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Portfolio > Portfolio Construction

LPL Launching Robo-Advisor This Month

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Rob Pettman has announced that LPL Financial’s robo-offering, Guided Wealth Portfolios, will launch this month.

Pettman, executive vice president of product and platform management, said during Tuesday’s general session at LPL Focus in Boston that the first wave of invitations to the digital platform will go out Aug. 15.

(Related: Pros & Cons of LPL’s Move to Add Virtual Assistants: FPPad’s Winterberg)

With Guided Wealth Portfolios, investors will have access to a low-cost technology solution with the personalized planning, service and advice of an advisor, who remains at the center of the relationship, he explains.

“We’re kind of the first at this, from a broker-dealer standpoint,” Pettman told ThinkAdvisor. “I understand that some of the custodians have it, but we’re going to be one of the first broker-dealers to be live with a tool like this that’s delivered by independent advisors. There’s going to be things we learn along the way to enhance it and make it better fit in their practice.”

The platform has been in pilot since last year and, according to Pettman, it already has about $14 million in assets under management and more than 700 investors.

During a briefing with reporters, Andy Kalbaugh, managing director and divisional president of national sales and consulting, said LPL tried to make sure the platform had a “thoughtful launch,” so LPL’s affiliated independent advisors could help shape the end product.

“We built it to help solve a need that they saw, to deliver an efficient portfolio construction and segment their client base,” Kalbaugh said. “We wanted them to be a part of the pilot, so that they could say ‘that works,’ or ‘let’s enhance that,’ or ‘that may need some improvement’ and we’re getting that. We’re now at the stage where we’re comfortable [with] where we are — based on what we’ve seen [with] the feedback and the tests, and we’re ready to go live later this month.”

In the pilot phase, Pettman said, LPL learned a lot about the user interface, the purchasing process and how advisors help onboard investors. The IBD also discovered that the robo platform doesn’t appeal to only younger generations of clients.

According to Pettman, the average age of the investor on the pilot platform is 41.

“So first lesson learned is it’s not just for millennials,” he said.

Some advisors in the pilot “really embraced” the platform as an extension to their practice, according to Pettman. “You’ve got a couple that have over 50 accounts already and they’ve been going at it for a couple months,” he said.

According to Pettman, the average age of the investor on the pilot platform is 41.

For advisors, the platform provides a way to grow their practice by reaching new markets and to operate more efficiently to be able to scale their business. For example, Pettman said it enables advisors to help small clients.

“Without the platform, [advisors] might not have engaged or proactively gone to help the small investor,” he explained. “The platform affords them the ability to have scale. And the overall cost that a small investor might have on the infrastructure is significantly less now, because of the efficiencies that the platform provides.”

The platform also gives advisors more time to work on their practices, according to Pettman.

“It’s in constant communication with the investor, letting them know what’s going on with the account, what’s going on with the market, trades that happen when there was a tax optimization …,” he said during his general-session speech.

As a result, the robo offering “takes out a lot of the low-value calls [between the advisor and client] but leaves the high-value calls,” Pettman explained. “Ultimately that helps advisors free up some time to be able to help new people.”


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