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LPL Launches Paraplanning Services for Its Advisors

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What You Need to Know

  • LPL had been incubating Paraplanning Services for nearly 18 months before its recent expansion to all the firm's advisors.
  • The Paraplanning Services team how has 15 paraplanners and the firm is looking to add more.
  • LPL is also testing a tax planning service and an offering for advisors with high-net-worth clients.

LPL Financial has launched Paraplanning Services for all LPL-affiliated advisors, RIA firms and institution-based investment programs, after its New Ventures Lab ran a pilot program making the new offering available for more than 50 advisors, the company said Tuesday.

The pilot program was “in our incubation lab for close to 18 months before we opened it up to the broader advisor population in January,” Aneri Jambusaria, LPL executive vice president of the firm’s new Planning & Advice Services business unit, told ThinkAdvisor.

Although Tuesday’s press release on the new offering represented the first time  LPL announced details on Paraplanning Services publicly, Jambusaria provided some details about it to ThinkAdvisor last year.

“We’re really focused on helping advisors to expand their value proposition beyond traditional investment management,” she said Monday.

The firm had been hearing “a lot of demand” from clients for a “broader set of financial advice in areas like financial planning, tax planning and estate planning,” she noted. To meet that demand, “we’re working on building out a set of services that helps our advisors be able to expand their value proposition more effectively,” she said.

Paraplanning is “our first service within this umbrella of Planning & Advice Services, and it’s really all about helping advisors to do more financial plans,” she  explained. “We know from talking to our advisors that many of them aren’t doing as much financial planning as they would like,” especially planning for more than just their top client relationships, she noted.

But offering financial planning for all of an advisor’s clients “can be kind of challenging to execute, especially if you’re a solo practitioner or you’re in a small practice because it can take up to 10 hours to complete a financial plan,” she explained.

Paraplanning Services provides advisors with experienced support through the use of paraplanners to deliver financial planning services to clients, helping advisors to grow their capacity to deliver personalized advice, the firm said.

The Paraplanning Services team is now made up of 15 paraplanners and operates as an extension of the advisor’s practice, working together with advisors to learn about their clients’ needs, according to Jambusaria. LPL is looking to grow the team, she said, but declined to say how many additional people the firm may be targeting.

Paraplanners gather and input data into financial planning software, such as eMoney, MoneyGuidePro, RightCapital and WealthVision, to generate insights and offer advisors a complete financial plan for their clients, LPL said.

The plan generated becomes the guide for advisors and their clients, with plan maintenance available on an annual basis.

LPL likes what it sees so far from Paraplanning Services, according to Jambusaria, who told ThinkAdvisor: “We’re really excited about just the trajectory and traction that we’re seeing of the service amongst our advisor population.”

Future Services

The company is incubating additional services at the New Ventures Lab, including one focused on tax planning and another focused on helping advisors with high-net-worth clients, Jambusaria also said Monday.

Research shows that, in many cases, investors are “not invested in a tax-aware fashion” and many “aren’t always taking advantage of all the opportunities to reduce their taxable income in a way that they could,” she pointed out.

Therefore, “we definitely see a huge opportunity” for a tax planning service to help investors, she said.

There is, meanwhile, “confusion” in the sector among some advisors who mistakenly think you must be a tax professional to provide tax planning, which is different from providing tax advice. Tax planning focuses on helping clients make changes in their current financial lives that can reduce future tax liability, and is “one of the seven steps of financial planning,” she explained.

LPL did not say when the tax planning service will launch. The firm is “in the process of testing out the concept” and “experimenting with different concepts,” Jambusaria said.

Meanwhile, “one of the things that we learned” from Paraplanning Services is that higher-net-worth clients and clients with more “complex” financial situations often “require a deeper dive in certain areas,” including executive compensation and complicated estate planning, she said.

Therefore, “we’re looking into” whether there is an opportunity for LPL to “take some of our existing capabilities and be able to help advisors to serve high-net-worth clients in a more targeted way in these areas,” she said, adding that the company plans to experiment with this throughout the year.

LPL now supports almost 20,000 financial advisors, 500 independent RIA firms and about 800 institution-based investment programs nationwide, it said. As of Dec. 31, LPL had total advisory and brokerage assets of $1.2 trillion and total advisory assets of $643 billion, according to its website.

Pictured: Aneri Jambusaria, executive vice president, Planning & Advice Services


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