LPL goes on a charm offensive. Will it work?

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LPL is sweetening the deal for financial advisors.

In the most recent LPL fourth-quarter reporting call, CEO Dan Arnold took a strong “we take care of our advisors” stance, announcing a number of initiatives aimed at providing the company's advisors an enhanced suite of resources and tools. The goals stated were simple ones — provide LPL advisors the necessary support to better manage their businesses and improve the overall LPL customer experience in the process.

This flurry of changes makes it apparent that advisor dissatisfaction and attrition have become of primary concern to LPL. While LPL has long been recognized as the leading independent broker-dealer, other firms have been nipping at LPL's heels and making inroads into its once solid territory. This has made it necessary for LPL to redirect and recalibrate to remain competitive in a financial services market that is moving away from the sometimes paternalistic large firm model into the more accountable, advisor and customer relationship focused business paradigm.

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Planners ranging from sole practitioners to the largest OSJ enterprises welcomed the CEO’s comment that the firm's culture was not aligned with its strategy.

To that end, LPL has publicized a number of recent strategic moves to better align with their new advisors-first agenda. In December, LPL bought asset allocation software firm AdvisoryWorld for $28 million and has pledged greater investment overall in emerging technology in 2019. Soon they will be launching a goal-centric planning solution on ClientWorks geared toward improving organic asset growth and advisor service. There is also a new LPL fee-only RIA offering on the horizon and the company is migrating away from a call center model to a case manager structure for handling advisor requests and inquiries.

Those recent announcements were not LPL's first effort to entice advisors. In recent months we have seen more than a few former LPL advisors move back into the LPL fold as the firm strategically began offering one of the most aggressive recruiting packages of any IBD. A big pay day has made it easier for some to forget LPL's perceived transgressions like advisor dissatisfaction and higher, ongoing internal pricing for things like errors and omissions, trading costs, and compliance and oversight.

Competition for advisors and their client assets has been one of the best things to happen in the IBD space. LPL, Cetera, AdvisorGroup, Ladenburg Thalmann and their sister firms are all vying for the leadership stake. Those who talk about private equity being bad for the businesses or firms in which they invest couldn't be more mistaken. The IBD space has proved to be even more desirable than the retail industry, in particular, because of the money that private equity is bringing to the table.

Private equity firms recognize why they should be in the IBD space, where more advisor flexibility, better technology, and better revenue rule the day. It behooves retail firms to take note of this. The time will soon come when advisors recognize what the private equity firms already have — and follow the money to greener IBD pastures.

The dawn of a new financial services industry has long been in the making — one built on transparency, advisor support, accountability and customer satisfaction. More large firms like LPL will be strategizing their next moves to retain the power positions to which they have become accustomed. It is either that or run the risk of suffering extinction as the rest of the industry moves forward in a new direction.

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Independent BDs RIAs Private equity Independent advisors Financial services industry Fintech Dan Arnold LPL Financial