LPL, the country’s biggest broker-dealer, had several key messages for the thousands of advisors attending its Focus 2015 annual conference in Boston during its last final general session Wednesday morning. Even advisors who are not affiliated with LPL may find them useful.
1. Don’t fight the robo.
A robo-advisor offering is “something we should rush to, not rush away from,” said Robert Fragasso, of Fragasso Financial Advisors, who participated in one of a series of 4-minute, two-person relay panels.
Robo advice “can be a very productive part of our practices,” said Fragasso. He described it as an entry-level product that can attract more clients who could potentially want personal guidance in the future.
Robo advice for advisors is like LegalZoom for attorneys and TurboTax for accountants: potentially the start of a longtime, deeper relationship, said Fragasso, who is participating in LPL’s robo pilot program, which will begin within the next 60 days.
He named three categories of clients who may be attracted to a robo-advisor offering:
- The do-it-yourselfer who is less affluent and younger than the traditional client
- The grown children of current clients (“isn’t it better that we service them?”) and
- The participant in a retirement plan, which would also provide added value for plan trustees
2. Advocate for change in DOL’s proposed fiduciary rules for advisors.
“You have the power,” said Peggy Ho, head of government relations. “Join us and strengthen our voice. Join the LPL PAC… Email Congressional members. Have your clients send emails to Congress.”
The current Department of Labor proposal “represents fundamental change in how we deliver advice to our clients and how our advisors inform investors,” said David Bergers, LPL’s general counsel. The proposal will “prevent advisors from giving advice in the way investors need it“ and reduce investment choices for investors, said Bergers.
Under the proposal as it’s currently written, investors could not hold alternative investments such as nontradeable REITs and shares of business development companies (BDCs) in tax-free retirement accounts. In addition, if their retirement account is held at a brokerage they could not receive investment advice from that advisor (if he or she is not a registered investment advisor) unless the advisor signs a contract, along with the investor, stating a commitment to put the client’s best interest first.