Gary Gallagher jokes that while he recently was given a new title that's longer than the old one he held at LPL Financial, "that doesn't necessarily mean I'm any more important," though one could argue that, modesty aside, Gallagher's job as point man for the largest independent broker/dealer's RIA custody arm is quite important. Now executive VP strategic programs and support services at LPL, Gallagher, the former senior VP at Fidelity's RIA arm, spoke to Group Editor-in-Chief Jamie Green by telephone in October.
Have the prerequisites for what makes an advisor successful changed since the market meltdown of 2008? We like to say we're an ennabling partner to the RIA community. There's more that an advisor has to think about now, because of the markets and the noise around clients, but I see four areas that successful RIAs are focusing on.
The first is that they need to have flexibility in how they operate [their business models]. RIAs have had to find a way to serve the widest possible range of client needs, and so we see that in the ability to support both fee-based and commission-based opportunities. So these clients are looking to their advisor for support and guidance, but also to meet a wider range of need sets--not just the value of their portfolios, but also, Do I have the right insurance? Should I be thinking about guaranteed income? The RIAs have to be in a place where they don't have to pick sides to meet their clients' full need set.
Secondly, now that they've gotten through the storm, they're focused on growth. The most successful RIAs are focusing on marketing, and one of the ways LPL has been doing that is with our Clients First marketing support program. We've used our entire product sponsor universe to get their best practices ideas into a program to help advisors grow their business--everything from how to get leads to establishing a formal referral program, to getting out and branding and marketing themselves. It's not just the smaller advisors, it's the larger ones, too.
The third is focusing on the bottom line--how they can better manage their firms for efficiency, to get the most out of their people resources and their technology. We've supported that through our platform which was designed to take the complexity out of advisors' offices, so on performance reporting and fee billing--we do that for them at scale, helping them redirect their focus to client-facing needs. Our hybrid platform makes it easy for them.
The last is an increased focus on risk management. Advisors are having to not only make sure that they're clean, but to reinforce to clients that they're not Madoffs, that they're supported and have a strong compliance [culture]. Advisors are also using that as a selling point. We help through our dedicated compliance resources, but also an automated compliance workstation that advisors depend on to make sure they're doing everything they can.