LPL Financial has launched a business solution designed to help advisors deal with one of the more difficult issues facing the industry—what happens to their firms when they leave the scene.

Many financial advisors have put years into building up their businesses and giving them value. Yet that value can drain out suddenly and be lost if the advisor dies or becomes incapacitated.

For that reason, LPL developed its “Assurance Plan” which offers those advisors a solution in an emergency—their unexpected demise or disability, for example—to keep the firms from losing value. LPL does that by facilitating the sale of the business.

The company developed the plan off advisors’ feedback, explained Jeremy Holly, a senior vice president at LPL Financial and head of its Advisor Financial Solutions.

“There is a big need in our industry to create solutions for advisors around succession planning, and we think this is an important thing to focus on,” he said, noting that it has been widely reported that less than 40% of advisors across the industry have a plan in place.

One of the industry’s greatest ironies, he noted, is that advisors spend so much time planning for their clients’ futures that they tend to forget about their own in many instances, even though their business is oftentimes their most valued asset.

The Assurance Plan, he said, serves advisors at any stage of their business life cycle, protecting their business value and offering continuity to protect the firms’ clients and families from financial disruption.

With the LPL offering, firms that have lost their advisors for whatever reason can get a guaranteed, predetermined minimum purchase price based on a multiple of their recurring revenue. Holly said LPL also will facilitate the sale of the advisor’s business to another qualified LPL advisor, commission-free, providing any additional proceeds above the guaranteed amount to the advisor or their family.

Advisors usually try to figure out this problem by finding a succession partner.

“Finding that other person has always been the biggest hurdle,” Holly said, “and that’s why you don’t see more people with a succession plan, and not to mention the time it takes to put one in place.”

The LPL offering, he said, takes the onus off the advisor to find another person. “We will help you identify that person if the time comes,” he said. 

The creation of the plan was not driven by the current Covid-19 pandemic, he said. “This has been a 10-year journey of mine. The timing just happens to be a little coincidental that we are dealing with Covid-19 right now.”

But he said it sheds light on the fact that it is important for people to think about their health and wellness, and that the LPL offering is something that could help them get peace of mind and help them protect their business, their family and their clients.

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