LPL Financial plans to continue growing the roster of products and services under what it refers to as its "business solutions portfolio," with the goal of selling more subscriptions to advisors who use them to grow their practices, according to its president and CEO.
LPL’s business solutions portfolio currently encompasses four areas — administration, marketing, technology and chief financial officer services. Tasks in those associated areas are outsourced to specialists, according to LPL.
The firm is exploring whether it can create new variations on those offerings that might have narrower value propositions, lower price points, or solve specific problems advisors have on a weekly or monthly recurring basis, CEO Dan Arnold said last week on a call with analysts to discuss the firm’s first-quarter earnings results.
“We see several pathways for continued business solutions growth, including partnering with more of our advisors, introducing new solutions to the portfolio, and experimenting with serving advisors outside LPL,” Arnold said.
LPL reported that it had roughly 1,700 monthly subscribers to its services in the first quarter, generating annualized revenue of around $19 million. The subscriber base is more than double from a year ago, and up 300 from the previous quarter.
Arnold said that the growth was primarily driven by LPL’s “ongoing expansion and evolution of the value proposition of our existing portfolio.” LPL also recently struck deals with BMO Harris Bank and M&T Bank to outsource their retail wealth management businesses to LPL.
Arnold said that LPL is considering several new iterations on those offerings that it expects to roll out this year.
For example, he said LPL is currently experimenting with a capability around paraplanning — handling the administrative tasks in support of financial planning — that is out on the market.
Arnold said LPL is also preparing for expanding the reach of its "M&A Solutions." The M&A Solutions tool is a turnkey solution that provides LPL advisors with transaction advice, capital funding and process execution. LPL formally launched M&A Solutions in February and is now trying to attract non-LPL network advisory firms that may be interested in selling their practices.
LPL is also planning to launch a client engagement product this quarter, he added.
“How do we expand the product road map and thus create more and more value that our advisors can leverage to replace that spend that we estimate is close to $1.5 billion a year that they spend on local-level services? That’s what’s driving that road map," Arnold said.
LPL also wants to expand its affiliation options, which could bring in more independent advisors, according to Arnold. LPL had a “soft launch” of its Strategic Wealth Services channel in 2019 and added its first advisor practice to it on Apr. 1, 2020, LPL managing director and divisional president of business development Rich Steinmeier previously told FA-IQ. The channel offers support to wirehouse advisors breaking away to start independent practices, including for finding real estate, managing payroll and brand development. But it also has a lower payout than if the advisor used the traditional independent channel, according to LPL.
LPL’s advisor count swelled to a record level of 17,672 in the first quarter, up 385 from the previous quarter and up 909 from March 2020.
Meanwhile, LPL Financial Holdings, the parent company of the broker-dealer firm, says it closed Friday its acquisition of the wealth management business of Waddell & Reed Financial from Australia’s Macquarie Group.
More than 900 Waddell & Reed advisors have committed to join LPL’s platform, according to LPL. Those advisors served around 95% of the $71 billion Waddell & Reed wealth management client assets as of March 31.
LPL says it expects to onboard the advisors in the next few months.
“Waddell & Reed advisors are seasoned and well-regarded throughout the industry and are a strong cultural and strategic fit with us," Arnold said in a statement following the closing of the deal. "We look forward to supporting them with our comprehensive platform that helps them design and operate the perfect practice for them and their clients. Waddell & Reed and Macquarie have been strong partners throughout the process, and we look forward to our ongoing collaboration.”
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