LPL Execs Tout Capital, Succession Planning Solutions

Executives of independent broker-dealer LPL Financial used its Focus conference in San Diego on Monday to tout its various capital and succession planning solutions — including new solutions designed to make M&As and succession easier  — as well as the importance of diversity.

During a conference session called “Your Long-Term Partner” that was webcast, Greg Cornick, executive vice president, explained that the “main objective” of the company’s Advisor Financial Solutions division is “to grow, protect and unlock the value of an advisor’s practice.”

To accomplish that, he explained: “We leverage LPL’s strong balance sheet with our expertise in areas like M&A to try to come up with solutions for advisors to do just that.” LPL understands that advisor firms may need to raise capital to grow their businesses organically and inorganically, he noted.

“Capital is oxygen for their business” because it’s “what you need to thrive and to grow,” he said. So, the company tried to “come up with a suite” providing its advisors various options, he said, noting it offers a CFO Solutions option, M&A solutions and succession solutions for companies to monetize their businesses when shifting to a new owner. With CFO Solutions, LPL provides an accounting expert who can serve as the advisor’s chief financial officer, he pointed out.

While capital is “critical,” it’s not just having capital that’s important but also “having it available to you when you need it for the circumstance you need it with,” he said.

As an example, he noted that if an advisor has a short-term need for capital, LPL offers a line of credit solution. It also offers a growth loan if an advisor needs capital for real estate or marketing, he told attendees, adding that LPL also offers acquisition loans if advisors want to go the M&A route.

“Advisors are really interested in growing through acquisition,” Jeremy Holly, senior vice president of corporate development and AFS, went on to say. After all, “there’s a lot of benefits to doing it,” he said, explaining: “You can take [on] a lot of clients at once and so you get the benefits of faster growth, increased scale, as well as you get access to the referral network that comes with those clients … It is also is good for expanding your market presence and getting into new markets, as well as getting into areas of new distribution.”

But handling an M&A isn’t so simple for an advisor, he said, noting “advisors sometimes struggle with some challenges around M&As” because it “can be a complex process” and “they don’t do it very often, so the learning curve can be pretty steep.”

LPL is, therefore, “building an end-to-end solution that helps advisors through that process, so it’s a faster, simpler, more cost-effective way to do M&A,” Holly said, adding: “What we’re trying to do is take as much off their plate as possible.”

The company also said it’s developing a portfolio of monetization solutions, providing advisors peace of mind regarding their assets and their family, staff and clients. One solution, which it said will be available to all LPL advisors, will allow them to monetize their business in the event of an unplanned exit, it said. Advisors will also be able to access capital and resources to help them plan their succession or be able to monetize their business when they’re ready.

These solutions are being offered amid increased demand among RIAs industrywide for capital for M&As and internal succession, DeVoe & Co. recently pointed out while announcing its own solution.

The second-quarter Nuveen/DeVoe RIA Deal Book reported the industry experienced record M&A activity in the first half of 2019 (65 transactions) and was on track to experience a sixth straight record year of M&A.

At Focus, meanwhile, LPL also pointed to the importance of diversity. The firm noted in an announcement that it expanded its lineup of diversity and inclusion programming at its annual conference. Advisors at this year’s event have “access to more breakout sessions, networking events and personalized support than ever before, reflective of the firm’s ongoing commitment to helping advisors reach new cultural markets and create more inclusive practices,” it said.

As part of LPL’s diversity initiatives, it’s recruiting more women, according to Kara Mackie, assistant vice president of business development. Bringing more women into an advisor business provides “just an amazing opportunity for advisors to bring more experience, different life experience [and] different opportunities for end clients to connect with advisors,” she told attendees.