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LPL Is Dreaming Bigger, and Institutions Are Benefitting

LPL Financial

LPL Financial’s Ken Hullings was interviewed for an InvestmentNews podcast. He discusses how banks, credit unions, and insurance companies are staying competitive at LPL.

   

What really matters in this business is rarely the investments or the tools. It’s really the trust, the ability for an individual or a family to sit down with an advisor and be open with them about what they're concerned about.

- Ken Hullings

In a recent InvestmentNews podcast, financial journalist Bruce Kelly interviewed LPL Financial’s Ken Hullings, executive vice president of Institution Business Development, about how banks, credit unions, and insurance companies are staying competitive at LPL.

LPL continues to push the envelope, giving institutions and advisors the resources, autonomy, and comprehensive support to grow their wealth management programs and better serve their clients. A strong commitment to innovation comes from LPL’s executive leadership team, which pushes teams across the firm to “Dream bigger and raise our aspirations,” Hullings said. 

In the following exchange between Kelly and Hullings, they focus their attention on how institutions can give advisors more time in their day and keep up with the speed of technology. 

Kelly: Time is of the essence when it comes to getting to the heart of what matters most to clients and their families. But so many advisors find that they just don't have enough time. Why is time so important to financial advisors?

Hullings: What really matters in this business is rarely the investments or the tools. It’s really the trust, the ability for an individual or a family to sit down with an advisor and be open with them about what they're concerned about. Our belief is that there are a lot of things you can do to expand and improve the level of trust that you have. But one of the biggest things that will drive that is time, because with time, you can be more present for your clients, you can be more present in your community, and people will know that you care, and that you're thinking about them.

We think there are many large, well-capitalized, well-run firms that are very focused on getting in between advisors and their clients and demoting the role of the advisor and the value of advice. We're on the flipside of that equation, where we believe the advisor or the professional is the most important component of delivering advice, but they need to have the appropriate amount of time to be present. It allows us to compete effectively against many of these other firms that are trying to get in between advisors and their client relationships. 

Kelly: What can firms do to help those advisors find more time in their day to focus on clients? 

Hullings: The way I think about it, Bruce, is really in maybe two parts. One is just from the advisor perspective. How much time and efficiency can the advisor and their staff have in their office to focus on the clients, on the things that matter. Where we land on that – it really comes through technology and through the integration of technology. There's a ton of amazing tools out in the marketplace, and new ones come up all the time. And we are a big believer in some of the important third-party tools out there. But the value and the power of technology is not in just having the best tool in each part of the process, it's making sure the technology and those tools are integrated. Think about proposals, financial planning, account opening, moving money, reporting, billing – it’s important to make sure that the technology is integrated across all those key workflows so that advisors and their staff are being as efficient as possible.

Then the second part would be the tools clients are expecting and desiring to be able to interact with their wealth when and where they want. They value advisors, but they don't necessarily want to have to interact with their advisors for small, mundane things. They want to be able to check on their accounts, they want to aggregate their accounts and see their whole life in one place. They are comfortable taking small self-service actions like depositing a check or changing an address or a beneficiary. As it relates to how firms can help, it's driving efficient workflows on the advisor workstation and then providing clients with productive digital tools.

Kelly: When it comes to technology, what are some other challenges that firms are facing right now? 

Hullings: The biggest one is just how fast technology moves. And therefore, how costly it is. As I mentioned, there are a lot more technology options these days, and the tools are incredible. But if they don't all integrate, it becomes challenging. So many of these firms have been able to outsource the proposal tool or the financial planning tool or the reporting tool, for example. And they end up with great tools. But then they have to integrate them.

Their job becomes tough because they have three or four different vendors that might have different roadmaps and might have different strategic positioning or things that are important to them. And they don't always work great together. We see that being a challenge for a lot of institutions today…the ability to bring those tools together to deliver a great experience for advisors, and also for their clients. That's where we see our solution, hopefully helping them in many ways.

Kelly: What can firms do to ensure they remain relevant when it comes to technology? 

Hullings: You need to be investing a lot of money into new technology capabilities. If you look at the top 10 firms in the wealth management space – those firms represent well over 50% of the advisor population, on average – they are spending north of $200 million a year in new technology capabilities. If you're a firm that perhaps doesn't have the scale to do that, it's just going to be very hard to keep up.

But I think, first and foremost, it’s the fortitude and the ability to invest in things that drive a great advisor and client experience. And then the second thing is what we've previously talked about driving integration through the key workflows. It's not just having great tools and great components of a tech stack. It's having a tech stack that gives you more time, because having more time to spend with your clients, your prospects, your community, that's actually going to be the differentiator to help you win.

You’re encouraged to listen to the entire InvestmentNews podcast, where Kelly and Hullings also talk more about the importance of scale and modernization. If you’re intrigued by the conversation and want to learn more about LPL Institution Services, contact your Institution Business Development consultant.

00:08

Hey everybody, welcome back to another episode of the Investment News Podcast. We have a slightly different format this week with Ken Hollings from LPL. He's Executive Vice President, Institution Business Development. That means he's part of LPL that works with credit unions and banks and insurance companies that want to use LPL's platform for their financial advisors. So Ken.

00:37

Welcome to an episode of the Investment News Podcast. Thank you, Bruce. Happy to be here. And I hope I got that right, that kind of description. You did. Yeah, you nailed it. I think it's a misunderstood proportion of the business where you all, you don't necessarily, you work with these financial advisors at different financial institutions like credit unions and the like, right? Yeah. I would say it is perhaps a little unknown.

01:07

or less known than maybe the work we do with independent advisors. But as you know, we've been expanding the work we do with advisors over the past handful of years, but we have been in this institution space for going on the last 20 years. Actually our CEO, Dan Arnold, started his career in the financial institution space and got to LPL through an acquisition we made.

01:36

So yeah, it's probably a bit unknown for many of the listeners. And you yourself, I thought it was interesting. You've been, I think you started, I just looked at your LinkedIn profile. You began your career as a wholesaler and then you moved to very briefly and then you were a broker very briefly, I think, and then you started working at LPL and have had an 18 year career there. That's a long time to be at one front.

02:05

If you could just tell us how you started at LPL and how has your work and role there evolved ever since? Yeah, it has been a good run. I started when we were owned by one individual, Todd Robinson, and then was there while we went through private equity ownership from call it 06 to 2010. And then have seen us as a public company since 2010.

02:35

My first role was actually just as a cold caller, if you will, reaching out to advisors about this thing called independence, which candidly I didn't have much knowledge about prior to getting to LPL. I was a wholesaler for a while, an internal wholesaler. And at that time, the firm I was with, we didn't really call on independent advisors. And then I joined a team with my uncle.

03:04

actually at Merrill Lynch and so really was just focused and aware of kind of the wirehouse world. Landed at this firm called LPL, didn't really know what I was doing and lo and behold, here we are, you know, 18 years later. The first 14 years of my career, Bruce, at LPL was really on the independent advisor side. So I started as a cold caller, then became one of our field recruiters.

03:31

and ran the Los Angeles and central California territory for a while. And then came back into the home office to build out a few teams. I led our home office visit experience for a while. So got to interact with a lot of advisors that were doing due diligence on different firms and then did a little bit of sales strategy, sales operations, sales enablement. And then about four years ago was asked to come over and think.

04:01

and reimagine how we might be able to expand the institution market for us. And so it's been an exciting run. And you report off to Rich Steinmeier, right? I do. Yep. So I work directly for Rich. He's been just a great addition to LPL. Dan Arnold, I would say, has really brought in a lot of really good leaders for us over the past five years. And those leaders, along with Dan, have been really good leaders for us over the past five years.

04:30

The way I would describe it as someone who's been there a while, they've really allowed us to dream bigger and raise our aspirations. We still have a lot of work to do and a lot of things that we want to accomplish, but working with Rich and some of the other management committee members has been a great time. Okay, so we just wanted to focus on a couple of topics here today, time, scale, and technology among them. I guess time.

04:58

as everyone would know, is of the essence when it comes to getting to the heart of what matters most to clients and their families, but so many advisors find that they just don't have enough time. Why is time so important to financial advisors? Yeah, I think it comes down to, at least from our belief, what really matters in this business

05:28

tools, it's really the trust, the ability for an individual or a family to sit down with an advisor and be open with them about what they're worried about or what they're concerned about. And our belief is that there's a lot of things you can do to expand and improve the level of trust that you have.

05:56

One of the biggest things that will drive that is time, because with time, you can actually be more present for your clients, you can be more present in your community, and people will know that you care, and that you're thinking about them. And so, as we think about time, and we think about where the world is headed, at least as it relates to the wealth management space, we think there's...

06:24

many large, well-capitalized, well-run firms that are very focused on getting in between advisors and their clients and really demoting the role of the advisor and the value of advice. And we're on the actual flip side of that equation where we believe the advisor or the professional is the most important component of delivering advice, but they need to have

06:53

the appropriate amount of time to be present. And so that's how we think about why time is important because it makes the families you deal with feel cared about, which is really important for a human being. And it allows you to compete effectively against many of these other firms that are trying to get in between advisors and their client relationships. So what can firms do to help support?

07:22

those advisors in that case and finding more time in their day to focus on clients. Yeah. The way I think about it, Bruce, is really in maybe two parts. One is just from the advisor perspective, right? So how much time and efficiency can the advisor and their staff have in their office, in their practice to focus on the clients, on the things that matter? And so we're...

07:50

where we land on that is really that comes through technology and through the integration of technology, right? There's a ton of amazing tools out in the marketplace. A new one comes up all the time. And we are a big believer in some of the really important third party tools out there. But the value and the power of technology is not in just having the best tool.

08:19

in each part of the process, if you will, it's making sure the technology and those tools are integrated. And so we break it down to the key workflows that drive an advisor and their staffs day to day. So think about proposals, financial planning, account opening, moving money, reporting, billing. So making sure that the technology is integrated across all of those key workflows so that

08:49

are being as efficient as possible. So that's maybe the first part. And then the second part would be around the tools for the client, right? Clients are expecting and desiring to be able to interact with their wealth when and where they want. And so they value advisors, but they don't necessarily wanna have to interact with their advisors for small mundane things. They wanna be able to check on their accounts. They wanna do, they want to aggregate.

09:19

their accounts and see their whole life in one place. They are comfortable taking small self-service actions, like depositing a check or changing an address or a beneficiary. And so as it relates to how firms can help, it's really driving efficient workflows on the advisor workstation. So their staff and their advisors can be effective. And then providing clients with

09:48

with productive digital tools so that they can interact with their wealth how and when they want to. So just sticking to technology, when it comes to technology, what are some other challenges that firms are facing right now? Yeah, the biggest one is just how fast technology moves and therefore how costly it is. A lot of the institutions that we deal with, whether it's a bank or a credit union or a

10:17

an insurance company. In many cases, they have been in the model where they've been an introducing broker dealer and they then integrate with a clearing firm, but also with a lot of technology vendors. And it's great for them because as I mentioned, there's a lot more technology options these days and the tools are incredible. But...

10:44

If they don't all integrate, it becomes challenging. And so many of these firms, they've been able to outsource the proposal tool or the financial planning tool or the reporting tool, for example. And they end up with really great tools. But then they have to integrate them. And so their job becomes really tough because you have three or four different vendors that are all great firms.

11:11

but might have different roadmaps and might have different strategic positioning or things that are important to them. And so they don't always work great together. And so we see that being a challenge for a lot of these institutions today is that the tools they have access to are better than ever, but the ability to bring those tools together to deliver a great experience for advisors and also for their end clients

11:40

It just continues to be challenging. And so that's where we see our solution hopefully helping them in many ways. And what can firms do to ensure they remain relevant when it comes to technology? I think again, it comes down in many cases to scale, right? You need to be investing a lot of money into new technology capabilities.

12:10

and those firms represent well over 50% of the advisor population, on average, those firms are spending north of $200 million a year in new technology capabilities. And so if you're a firm that perhaps doesn't have the scale to do that, it's just going to be very hard to keep up. So I think first and foremost is the fortitude and the ability to invest.

12:38

and invest in things that drive a great advisor and client experience. And then the second thing is what we've previously talked about, driving integration through the key workflows so that it's not just having great tools and great components of a tech stack, it's having a tech stack that actually gives you more time because to your previous question, having more time...

13:06

to spend with your clients, your prospects, your community, that's actually gonna be the differentiator to help you win. And so those are the two things that I think firms can do to really help advisors. So just sticking on scale, as you mentioned, there's all these different vendors, right, that firms work with. They have to manage them, and this can all become cumbersome, right? How do you streamline those middle and back office functions?

13:33

And then what are some of the benefits that come from that streamlining process? Obviously time, right, is a big factor in this, as you said, but what else might be? Yeah. So our solution, the way we have built our business is a little bit different than many in the industry. It's not unique, but it's different. Where we are a broker dealer, we're a custodian, we're a clearing firm.

14:00

We have our own technology stack that also integrates with many of the leading third parties and then we also have our own advisory platforms. And so when institutions like banks or credit unions or product firms work with us, they generally leverage that entire stack. So they leverage us for all of those key components. And what that does is one, it eliminates a lot of vendors.

14:30

And so it just makes their vendor risk management and their vendor management in general a lot simpler for them and for their organization. Number two, though, it also allows them, when we sit with our clients at the end of a year or at the beginning of a year and go through their strategic priorities, they mainly have to only sit with one firm to share their strategic priorities and understand how we're gonna

15:00

show up to help them achieve those. They don't have to go have that meeting with three or four different firms, hope everyone gets on the same page, and hope everyone kind of talks to each other. And so in many cases, it allows them to sit down with what we aspire to be, which is a strategic partner, rather than having just vendor meetings. Some of the other benefits, Bruce, that are a little bit different from our solution that

15:28

that apply is because we provide the middle office or the broker dealer in our scenario and the firms that we support don't have to be the broker dealer, that allows them to take a lot of cost out of their ecosystem, right? So no call centers, no product due diligence, no broker dealer operations departments, they can remove that cost.

15:57

and in many cases redeploy some of the capital they're spending into more revenue-focused activities. Also, because of our structure, again, being the broker-dealer, a lot of the compliance and supervision falls onto us. So our clients, the banks and product firms, they will always maintain reputational risk because they have brands and they're big in their communities. But as it relates to the operational risk...

16:26

and most of the regulatory risk, that also falls onto us. And so those are some of the key benefits that we're able to provide our clients by taking over the middle and the back office function and really allowing them to focus on the front office, the experience they provide their advisors and the experience their advisors provide their clients, which again, at least in our view, is where the value is actually derived in our business.

16:56

Okay, Ken, we've talked about time, scale and technology. Anything else about those? Either one of those before we move on to our final topic? No, I think we've hit those pretty good. Okay, let's talk then about our last topic for today is regarding modernization. You've been at LPL 18 years, I've been at Investment News 23 years, so we're not very modern unfortunately, I think, Ken. I don't want to speak for you.

17:26

but I don't feel very modern at least, but looking at how the industry has evolved over that period of time, you know, 15 to 20 years, what kind of opportunities do you see for, you know, wealth management firms, the LPLs, you know, the Merrill Lynch's out there to deepen their value proposition with advisors and the end, and the advisors and clients? Yeah, I'm with you, Bruce. I don't feel very modern as well, although I will say about

17:55

about you. I have watched you closely since I've been in the industry and you have evolved a ton and continue to evolve. So hopefully I have as well. You know, as we think about the future, maybe the next 10 or 15 years, a lot of it is maybe similar to what we've talked about where our belief is that there's going to continue to be...

18:25

firms and technology that are pretty slick to be candid, that are going to try to get in between advisors and their clients. They're going to try to automate a lot of the functions and they're going to try to perhaps reduce or demote the value of an advisor. And so as we think about what firms can do, it does come back to the basics, right?

18:54

spending as much time as possible with your clients, showing them that you understand and care, and really combine the IQ and the EQ. What we think a lot of these digital tools will be able to deliver in a great way lands a little bit more on the IQ scale, some of the due diligence or the automation of investing, and that's great, and we think advisors should really take advantage of that.

19:25

We encourage and we think our advisors stand out because of the EQ they have, the knowledge they have, the experience they have, the empathy they have. And so as you think about where the industry might go, it's just extending those. I think we will see advisors start to provide guidance and advice on things more than just investments. I think we've already started to see that. I think financial planning.

19:52

whether it's on a flat fee or hourly fee or subscription base, we'll continue to expand. And I think that's a great thing for the industry and for the country, because that makes advice more accessible to a lot of people. And I think we'll continue to see clients really want to interact with their advisors in a way that's simple, easy, their self-service optionality for them.

20:20

But when they get to those moments in life where there is a big decision to make around their financials, they want someone to call that they know understands them, understands what's important to them, and can give them really valuable guidance. And so I don't know if I have anything from a, hey, this is a really sexy thing that is going to change in the next 15 years. I'm sure there'll be really cool things that come out.

20:48

But I think it's more back to the basics. Get in front of people, make sure they know that you care, and be able to deliver them with personalized advice. I think that's the winning combination. All right, Ken. Anything else you want to add or emphasize? No, this has been great. I really appreciate the opportunity and it's been a lot of fun. Okay. Thanks so much to Ken Howlings from LPL Financial, which I forgot to mention at the beginning of the podcast is-

21:14

the largest independent contractor broker dealer in the industry right now. It also has an employee channel and has an RIA channel, has this bank channel that can work that as well with more than 20,000 financial advisors across its platform. Ken Hollings, LPL Financial Executive Vice President, Institution Business Development. Thanks so much for coming on the podcast. Thank you, Bruce.

21:39

Okay thanks everybody for dropping by for another episode of the investment news podcast and we'll be speaking to you real soon.

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