along with Cetera's platform and those of custodians Fidelity and TD Ameritrade, and Orion Advisor Services' rebalancing tools, Steuter says.
"We haven't gotten there yet with eMoney," he says, "but we are working on that this year. Our next phase of this whole thing is to go out to those integration partners and get their technologies to speak with ours."
The end result puts the client prospecting, onboarding and management process into one screen that includes an interactive "Value of Relationships" timeline that allows clients to dynamically review milestones they have achieved in working with their advisors — like putting kids through college or buying a home, Steuter says. "It reinforces for the client that we are in sync with their financial goals," he says.
About 40 people who attended the Los Angeles conference watched a demo of the product.
At least four among them were advisors affiliated with LPL. All asked to remain anonymous for fear of repercussions from LPL. Three said they were impressed with what they saw, but would not leave LPL for Carson for a variety of logistical reasons, including the hassle of re-papering clients. The fourth advisor said he was in the process of choosing between Carson, another large IBD and a prominent RIA.
One advisor in the former group said he wished he could afford to move, if only to avoid LPL's clunky technology, which forces advisors to toggle frequently between various software programs and online accounts.
For example, trying to use Riskalyze, a third-party software that helps build risk-managed portfolios for clients, with LPL's Internet Explorer-based BranchNet and its client management software, ClientWorks, is a chore, he said.
"Because it doesn't integrate directly into BranchNet or ClientWorks, we have to export [data] into an Excel file and then import that Excel file back into Riskalyze, after deleting what was in there," the advisor says, adding that LPL "tells us it's integrated and it's not."
LPL did not respond to these and other criticisms of its services.
The advisor who said he is contemplating a move to Carson said the new platform's streamlined interface "is as good as I've seen. I know we [at LPL] are not using Salesforce to its maximum capability," he said.
With Carson's offering, he said, "the prospect coming to the website, going into a questionnaire and risk analysis, answering all these questions and taking that data and automatically pre-filling those application forms — I've not seen that before. "
Although the technology was built to give Carson an edge, Edelman also says it could have a broader impact.
"They didn't have to spend $52 million to help the industry, and that's what they did," he says. "I think this was really passionate and thoughtful and could have a profound impact on the future of the business, especially as relates to this fear of competition with robo advisors."
Given the personalized way the CRM captures the advisor-client relationship — including the focus on shared milestones — over time, "there's no fear about robo advisors," Edelman says.
LPL's size, with more than 15,000 affiliated advisors and $615 billion in AUM, prevents it from adopting such an advanced tool, Carson says. By contrast, Carson's partner firms collectively employ fewer than 200 advisors who manage more than $4.8 billion in AUM.
During conferences held over past years, LPL has acknowledged problems with its technology and promised to make fixes.
Those promises did not enable Carson Wealth to come into compliance with the minimum global standard by which firms report investment results, known as GIPS compliance, Carson says.
"At LPL we were not able to get GIPS compliant," Carson says. LPL's "brokerage statements would not reconcile with their advisory statements," which would drive clients crazy.
He estimates he lost $200 million in client assets over a five-year period over the GIPS issue, alone.
Inspired by the convenience and predictability that Amazon and Netflix are providing for customers, Carson says he set out to give consumers and advisors the service they are "starving for."
"We are making [advisors'] lives simple," he says, "so they can have a greater impact on the people they serve."
Additional reporting by Charles Paikert.