How Capital City Investments Transformed Risk Management to Accelerate Advisor Growth

In wealth management, top producers don’t focus on obstacles. They see possibilities.

“They don’t see a wall,” explained Ben Bowersox, Strategy Process Manager at Capital City Investments. “They’ll just see something on the other side of that wall. They won’t go over it – they’ll go through it.”

Bowersox, whose team is based in the greaterTallahassee, FL, Gainesville, FL, and Macon, GA areas, takes pride in knowing that his advisors offer high-caliber advice and a wide range of products without sacrificing the local, community-oriented service their clients have come to expect.

But some six years ago, Bowersox and his team concluded that at least one aspect of how they did business was ripe for change: risk management. At the time, risk management at Capital City Investments was under the purview of an advisor — a person who took on compliance responsibilities for the group in addition to managing their own book of business.

The advisor handled both their primary job as well as compliance duties admirably, Bowersox said. But questions arose around whether the team might benefit from more comprehensive support than what an in-house compliance role could offer. Could advisors use more frequent guidance on what they should and shouldn’t do — on what walls, so to speak, shouldn’t be breached?

“You need someone to say, wait a minute — we need that wall. That wall is structural,” Bowersox explained. “That’s a good thing.”

Outsourcing Risk Management

An opportunity for a new approach to risk management presented itself when Capital City began transitioning from a small broker-dealer to LPL Financial.

In addition to incorporating LPL’s cutting-edge technology and wealth management solutions, the Capital City team took interest in another offering: LPL’s Home Office Supervision program, which provides wealth management groups a dedicated LPL professional focused on Office of Supervisory Jurisdiction (OSJ) responsibilities — a supervisor ensuring compliance with financial industry regulations, approving advertising, and other risk management activities.

“When we began our relationship with LPL we learned of the option of someone doing the OSJ work for us — it was like a light bulb turned on,” Bowersox recalled. “That work is foundational in terms of running a good wealth business. We could offload that so that the advisor could then focus on his book while LPL took on that burden. It just made sense.”

Accelerating Productivity While Mitigating Risk

Bowersox said his team quickly found value in working with their LPL OSJ supervisors. As an example, LPL helped advisors avoid errors and provided clear recommendations for complicated situations — guidance that helps mitigate the risks of regulatory violations and steep penalties.

“Every partner we’ve had at LPL has been responsive and they know their stuff,” he said. “They say an ounce of prevention is worth a pound of cure, and this is where LPL helps us because this is what they do.”

As LPL OSJ supervisors help advisors take a more prudent approach, they can also bolster efficiency and productivity.

For instance, a supervisor flagged errors consistently made by one advisor when using an annuity order entry system — errors that slowed the team’s overall work. The supervisor collaborated with Bowersox on a bespoke training effort for that advisor, and the error hasn’t been repeated since.

The supervisor “gave specific suggestions and it was great,” Bowersox said. “You want that kind of person on your team.”

Powering Growth and Future Collaboration

In the last six years, Bowersox’s advisor team has grown from 8 to 14 people. Such growth might have strained Capital City’s old, in-house compliance program. But LPL made scaling risk management easy.

“It’s one less thing I have to worry about,” Bowersox said.

Another concern that’s firmly off Bowersox’s plate? Key person risk in relation to compliance. The advisor who had managed compliance before the LPL transition eventually left Capital City. Before the LPL relationship, that departure would have left Capital City Investments scrambling to quickly train a replacement, Bowersox said. Instead, working with LPL meant Capital City had avoided “putting all our eggs in one basket.”

Capital City’s fruitful relationships with LPL OSJ supervisors, in addition to the team’s overall experience with the LPL platform, is paving the way for additional collaboration. Call center and account servicing, financial planning, and administrative services are additional areas where Capital City is exploring taking advantage of LPL offerings.

“LPL makes us stronger, more efficient, smarter, more powerful — all the things we want — while allowing us to maintain the local feel that’s important to who we are,” Bowersox said. “We’ve partnered more and more with LPL, and I don’t see that slowing down.”

For more information on mitigate risk for your organization you may also like this article from LPL: “De-Risking Wealth Management Through Strategic Outsourcing”.