The LPL Difference: Transparency and Personalization Drive Transitions

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This is the third article in a series of executive interviews with LPL Financial. To view the previous article, The LPL Difference: Maximizing Revenue and Growthclick here.

Set aside what you might have heard about LPL Financial – the 16,161 affiliated advisors, the $731 billion in brokerage and advisory assets, and the vast technological resources. What LPL is also very proud of – and what helps set it apart from other firms – is that the company spent over 33,000 hours inside advisors’ offices helping them move to LPL in 2018. Think about what 33,000 hours of up-close and personal service means for an industry, where every day thousands of advisors consider a transition.

Kimberly Sweet

According to Kimberly Sweet, senior vice president of business transitions and business development at LPL, this kind of assistance is like having a confident and experienced pilot in the cockpit with you as you take off, cruise, perhaps experience turbulence, and then land the plane smoothly. Amid all the concerns that advisors have about switching firms, the actual transition of their clients is the most daunting concern. Here, Sweet guides us through some of the in-flight issues that advisors might face while making the change to another firm, and describes how LPL taps into its depth of experience to keep their practices on track.

AdvisorHub: When is the best time for financial advisors to transition to a different platform, and when is it worth the process? 

Kimberly Sweet: We looked to our advisors to get their perspective on this. We commissioned our latest survey of advisors who had switched to LPL over the last 3 to 18 months, and their responses were resounding in regards to why they changed firms

  • The majority of advisors (52%) said one of the main reasons they made the move was because they were unhappy with the strategic direction of their firm at the time they were considering a switch. This suggests that financial advisors recognize the business is getting more complex and are looking to work with a firm that is stable, has the ability to invest back into the business, and is able to keep pace with change.
  • Then there were the 44% of advisors who indicated that better technology was a primary reason for making a change. Their current technology may be slow or outdated, and they may have to use several different platforms to cobble together what they need. Advisors are looking for integrated technology that saves them time, and allows their clients to interact with them in a digital manner.
  • Lastly, 40% of advisors wanted to improve their ability to act in their clients’ best interests. They were concerned that their firm did not have the products, platforms, or tools their clients desired and wanted to make sure they partner with a firm that allows them to meet all of the needs of their clients.

So, this tells us the triggers for moving are a desire for a better future, an improved client experience, and a need for better technology and tools to drive growth. All of these are likely reasons for going through a couple months of change in order to set your business up for long-term success.

AdvisorHub: What are some of the biggest issues advisors must watch out for while they are in the process of making the transition?

Kimberly Sweet: We strongly encourage advisors to evaluate their existing contracts with their employer, firm, or business partners first, to make sure they understand the terms or any remaining obligations, including any non-compete or non-solicitation clauses.

Advisors should be familiar with any privacy considerations concerning client information and how the Broker Protocol may apply. They should be diligent about preparing and executing legal documentation and regulatory filings. Advisors should remember to ask questions in areas that sometimes are overlooked: Are there any hidden fees? Do you understand the transition package? And are there any licensing requirements you need to consider?

At LPL, one of the first steps in the transition process is a complimentary consultation with a third-party legal counsel, so advisors can go through all of these considerations and make sure they are prepared .

AdvisorHub: How is LPL making the transition easier on advisors?

Kimberly Sweet: We transition more advisors than any other firm on a yearly basis1 so we have deep insight into what the friction points are in a transition. We have analyzed our learnings and are transforming the onboarding experience from the ground up through automation. Traditionally, the recruiting process has been manual, and we feel that enabling prospects to control the pace of the transition through streamlined digital workflows will provide the critical insight, approvals, and resources they need as part of their due diligence process.

Our team also makes it easier on the advisor by taking the time up front to learn about the advisor’s practice. From that understanding, we can better execute a tailored transition plan, anticipate challenges, and provide expert support at every stage of the transition.

We help the advisors and their staff maximize the use of LPL technology and resources by providing them with comprehensive system and platform training prior to their transition.

We help them map over their book of business so they are ready to meet their client’s needs and start conducting business as soon as their license transfers.

Once the transition occurs, we leverage e-signature (Docusign) and our customized onsite support team to ensure the clients are transitioned smoothly and the advisor and staff get back to business as usual as quickly as possible.

Throughout last year alone, the team spent more than 33,000 hours in advisors’ offices helping them plan their transition and working alongside them through any challenges. We are proud to say the advisors that our team works with typically transition over 90% of their desired assets in two months.

AdvisorHub: How is transition assistance determined?

Kimberly Sweet: We custom underwrite every advisor that we work with to determine the level of transition assistance that will be available. As with most firms, we typically look at the underlying assets that the advisor is managing for the client base and what the makeup of those assets is. How much is in brokerage products compared to fee-based accounts? Within the fee-based accounts, are the advisors using packaged products or individual securities? We also look at the growth rate of the practice and the number of households. All of these components can impact the underwriting of the transition assistance.

At the end of the day, our strong balance sheet, and our experience helping so many advisors make a transition lets us offer competitive transition assistance packages that allow advisors to make an efficient move with as little disruption as possible to their clients and staff.

AdvisorHub: With the change in the industry and advisors always on the move, what will future transition experiences look like? 

Kimberly Sweet: There is a lot the industry can do to help improve the transition experience for advisors, and we’re committed to being at the forefront of that evolution. Imagine how it would be if an advisor could change firms almost immediately, with nearly no disruption to their business? This is the type of future our team is focused on developing. We are currently in the middle of a substantial project that aims to transform the transition process in three ways:

  • Radical transparency – advisors would be able to understand the financial and non-financial considerations of a potential transition easily, and have greater trust than ever before that they are making the right decision.
  • Community/Network – advisors could connect with their peers who manage similar practices and clientele to be better equipped throughout the transition.
  • Hands-on, personalized, and on-demand support – advisors would always know exactly where they are in the process, what they need to do next, and could connect with a resource at any time that is convenient for them.

Through this project, we have learned one thing: the future is even more advisor-centric. We know that hyper-focusing on the advisor experience leads to amazing outcomes for them, their staff, and their clients. We also know a transition doesn’t end with transferring clients and accounts. It is just the beginning and our work always starts with a focus on advisors.

Want to learn more about the LPL difference? 

Read “Integrated Technology Centered Around the Advisor”, an interview with Rich Steinmeier, managing director and head of business development.

Read “The LPL Difference: Maximizing Revenue and Growth“, an Interview with Ken Hullings, SVP of Business Development

Kimberly Sweet is a Senior Vice President of Business Transitions at LPL Financial – a registered investment advisor, Member FINRA/SIPC.

Sources 1 Discovery Database. Trailing 12 months as of October 2019.

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