Part 1: The evolving industry
From traders to advisors, from selling products to selling advice, from sharing information to giving personalized guidance, from investment advice to holistic wealth management, the landscape of financial advice is dramatically different from where it started almost 40 years ago.
Like any seismic shift, it didn’t happen overnight. It evolved over time, through trends like the growing demand for advice, the increased complexity of our financial lives, and the rapid pace of the digital transformation. That natural progression, paired with big moments like the stock market crash of 1987, the Great Recession, and the COVID-19 pandemic, have led us to where we are today. An era of intricate regulations, high client expectations, compressed fees, and incredible opportunity. Opportunity to reach more investors, run successful businesses, and influence the future of financial advice.
And at LPL, we see that opportunity only growing in the coming years—especially for you, our community of financial advisors.
Before we dive into what’s ahead, let’s indulge in a brief trip down memory lane and reflect on how our industry, LPL Financial, and advisors have changed and grown over time. As we remember where we’ve been, we can ask ourselves, what’s next?
Who will we become, how will it affect what we do, and what is the greater purpose we’re all here to serve?
From traders to advisors
We can trace the dawn of the true financial advisor back to the 1980s. That’s when private investors first had access to investment advice—rather than just someone to take their orders and execute stock trades. And as the markets continued to rise in the coming years, the value of financial advice really began to grow.
From selling products to selling advice
The next big industry shift expanded the value of advice as the trend toward an advisory, fee-based relationship grew. Instead of seeking advice on which products to buy and sell, investors were interested in getting ongoing advice about their financial picture and how they should approach their long-term goals. Focusing on continuing to grow assets, but within the framework of the investor’s unique needs and the risk tolerance that’s appropriate for them.
The fee structure also effectively put the advisor on the same side of the table as the investor. Instead of being incentivized by trades and transactions, the advisor benefits when the investor does. Making it a more natural progression toward recommending only what’s truly in the best interest of the investor.
From sharing information to delivering personalized guidance
Access to information became another big factor in the growing value of advice. Financial advisors are no longer the gatekeepers of information on stocks, market trends, and economic forecasts. Investors can access economic and market news 24/7, check their accounts online, and conduct their own research on an investment opportunity. And when people no longer need someone to give them the basic information — about any purchase or decision — what they do need is a partner and a guide. Someone to help them decide what’s best for their personal situation, based on their needs, challenges, and goals. They need an authentic relationship that’s based in trust, transparency, and true understanding.
From investment advice to life holistic wealth management
As the value of advice from a trusted partner has grown over time, so has the scope of that advice because investors want more – more transparency, more communication, more planning. Or to put it simply, more advice. Ongoing investment management may keep the investor on track for retirement, but what if they decide they want to open a small business or establish a trust? What if they inherit a large estate earlier than expected…and then get divorced? To say that an investor’s financial picture can get complicated quickly would be an understatement.
And that’s why we’re seeing the latest trend toward more comprehensive planning and wealth management.
The world has also gotten more complex, with more choice, volatility, and competition. At the same time, many industries in our lives have also become more personalized, convenient, and digitized. It’s safe to say we’re all familiar with what Amazon, Uber, Netflix, and Airbnb have done to prove that point. And those same people getting free same-day delivery from Amazon are your clients.
So now we have investors who are eager for financial advice — and willing to pay for it — but their expectations are high. They’re seeking a modern client experience that’s customized, hands-on, and encompasses all aspects of their financial life.
The big picture here is, of course, that this is a positive trend. The opportunity to shape the holistic financial picture for an investor only makes you, as their trusted advisor, more valuable. And helping your clients navigate these other aspects of their lives doesn’t mean that you have to be the expert in those areas — that’s what your network of attorneys, tax specialists, and estate planners is for. What it does mean is that you have more comprehensive information about your client – which can help inform your advice – and that you’re at the center of your client’s financial picture. Making you indispensable.
From who you are and what you do—to what you stand for
If you’ve been in the industry for 30–40 years, you’ve gone from being a stock trader to a broker to an investment manager to a holistic financial advisor and trusted partner. And even more important than the title you would use to describe your role, are the principles you uphold, the services you provide, and the relationships that you cultivate. What it means to be a financial advisor, and what it is that you stand for. And that’s something that’s unique to you.
The industry trends and shifts maybe inform and influence you, but ultimately you decide what role you want to have in your clients’ lives, how much autonomy you want to have in the way you manage your book of business, and the trajectory your career will take.
At LPL, we believe we have the right culture and business model to meet the unique and evolving needs of financial advisors across America. Because we aren’t simply awaiting the next transformation in our industry, we’re spearheading it — with you at the helm.