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Robert Pettman, executive vice president of Wealth Management Solutions at LPL Financial

Portfolio > Portfolio Construction

LPL to Add SMAs to Model Wealth Platform

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What You Need to Know

  • LPL made some SMAs available on its MWP platform last week.
  • The firm is testing them now and will start rolling them out to more advisors by year-end.

LPL Financial has started adding separately managed accounts (SMAs) to Model Wealth Portfolios (MWP), its premier advisory platform. This means advisors can combine multiple investment types in one account, which the company disclosed Thursday during its Focus 2021 conference.

With this enhancement, MWP will become a unified managed account platform, giving advisors the flexibility to design portfolios in various different ways to tailor them for each client’s individual needs, according to the company.

LPL made some SMAs available on the MWP platform last week, Robert Pettman, executive vice president of Wealth Management Solutions at LPL Financial, told ThinkAdvisor Thursday.

“We’re currently testing them” with advisors who already use SMAs and “we’ll be rolling them out to advisors throughout the rest of this year,” he said, adding, “We’ll do it in waves and all advisors will have access by year-end.”  The company will then continue to “invest and increase our capabilities there.”

The SMA plan, Pettman said, is “attached to” LPL’s plans to spend more than $1.3 billion this year on investments in key areas such as technology and other efforts to support advisor growth, which were announced one day earlier, on the first day of Focus.

LPL is “investing a considerable amount in its advisory platforms,” he said, noting the firm already made several announcements about platform enhancements this year ahead of the conference.

LPL earlier this year introduced Firm Sleeve, its proprietary investment management solution that it said in June had already surpassed $3.4 billion in assets, demonstrating the value of a personalized investment management solution. Built within LPL’s centrally managed MWP platform, Firm Sleeve delivers scalable, digital and flexible solutions for large firms, RIAs and institutions.

The combination of Firm Sleeve and Advisor Sleeve, the technology solution LPL introduced in 2019 that was designed to help advisors gain scale and efficiency in their advisory practices while expanding upon the functionality that LPL can deliver as it enhances its wealth management platform for the future, recently reached $9.1 billion in assets, Pettman noted.

LPL also recently started allowing advisors to “combine models of any investment objective together into a single account utilizing our risk scoring system,” he pointed out.

“The next step to that is the introduction of SMAs into the platform,” Pettman said, explaining, “We’re building one of the most competitive single account solutions in the marketplace, and this is the next key part along on that journey.”

This is all part of LPL’s strategy of expanding the number of solutions that it has available, which also ties into the firm announcing earlier this week that it lowered the investment minimum in its Optimum Market Portfolios platform to $1,000 from $10,000, he said.

LPL also did an integration with AdvicePay last year, giving advisors the ability to expand the reach of their services via alternative pricing models, such as subscription models, Pettman noted.

Now, with the addition of SMAs to MWP, advisors “have a small account solution to pair along  with it,” he said.

In the second quarter, LPL’s total assets exceeded $1 trillion for the first time, rising 46% from $762 billion a year ago. The firm also reported that its advisor headcount surpassed 19,100 advisors and ended the period at 19,144, up 13% from just under 17,000 a year ago and up 8% from roughly 17,700 in the prior quarter.

(Pictured: Robert Pettman, executive vice president of Wealth Management Solutions at LPL Financial)