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Technology > Marketing Technology

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

By Janet Levaux

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At LPL Financial’s yearly conference in Boston this week, CEO Dan Arnold and other executives have kept advisors (and reporters) on their toes with a series of important technology-related announcements.

Monday’s news focused on a new mobile app for clients with a rollout planned for 2018 and a team of virtual assistants that would help advisors as needed. On Tuesday, the independent broker-dealer said its robo-offering, Guided Wealth Portfolios, will be rolled out starting in mid-August.

The virtual assistants could be used “any way that that advisor would leverage a traditional assistant,” according to Arnold — for opening an account, processing paperwork and responding to client requests. These aides are set to work with live staff based at LPL’s main campuses.

But at least one technology specialist is raising some concerns about such a plan.

“I’m 50/50 on this one,” said Bill Winterberg, a certified financial planner, via Twitter on Tuesday. “While I applaud efforts to work efficiently, bifurcating the client’s service experience doesn’t seem ideal to me.”

Given LPL’s size — with more than 14,000 affiliated advisors — the introduction of such shared technology-based services is worth paying attention to, he points out.

“They are a bellwether for the industry as the largest group in the independent broker-dealer channel,” Winterberg, the founder of fintech website FPPad, said in an interview with ThinkAdvisor.

Too Remote?

Aren’t many individuals used to dealing with automated phone calls mixed with live customer-service representatives when dealing with phone bills, credit cards, cable entertainment and the like?

“Yes, but there’s a caveat to that,” Winterberg said. “As a client, I pay a premium” for financial services that include an advisor “and for that I should get a pretty premium relationship experience.”

Clients who don’t want a premium relationship with premium service, he adds, can turn to Vanguard or Charles Schwab for more automated advice. Fees for such services are around 30 basis points vs. 90 to 100 for advisor fees.

Investors paying the higher fees “don’t want to get tossed around, with a random person picking up the phone,” and that’s why they chose to pay more to work an advisor, adds Winterberg.

“I get the efficiency benefits [of virtual assistants]. But, for client experience, you don’t want to treat the financial advice relationship like the one with Comcast or an internet service provider, for instance.”

Upsides, Downsides

What about the idea that virtual assistants could be a net positive for advisors by handling some of their office busy work?

Their use might allow “existing staff to focus on more relationship-based activities without [the need for] additional headcount,” said Matthew Enyedi, executive vice president of RIA and high-net-worth solitions for LPL, on Twitter.

When it comes to advisors who are solo practitioners without administrative staff, the virtual assistants “could be a great fit … and could be a great resource [to provide] more service … at the right price for these advisors, who then would not have to raise their rates by leveraging this technology,” Winterberg acknowledged.

Sean Kernan, principal of 360 Wealth Management in Dallas, says a rough estimate of LPL advisors that work via solo practices is within a range of about 25-30%.

“This means a pretty good amount could benefit” from virtual assistants,” he said. “The most obvious [group] … would be those who do not have help right now

Even among bigger groups who are growing, virtual aides could tackle “backend grunt work,” Kernan explains, and that would free up administrative and operations staff to answer the phones and work more with clients, for instance. 

Winterberg is more pessimistic about how the virtual resource will be embraced by larger groups.

“We it comes to, say, RIAs with 20 to 30 staff, I don’t see this [technology plan] as having a material effect, since they have so many full-time employees internally,” he said.

The situation gets tricky for teams of four to five financial professionals who rely on one administrative staff member.

“How does that admin feel about virtual assistants? Do they see their job as being at risk, as they might with competition overseas [for some services] and the pressure on fees today?” the tech consultant asked.

Advisors, like most other professionals, are trying to do more with less. The ability to turn to LPL’s virtual assistants might make it more likely that a small team would get rid of a full-time administrative staff member, he explains.

“This is a tougher situation,” Winterberg said.

With more than 14,000 affiliated advisors, he sees the overall impact of the virtual assistants, as the program has been outlined so far, as small: “It won’t likely make that much of a material difference.”

‘Sticky Factor’

However, for the solo advisor, “It could be seen as an improvement and for clients, too, as advisors leverage the strength of LPL,” the popular tech blogger said. “It looks like LPL is testing it, seeing how it works and wants the rollout to have a good impact. It’s a measured approach.”

Already some client services can easily be outsourced via human-based programs like Ruby Receptionists, which let advisors pay for someone offsite to answer their phones.

There may be some advisors who could use the virtual aide for some mundane tasks, and then their paid staff to do more complex activities — like planning a client-appreciation event or processing account-transfer forms.

“The use will differ firm by firm,” said the technology consultant. “Some firms will lay off an administrative person or have them pass the time on other tasks, like business development.”

Overall, though, the tech effort could prove beneficial in keeping some advisors with LPL.

“Clearly, it is a nice ‘sticky factor’ as a way to boost retention,” he said. In other words, advisors may come to see it as advantageous and something they prefer over more broadly available services like Ruby Receptionists, which they might have to rely on if they left LPL.

“It’s an interesting play in making the advisor relationship stickier,” Winterberg explained. “In that sense, it’s both shrewd and smart.”

— Check out 10 Best & Worst Broker-Dealers: Q2 Earnings, 2017 on ThinkAdvisor.

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