LPL Financial is looking to not only increase the number of Business Solutions it offers to advisors but also expand these solutions to non-LPL advisors, according to Dan Arnold, its CEO and president.
The firm sees “several pathways for continued growth including partnering with more of our LPL advisors, introducing new solutions, and experimenting with serving advisors outside of LPL,” he told analysts on LPL’s fourth-quarter earnings call Thursday.
When LPL started Business Solutions more than two years ago, it saw an “opportunity to help advisors find better alternatives for some local services that cost in excess of $1 billion a year,” Arnold said.
“Our hypothesis was that we could provide higher quality services at a lower cost and free up additional time for advisors to spend on more valuable activities, including serving their clients and growing their practices,” he explained. “In that spirit, we created our Business Solutions portfolio to solve for these discrete needs, with outsourced professional expertise.”
Since then, LPL has been able to “expand and evolve the value proposition of the portfolio and scale our subscription base,” Arnold pointed out. “As a result, we finished the fourth quarter with about 1,400 monthly subscriptions, which is more than double the level a year ago.”
Meanwhile, the firm has “expanded the portfolio to include business optimizers and additional professional services,” he said. “We are also innovating on how we package these solutions such that we can unlock additional value for advisors when using a combination of different offerings.”
During the Q&A with analysts, Arnold explained that because Business Solutions are subscription-based services, that “gives us flexibility as to how an advisor can plug in and leverage the LPL platform — so that’s the premise where you have a bit more flexibility in this concept about being able to serve advisors outside of the LPL family.”
LPL remains “focused on continuing to innovate and deliver” those services to LPL advisors, so “that’s where the majority of our allocation of investment goes across this strategic play and that’s allowing us to continue to learn and innovate on our offering,” the CEO said.
However, “our hypothesis is these services could potentially be offered to all 300,000 financial advisors in the marketplace,” he noted.
“If you think about that premise, if I’m operating my own business and I have local-level services that are necessary to support the operation of that business, well then we believe we could step in and create higher quality solutions at a lower cost using automation and digital capabilities to create real interesting scalability,” Arnold explained.