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LPL Announces Robo-Advisor Plan

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LPL Financial is joining the growing number of firms that will be offering a robo-advisor product for advisors in its network.

“We want to deliver a robo solution as a complement to your practice,” LPL President Dan Arnold told the crowd of 7,000, including 4,000 advisors, at the firm’s Focus 15 conference in Boston.

The firm is starting with a pilot program involving 20 advisors that it will roll out in the next 60 days and will partner with a third party, which it did not identify, to provide its technology interface and product solutions.

Arnold described the robo-advisor offering as “a complement” to advisors’ existing practices that will expand their portfolios, allowing them to reach more markets and the next generation of clients.

Arnold said robo-advisors would not replace financial advisors but would “be a disruption to our pricing.” To that end, he announced that LPL, the country’s largest independent broker-dealer, will eliminate the strategist fee charged for all LPL Research models in MWP — Model Wealth Portfolios — in early 2016, allowing fee advisors to offer LPL Research model portfolios for that platform at a 15- to 20-basis-point discount, said Arnold.  In addition, LPL announced that the IRA maintenance fee will be removed from its MWP and OMP platforms in early 2016 as well.

These fee eliminations will “lower the cost of accessing quality financial advice for investors and enable financial advisors to provide their services more cost-effectively,” said Arnold.  “These changes are a win-win for both advisors and their clients,” added Arnold. 

LPL is now 2.5 years into updating the technology backbone of the firm—replacing hardware and software and opening new data centers, its Chairman and CEO Mark Casady told the audience. LPL has spent $100 million so far on this transition and has “made incredible progress,” said Casady.

“It’s all about ClientWorks,” said Casady, referring to the firm’s enhanced and integrated cloud-based next-generation platform, helping advisors be more efficient and productive in growing their business.  ClientWorks is currently in its pilot phase with more than 300 advisors actively using it.

Ultimately LPL expects to transition from having 15% of its operational processes automated to 85%, said Arnold.