"We have advisors from Green Berets to GI Joe," he says, "And they completely run the spectrum of how they utilize our research group. So what they maybe do is call up and say, 'I have my own particular idea or bias and I'd like a little help on selecting a particular mutual fund or a particular asset allocation,' or 'I want to know your view on China.'"
White says that LPL's approach is not to enforce lockstep conformity with the research staff's company line, which might happen at the wirehouses, but instead to create a mosaic of information in which the company's research is used alongside that of other companies such as a Morningstar or an S&P.
That very freedom, but also the need for help, has inspired advisor Debra Taylor, the founder of Taylor Financial Group in Franklin Lakes, N.J., who says her firm has increased its reliance on LPL's research over the past 18 months.
"We review research from a number of sources, including Morningstar, Zacks, Standard & Poor's, Thomson/Reuters, and a variety of Web sites and trade publications, as well," Taylor says. "We will conduct our own research when necessary to either seek further confirmation of [LPL's] research department's recommendations or to address a very specific need on behalf of a client-for example, New Jersey municipal bonds."
She says that not only does her firm rely on the research department's recommendations when discussing specific items with clients (such as whether she likes gold), but she has also put more than 90% of her clients' assets into the research department's centrally managed platforms.
The firm has five platforms, says John Moninger, executive vice president for advisory and brokerage consulting services. Two of these platforms offer complete advisor control and three are centrally managed. Moninger says advisors of all sorts of sophistication levels use both types, depending on the nature of the work they're trying to do and how efficiently they're trying to do it.
Being relevant to advisors with the investment research means being ahead of the curve and proactive when the market is having tantrums. One such cataclysm was the recent 1,000-point drop in the Dow Jones index on May 6, a slide attributable to either fiscal problems in Greece or computer flubs on Wall Street, a land with more modern problems. White says LPL issued a blog in the middle of the market dislocation and a high volume advisor call-in at 4 p.m. for a market close discussion to talk about what happened. (He says the firm blogs eight to ten times a day and sends out a client letter every two weeks.) LPL followed up the next day with its regular 8:45 a.m. morning call, and again the volume was large, White says, and there was an 11 a.m. update as well.
"Obviously [the clients] were nervous," he says about the market drop. "What we said was that this was an aftershock. This is an effect of the financial crisis that we've been in and not something new. We've got a whole lot of casualties because of this recession. So this isn't a new event, this is a casualty of the financial crisis we've been in. This is an effect and not a cause."
A Big Team
Freedman, the Massachusetts advisor, notes that LPL today is a very different firm from the small independent brokerage it was when he started in the business in 1991. "Back then, the chairman's [founder Todd Robinson] roundtable really met at a roundtable," he recalls.
When CEO Mark Casady holds the roundtable meeting today, thousands of advisors attend. So when the firm holds its annual conference these days, Freedman brings most of his six staffers so they can meet their contacts at the home office face to face and exchange business cards. "Everyone has their own extension," he notes. "What they've done really well is to build out the depth of the staff."