In his welcoming speech to the 5,000 attendees at LPL Financial’s annual conference Monday in San Diego, National Sales President Bill Dwyer took a look back at the past two decades, but then looked ahead to what he believes will mark advisors’ success in a coming “Golden Age of advice” over the next 20 years.
At LPL, which Dwyer joined 20 years ago in July, “we’ve always tried in downturns to capture more market share and invest in new competencies,” and highlighted how LPL will help its advisors—and itself—enjoy continued success by focusing on the retirement planning space, on serving the high-net-worth client and on helping its advisors run more efficient businesses.
He told the audience, which included 2,700 of LPL’s 13,000 independent contractor rep force, that those investments in the past included launching a corporate RIA in 1992, making LPL the first “full-service firm to have advisors managing money on a fiduciary basis,” and its decision to become self-clearing in 2000, which has produced “efficiencies for us and our advisors,” citing a 2010 PriceWaterhouse survey sponsored by LPL which found that its reps had higher pretax income per owner and significantly higher profit per client than their competitors, part of which Dwyer attributed to LPL’s self clearing status.
“Today, we’re doing the same thing,” Dwyer said in a telephone interview Tuesday (reporters were not invited to the conference). While he said that “other firms are hunkering down, we’re adding competencies in the advisor space.” One of those competencies, via an announced partnership with Morningstar and through its acquisition of National Retirement Partners in July 2010, will “allow advisors to give advice on a fiduciary basis” to retirement plan participants.
“We introduced this to our advisors at the conference,” Dwyer said, and he believes that by “the spring of 2013, we’ll really hit our stride” with the offering, once LPL gets the cooperation of plan providers and plan sponsors.
Noting that 50% of the 4 million accounts at LPL are qualified accounts, he said that providing advice to plan participants in an efficient way is a “huge opportunity.” That opportunity resides not just among boomers, he believes, but also in the “echo boomers,” that cohort of workers who he said “will invest in their 401(k)s much differently than the boomers.” LPL is also finding success, Dwyer said, with its previously announced Rollover Results program.
If the retirement plan participant initiative is designed more for LPL advisors’ traditional sweet spot of what it likes to call ‘Main Street” investors, another investment is focused on the other end of the net-worth spectrum: the high- and the ultrahigh-net-worth.
Partly through its acquisition earlier this year of Fortigent, “we’ll take that up another level,” he said, noting that “50% of the revenue coming into” the overall advisor space in the next few years will come from HNW clients (LPL announced in January that it would acquire Fortigent and closed on the acquisition in April.) In addition to Fortigent’s alternative investing and reporting capabilities, Dwyer said, LPL is “building out our alternatives research” for its advisors.
That’s particularly important, Dwyer says, because LPL’s “research folks are saying to prepare for a long-term bear market in bonds,” along with “predicting single-digit returns in equities,” in addition to the likely bigger tax bite coming out of Washington on capital gains.
“It will be a different world for advisors to operate in” over those next 20 years, Dwyer (left) said, in which advisors will need to “manage more relationships, because they won’t see market gains” driving their own growth or their end clients’ portfolio growth.
Advisors will thus have to “more effectively communicate with clients and manage more relationships; we’re throwing significant resources to help” advisors do just that, Dwyer said. “If I’m going to have to manage two to three times” the number of clients, he said, then advisors will “need to be leaders in social media,” citing “every survey I see [finding that clients want] more transparency, information and communication, but I don’t want to run my own money.” LPL, Dwyer says, is “giving advisors the tools to do that.”
Dwyer said that “growth and execution have driven this business; moving forward, the most efficient businesses…will be the most successful—that’s true among advisors and at LPL.”
When asked how many potential recruits were attending the conference, Dwyer said that while it’s not designed as a major recruiting tool, about 30 advisors who are “90%” of the way toward affiliating with LPL were in San Diego. Those potential recruits say that while they “knew about the breadth” of LPL’s offerings, “what I came for was to see how other [i.e., existing LPL] advisors feel about the firm.”
What they didn’t expect to experience, Dwyer said, is “the positive energy of the advisors, which is not true at all firms” and “the willingness and openness to share.” Among RIAs at custodians, Dwyer said, “there’s more diversity,” while at other broker-dealers, there’s often “more competition” among advisors. But LPL, Dwyer said, is “the true melting pot of the industry.”