LPL partners with BlackRock's FutureAdvisor, paving way for robo-pilot program

The broker-dealer first announced a robo initiative last summer, but has held off until finding the right partner

Apr 13, 2016 @ 2:02 pm

By Alessandra Malito

+ Zoom

LPL Financial announced on Wednesday it is using BlackRock's FutureAdvisor for its adviser-driven digital advice platform, paving the road for its own future robo-adviser offering.

The independent broker-dealer had said last July during its annual conference that it planned to introduce a robo-adviser pilot program within two months, but the firm has held off. It will now begin a phased rollout of its new offering, called Guided Wealth Portfolios, in the second half of 2016, a spokeswoman said.

The company explored plugging robo-technology into existing LPL programs last fall, but decided not to proceed until they had found the right partner, she said.

Despite the slow pace, having a digital advice offering can benefit LPL advisers in a number of ways, including expanding their reach to more prospective clients, improving investor experiences and working more efficiently within their practices, Ryan Parker, managing director of investment and planning solutions for LPL, said in a statement.

"We believe that our robo advice solution will support our mission by improving investor experience and adviser efficiency, allowing advisers and their staff to focus more on what matters most to their clients," Mr. Parker said in a press release.

The firm has not yet determined a price structure for its robo, a spokeswoman said.

LPL will integrate FutureAdvisor, which BlackRock acquired last summer, on its custodial dashboard, with access to the firm's model investment portfolios as well as data aggregation, portfolio management and a client portal.

"Members of the financial services community believe that digital, especially digital together with the relationships and value an adviser already provides to clients, is the wave of the future," said Bo Lu, chief executive of FutureAdvisor.

Ross Gerber, president and chief executive of Gerber Kawasaki Wealth, will be a part of the pilot program and said he thinks LPL chose the right vendor with FutureAdvisor. The partnership gives LPL advisers "all of the tools that all of our digital competitors have," he said. "We are on an equal playing field."

Though the robo took longer than anticipated, Mr. Gerber said the firm had to take its time to find the right platform for all 14,000 advisers to use.

Jon Ulin, managing principal of Ulin & Co. Wealth Management, said the robo comes at a great time, what with the Department of Labor's final fiduciary rule, which requires all advisers to act in their clients' best interest on retirement accounts. One concern was that the rule would hurt small accounts, but Mr. Ulin said he would consider using this robo-adviser for smaller retirement accounts under $50,000.

"With the new DOL regulations pushing financial advisers to focus more on utilizing 'fee-based' investment platforms in retirement accounts, I am looking forward to have access to the new LPL robo-platform," he said in an email.

Having a robo-adviser could benefit LPL's business in the long run, by allowing advisers to reach out to clients with whom they may not otherwise engage. Mr. Parker also said in the press release that a robo-adviser will expand services to current or potential clients who may prefer a digital method.

"That is obviously a platform you can shift clients or work on bringing in clients that otherwise you'd have to turn away because they are not big enough," said Alois Pirker, research director of wealth management at Aite Group.

Providing a robo-adviser is one of the initiatives LPL is taking to get on the technology fast-track. The company aims to ramp up its level of automation from 15% to 85% within the next few years, it said back in July, and will include opening new accounts, executive account transfers, rebalancing and moving money from one investment to another.

The speed in which a firm picks and then implements a robo-adviser also depends on what type of integration it wants to offer its clients, Mr. Pirker said.

"It can be pretty quick if you're not putting a lot of emphasis on the integration," he said. "If you want to customize and integrate, you need to take time for that."

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