LPL acknowledged a rare loss of two advisor practices last month, which it attributed to not having built an attractive platform earlier for them to carry out succession planning. “Those two examples, maybe we didn’t launch ours in time enough to get a swing at those,” Arnold said.
Growth Planning
Going forward, the firm expects its recently launched liquidity and succession program to not only please existing advisors but also attract new advisors and assets to the platform, Arnold said, since it solves a major pain point for advisors around creating viable successions.
The firm also sees huge opportunities in providing more outsourced wealth management solutions to the large enterprise channel of advisors in banks and credit unions. Arnold said the total market for “outsourcing of wealth management” to such clients is estimated to be around $1 trillion, and so far the firm has captured “about $85 billion of assets to our platform.”
LPL has added features to that initial bank-focused offering since its launch, making it attractive to “insurance companies or product manufacturers that operate wealth management solutions” as well, Arnold added. “Now that market represents an additional $1.5 trillion of opportunity.”
Finally, LPL is banking on big revenue from outsourcing services for individual advisor practices in its growing subscription channel. “As a result of solid demand, the number of advisors utilizing our portfolio of over 14 available services continues to increase, and we ended the year with nearly 3,900 active users, up 27% from a year ago,” Arnold said.
In 2023, to keep up with high demand from advisors, the firm grew from 2 digital hubs to 11, with the newest one being the Tax Hub. Ultimately 50% of all support services could be digital, he said.
Arnold added that advisors were also looking for help growing more efficient and risk-ready “in a world that’s flipped on the side” following COVID-19.
“The growing complexity of regulations may drive up costs,” he said, adding that advisors had also digitalized their practices and were under pressure to keep up with tech advances.
“And now you throw AI on top of that, which in the short run, creates lots of noise and exuberance,” he said, calling artificial intelligence a “shiny penny” that may not do enough on its own to support advisor growth.
Arnold acknowledged, though, that the firm was looking to use AI to offer “a broad spectrum of service options” for advisors that included human and digital support.
The firm repurchased $225 million of shares in the fourth quarter as part of a total $1.1 billion in repurchases last year, and plans to buy back another $200 million of shares this quarter, Audette said, strengthening the hand of shareholders — who include employees of the firm.
