Building a competitive edge: technology as a catalyst for advisor growth

According to a recent Financial Planning Magazine 2022 Tech Survey, two-thirds of the financial advisors who responded said that technology is key to serving more clients and driving business growth. Those findings align with results from net promoter scores, which consistently cite technology as a leading indicator of customer satisfaction and loyalty.  

Yet, technology is more than just a tool; it’s a competitive differentiator. Beyond the basic economics of the advisor-custodian relationship, technology is critical in winning and retaining advisory business. That’s why LPL is on a mission to support more than 23,000 diverse financial professionals—including independent advisors, registered investment advisory (RIA) firms, and institutions—by investing in industry-leading technological tools and systems that enhance their core capabilities, boost productivity, and fuel growth.  

We’ve found that advisors want technology to help them do their jobs better, whether in investment management, financial planning, or estate planning. One way we can support them is by providing technology that makes it easier to get paid for their advice. As part of a large-scale investment in our technology systems, we assessed new tools to support advisors providing fee-based financial planning services.

While still a relatively smaller segment of the financial industry, fee-based financial planning is an important and rapidly growing area. It helps advisors attract next-gen clients who want financial advice but still need to amass the assets necessary to support investment management. It can also help firms attract and retain advisors serving clients at similar career stages.

Historically, advisors offering financial planning for a fee, rather than wrapped in an assets-under-management (AUM) engagement, had to contend with complex operations, compliance, and payment issues that made it challenging to offer the service on a large scale. For example, advisors had to physically collect clients’ checks and send them to the home office—a cumbersome process that takes too much time from serving their clients. 

We knew that improved technology would allow firms to offer fee-based services more easily and generate new revenue streams while freeing up some of their staff to take on direct client-facing roles. Several years ago, after analyzing different options, we selected AdvicePay to help modernize financial planning. We liked that AdvicePay offered a purpose-built solution enabling us to customize the program to serve our enterprise needs. The fact that its leaders are highly respected in the financial planning community was also a plus.

Building on our strategic relationship with AdvicePay, we are expanding our fee-for-service operations beyond payment management to include an end-to-end workflow including eSignature, invoicing, payment, and plan tracking with deep workflow integrations to our advisor workstation ClientWorks. Our goal is to equip advisors with the tools they need to establish industry-leading financial planning practices. By automating key processes and providing a centralized platform, we’re helping advisors save time, reduce errors, and focus on delivering personalized advice. We’re currently piloting this enhanced program with several of our fee-for-service champion advisors.

While technology is essential, overcoming misconceptions about fee-based planning is equally important. Many advisors harbor misconceptions about fee-based planning, wrongly believing they can’t offer it alongside AUM-based billing. So we provide training and education to show them how these services are complementary, not mutually exclusive.

Thanks to this combination of technology and education, LPL advisors have doubled their financial planning revenue over the past three years, turbocharging a once-stagnant service offering. The best part is that diverse advisors are embracing it—from younger professionals favoring a subscription-based model to veteran financial planners focusing on serving a specific niche clientele, such as executives.

As the business of financial advice becomes increasingly commoditized, advisors must seize the opportunity to lean into what makes them unique—their humanness. LPL’s internal analysis consistently shows that a wide range of advisors who engage in financial planning and charge for that advice grow twice as fast as their peers. Financial professionals shouldn’t fear becoming obsolete with the rise of apps, AI, and algorithms. Rather, they should leverage this technology to lessen the administrative burden so they can dedicate more time to connecting with clients and delivering nuanced advice. 

Through the broader adoption of highly integrated, industry-leading technology, advisors can realize their true value, expand their services, and grow their practices. 

Erik Smith is SVP of Wealth Planning and Product Management at LPL Financial, a leading provider of business and investment solutions for independent financial advisors nationwide.