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New Day at LPL? 20 Advisors Describe Changes Under Dan Arnold

September 4, 2018 – Financial Planning

Advisor Laura LaTourette noticed the difference in two panels on inclusion and diversity at LPL Financial’s recent Focus conference.

“I have never seen ‘LGBT’ written on anything when it came to LPL,” says LaTourette, who is a lesbian. “For me, that was just so empowering.”

For major office of supervisory jurisdiction manager Rich Dragotta, the changes became apparent in three town hall sessions LPL held for advisors with CEO Dan Arnold.

“It was something that was very transparent and very candid, and I think everyone who was there appreciated it,” Dragotta says. “In 15 Focuses, that was the first time I’ve seen that.”

And fellow advisors Jamie Cox and Julia Carlson both saw a major shift when it came to LPL’s move to allow third-party vendors like Riskalyze to plug into the firm’s ClientWorks technology platform.

“I think that was the missing piece,” Carlson says.

The No. 1 independent broker-dealer held the conference in Boston between July 30 and Aug. 1 with some 3,600 of its more than 16,000 advisors in attendance. LPL faces increased competition from its rivals and the challenging task of serving tens of thousands of independent businesses all at once.

Furthermore, Arnold only took his post at the beginning of last year from longtime CEO Mark Casady. LPL’s headcount has expanded by 13% year-over-year following the firm’s acquisition of the assets of National Planning Holdings, and its quarterly net income has soared by 74% to $119 million.

At the same time, LPL advisors reported widespread problems with the rollout of ClientWorks and the level of service from the home office. More than 20 advisors who spoke with Financial Planning noted such deficiencies while welcoming Arnold’s acknowledgment of them in his speech at Focus.

Arnold told the group that a full internal assessment and feedback from advisors showed that LPL’s culture was not aligned with its strategy, according to a summary of the speech released by the firm.

“In order to execute our strategy, we’ve got to change how we work,” Arnold said. “We are transforming our culture to one that puts you and your needs at the center.”

LPL closed this year’s Focus conference to the press. They also didn’t make Arnold or any executives available for an interview, answer any questions on the record or provide a transcript of the speech beyond the summary and highly edited video clips posted to its social media accounts.

Arnold’s speech included a vow to “make it easier to do business with LPL” and a theme of the firm being “one team on one mission,” according to the firm’s summary. Advisors also cite speeches by Andy Kalbaugh, the president of the national sales and consulting division, and Burt White, the chief investment officer, as highlights.

Advisor Cal Elam, a retired brigadier general with the South Carolina Air National Guard, joined Kalbaugh onstage to explain why even mess cooks fulfill a critical role, even if they’re not flying the jets. The company also played a video featuring advisor Irene Berner, her client Edna and Edna’s Harley-Davidson.

The advisors helped fill in the gaps on one of the most prominent conferences of the year, which came at a critical time for the firm. LPL may need to recruit hundreds of advisors per month just to retain its current size, based on normal attrition rates, according to consultant Tim Welsh of Nexus Strategy.

“Once you get too big, you lose control. Your scope of management becomes so exponential that no one person, no one team, can do it. We can all put those mission statements on the walls or the wallpaper, but you’re dealing with too many people,” says Welsh. “They’re in crisis management.”

Arnold’s outreach to advisors reminded him of Casady’s approach as CEO, he adds, when the CEO “knew every big advisor by first name and they had his cell phone number.”

Casady declined to discuss the view that the firm’s culture did not align with its strategy at the end of his tenure, noting in an email that he retired from LPL last year. However, he still holds more than 130,000 shares of LPL stock, making him the second largest direct individual shareholder behind Arnold.

None of the advisors brought up LPL’s stock price or Arnold’s reputation among some in the industry as a technocrat or so-called numbers guy, and only two of them mentioned the NPH acquisition.

The firm’s new Advisor Inclusion Council, aimed at fostering diversity among advisors and clients, drew many positive reviews, though. Members will help the firm make progress toward its goal of “being the most diverse and inclusive place to do business,” according to the company’s charter for the group.

In addition to Arnold’s pledge to spend $125 million on technology this year, LPL also promised it would soon join IBDs like Securities America, Voya Financial Advisors and Cetera Financial Group in offering a client texting solution. The firm is also developing a client-facing mobile app for all devices.

Additionally, the firm relieved advisors of the need to get clients’ driver’s licenses for new account openings or a voided check to set up an automated clearing house transaction. While such steps may not seem like much, they’re a help to the day-to-day tasks at LPL’s practices, says advisor Laila Pence.

“They may be small, but they really are big in terms of what we do on a constant basis with the clients,” she says.

The practices weighing in after Focus range from LPL’s largest hybrid RIA, Private Advisor Group, and other major super OSJ enterprises, to smaller firms and sole practitioners. To view the reactions to Arnold’s speech and key takeaways from 22 different practices, scroll through the slideshow.

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