The independent broker-dealer had net asset inflows of $4 billion in the quarter and $8.5 billion of recruited assets, bringing its trailing 12-month total to about $33 billion. Its total assets grew 7% year over year to $706 billion, while its advisor headcount is 16,161 — up 112 from last year but down 28 from the prior quarter.
Its purchase of Allen & Co., which has about 30 advisors working with $3 billion in assets, is set to end in the third quarter, about three months ahead of schedule; the group is joining its new independent-employee model.
Speaking with equity analysts late Thursday, executives outlined the role several new strategies and related programs are likely to play in the independent broker-dealer’s growth trajectory.
The firm’s “first strategic play,” according to CEO and President Dan Arnold, entails adding affiliation channels. The IBD’s new advisory oriented and independent employee models, he said, “more than double the size of our addressable market.”
For the firm’s advisory-oriented models, it aims to give advisors integrated custodial, advisory, brokerage and practice-level services “that make it easier for an advisor to enter and thrive in the independent channel,” he explained, by giving them “more capabilities and lower prices” to differentiate their practices and boost their competitive standing.
The includes LPL’s Advisor Sleeve program, announced in mid-June. According to Arnold, some 1,500 advisors have brought $600 million onto the service, which lets advisors run custom portfolios and use LPL for monitoring, rebalancing and tax management.
Though historically, LPL has seen demand for centrally managed platforms come mainly from advisors using its corporate platform, “about 30% of Advisors Sleeve flows are coming from hybrid advisors,” he said.
Technology, Service Updates
The firm’s “second strategic play,” Arnold said, is all about improving technology and client service. “With respect to ClientWorks, we continue to focus on Version 2.0, which aims to provide advisors with more streamlined and intuitive experiences,” such as giving them more ways to personalize key dashboards and interfaces.
“Advisors tell us that these updates have significantly increased the simplicity and speed of opening new accounts, while enhancing the onboarding experience for their clients,” Arnold explained, adding that such developments are “also improving their efficiency.”
To help advisors meet rising client-experience expectations (thanks to quick delivery and robust platforms like Amazon) and boost scale, the IBD is rolling out new services. This is the IBD’s “third strategic play,” Arnold said, and it includes “digitized workflows, virtual services and access to capital throughout their lifecycle.”
For the many advisors who lack a full-time CFO, for instance, LPL has launched a virtual CFO pilot project that is now being used by over 50 advisors. (It rolled out a virtual administrative assistant program in 2017.)
The virtual CFOs support advisors “for a monthly subscription fee at a big discount to hiring a full-time CFO,” according to Arnold. The result? Advisors say the virtual CFOs help them lower costs, use a business model that relies more on recurring revenue (or fees) and investigate M&A opportunities, he added.
LPL had 400 subscribers using its virtual services as of June 30, up from 300 last quarter. “We’re excited about the prospects to help a growing number of advisors to better operate their practices, increase their efficiency and drive growth,” the IBD exec said.