LPL Financial LLC will soon take the wraps off a major technology initiative intended to appease its 12,799 reps and advisers.
The nation's largest independent broker-dealer is being tight-lipped about its plans, which will include new and improved reporting and trading capabilities, as well as a mobile application for advisers and their clients. But the upgrade was apparently significant enough to persuade LPL's most successful adviser, Ron Carson, who has more than $2.7 billion in client assets, to change his mind about severing his ties with the firm completely.
Since his announced departure, which he attributed to shortfalls in LPL's technology, Mr. Carson created a registered investment advisory firm, CWM LLC, for which LPL serves as custodian, but did not go ahead with plans to create his own broker-dealer.
Instead, he decided to stay with LPL, in large part because of the technology initiative, he said last week.
“LPL is coming out with very exciting technology in the first quarter to help all of us run more-effective businesses,” Mr. Carson said. The new technology will be “more adviser- and consumer-friendly,” he said.
He declined to reveal details, adding that he doesn't “want to steal LPL's thunder.”
He added: “But it's going to be in a category that's very important to us — it will be among the best of the best. It's one of the most exciting technologies I've anticipated in a long time, other than my iPad 2.”
Mr. Carson also said that he considered buying a broker-dealer rather than starting one. In the end, he did not pursue that route, because he did not “want to inherit someone's liability.”
Mr. Carson said less than 10% of his firm's revenue comes from brokerage-related activities, such as securities transactions.
“It's not a significant percentage of the business, but a necessary part,” he said.
LPL typically delivers what it promises, noted one of its advisers, although the fast-growing firm often needs time to absorb areas of expansion, such as acquiring a broker-dealer, before regaining its focus.
“The technology was getting a little stale,” said Doug Flynn, co-founder of Flynn Zito Capital Management LLC, which controls $290 million in brokerage and advisory assets. “I like the fact that they are going to freshen it up.”
SPENDING KEEPS GOING UP
Indeed, LPL spent about $50 million in technology development last year, up from $12 million in 2009 and $28 million in 2010, said Bill Dwyer, president of national sales at LPL.
Like Mr. Carson, Mr. Dwyer offered little in the way of details about the specific changes and enhancements to the technology platform.
He said, however, that the firm intends to roll out the changes during trips in the spring for top-producing brokers.
“What Ron is excited about is that we continue to expand out capabilities for advisers,” Mr. Dwyer said.
In addition to better technology, a streamlining of compliance procedures at LPL was another factor in his decision to stay with the firm, Mr. Carson said.
For example, because CWM wants to act as a subadviser for its own fund, LPL worked with Mr. Carson's compliance officer and found a way to comply with the Investment Company Act of 1940, which regulates mutual funds.
“With that change, the reasons we had to form our own broker-dealer evaporated,” he said.
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