LPL Financial announced at the annual Focus conference that the company will be entering the robo-advisor space.
Dan Arnold, president of LPL Financial, told Financial Advisor the company is partnering with 20 advisors to create a robo-advisor pilot program. LPL is also partnering with an undisclosed third party to elevate their own technology for the portal and integrate it with LPL’s custodial platform.
Arnold’s general point of view is that robo advice will compliment advisor offerings to better serve their clients if advisors continue to position themselves as a trusted local resource.
“We don’t believe robo advice will replace the advisors,” he said. “A machine cannot replace the complex problems advisors solve.”
The launch of the technology solution will be coupled with portfolios of low-cost ETFs and price breaks in LPL’s Model Wealth Portfolios (MWP), with cuts of 15 to 20 basis points through the elimination of the research strategist fee.
LPL hopes to begin testing the robo-advisor solution within the next two months and roll it out to its advisors in 2016, Arnold said.
While he doesn’t view the technology as a replacement for professional advisors, he does think that robo advice will capture some self-directed investors.
“The change will be disruptive for pricing for traditional value components like asset allocation,” he said.
In another announcement, Arnold said LPL Financial will improve its operational efficiency for both LPL and its advisors from 15 percent to 85 percent with a tool to move money in and out of accounts, through a new account system and via account transfers in 2016.
Moreover, LPL continues to further develop ClientWorks, which remains in a pilot program in which more than 300 advisors are participating.