We’ve Got Your Back – What LPL’s Supported Advisor Model Signals To The Industry
There is the dawn of a new age occurring in financial services and it is one based on what might seem to be an obvious edict, yet it took a while to take hold. Put simply – if you are a firm who wants to lead the industry then recognize your advisors are your number one asset and treat them as such. That school of thinking was certainly realized this week as LPL Financial rocked the financial services industry with the launch of their independent employee-advisor model, which reinvents the entire concept of the supported, or W-2, advisor.
The LPL Financial independent employee-advisor model is robust in benefits to advisors. In terms of compensation, advisors under the structure have the opportunity to achieve a 50 to 70 percent payout with no platform, transaction, or administrative fees. Additionally, the program allows advisors to own their effort and lead their practices accordingly, with complete autonomy and retention of their book of business. What’s more, the LPL Financial independent employee-advisor model offers its advisors structured support to enable advisors to grow and successfully manage their practices. Among the features of the LPL Financial independent employee-advisor model are dedicated marketing for brand development, administrative support, and resources for growing capital and monetizing business, as well as other business consulting services.
A supported advisor model such as the one LPL Financial launched has been a long time coming and is a welcomed breath of fresh air in a financial services industry plagued by the old school, C-suite thinking of wirehouse firms. In an effort to seek relief from the captive W-2 constraints of the wirehouses, advisors in droves have turned to the independent model in the hopes that they could design for themselves a practice which operationally and philosophically aligned with their business vision. And therein, lies the quandary. While the independent model can be an extremely successful alternative for advisors seeking to chart their own course it does require by nature a certain set of entrepreneurial skill sets in order for its full potential to be realized – a subject I explore in my Advisor Talk With Frank LaRosa podcast episode “You Do You – Independence Isn’t The Only Option“.
When operating independently, an advisor must be able to manage their office and business practices, handle their compliance, navigate human resources, execute marketing and branding strategies, and a whole host of other operational duties while maintaining and growing their book of business and handling the day to day client-facing functions necessary for every advisor. Not to say it can’t be done – it actually can be done to a quite high level of achievement both professionally, personally, and financially – but it is simply a fact that the independent business structure is not suited to every advisor’s skill set or personality.
Therein lies the wisdom of the LPL Financial independent employee-advisor model. It allows advisors the opportunity to flex their entrepreneurial muscles, growing their book and running their practice independently, while benefiting from the safety net of LPL Financial’s business management and other support resources. Further, the LPL Financial independent employee-advisor model recognizes – if not celebrates – that unspoken truth of every financial advisor: it’s not about the money but it’s about the money. The LPL Financial payouts are between 35 to 40% higher than the competition, and with the guarantee of no small account requirements or growth targets the sky’s the limit to an advisor under this new program.
The only unsurprising piece of news in the news about the LPL Financial independent employee-advisor model is that it came from LPL. The firm has long held the industry position of leading independent broker-dealer. Further, LPL has been aggressive in its recruiting efforts leading the industry as well in the acquisition of advisor and team recruits to the tune of $19,540 million AUM so far in 2020 alone, according to recent AdvisorHub data. This has put LPL Financial in a unique position to step up and learn what advisors are looking for and what advisors need in the current financial services climate. With the launch of the independent employee-advisor model, LPL has responded to that call in spades.
There is no shame in noting that true entrepreneurship is not right for every advisor. Everyone needs a helping hand once in a while, and that is what LPL Financial has given to its advisors through its independent employee-advisor model. It can only be assumed that, given the model’s substantial upside offerings, many advisors will be standing up and taking notice as to whether the LPL independent employee-advisor model is right for them. Which leads one to speculate – how will the competition of LPL Financial respond through the revamping or development of supported advisor programs of their own? We can all look forward to when the answer to that question is revealed as it will no doubt shape the financial services industry for years to come.