LPL Recalibrates Retirement Business for the Long-Term

When Bill Beardsley, head of the Retirement Partners business at LPL, joined the firm some five years ago, there were perhaps 300 advisers in the business who could be considered 401(k) plan experts.

Since then, both the number of retirement specialists at LPL and the number working in the broader adviser marketplace have grown strongly. In the last year alone, the LPL Retirement Partners program has attracted some 200 new advisers, with 1,600 members now working on LPL’s “hybrid platform.” Nearly 1,000 other advisers support retirement plans on LPL’s corporate platform, and overall, more than 6,000 in LPL’s total adviser pool touch at least one retirement plan, many of them non-specialists using LPL’s Small Market Solution.

With these numbers in mind, one can understand the frustration among LPL leadership at the suggestion that their decision to close the Worksite Financial Solutions program signals that the firm—which is both a registered investment adviser (RIA) and a broker/dealer—is turning away from retirement plan services.

Asked for his take, Beardsley recently told PLANADVISER that he continues to “get some questions about this from time to time.”

“I’m happy to talk about this and explain our thinking. Worksite was a big initiative for the Retirement Partners Group here at LPL,” he said. “In sum, the problems that Worksite was trying to solve were really a series of important questions that continue to influence the direction of our industry. How do we help our advisers provide wellness solutions to the participants within 401(k) plans? How do we help them provide to their clients more holistic planning and investment opportunities? And finally, how do we help advisers provide real advice to their clients within 401(k) plans?”

Some industry watchers (and in fact some advisers quoted from within LPL) have suggested that the closing of Worksite signals that the firm is no longer interested in solving these questions, but Beardsley rejects that characterization.

“These questions and these needs are still out there, and we are still looking at building new solutions to solve all these challenges,” he explained. “We’re having conversations with our partners and our advisers about this, because we all agree that these are important questions, and that we need to keep pushing our business forward. Worksite was a solution that was great for what it was, but we have come to believe that we need something that is more scalable and that can be more broadly adopted across our business.”

Emphasis on scale 

“As your readers know, the challenge and opportunity for the broker/dealer in this conversation is, how do we make servicing retirement plan participants scalable and efficient for our advisers across our broader enterprise?” Beardsley continued. “That’s what we’re building out right now, so I encourage your audience to stay tuned.”

At a high level, LPL is looking to create something that will not just be focused on a few hundred Retirement Partners advisers. The leadership, Beardsley emphasized, wants to deliver something that is “deliverable across the enterprise and that leverages our scale.”

“So this is why you have heard the leadership here at LPL talk about building a more unified sales structure,” he noted. “We continue to focus on this. There are more talks happening right now. We are working to stand up something that is actually leveraging our entire enterprise to meet these client needs and these adviser needs more broadly. We’re moving towards more capabilities that are more broadly scalable across all our advisers.”

Fiduciary service for all? Not necessarily 

“We are also working to align ourselves with what the industry best practices have become on the wealth side,” Beardsley said. “If you think about how an adviser sets up their business from a wealth management perspective, they either build out that business in a rep-driven model where the adviser is also the discretionary investment manager, or they go with an outsourced centrally managed solution.”

The existing LPL Retirement Partners structure allows advisers to serve in that first capacity, along the lines of the rep-driven model where they are the fiduciary taking care of the client portfolios. But the firm has also been building out capabilities on the other side, Beardsley explained, “because there are a lot of advisers that want to take the centrally managed, outsourced approach.”

“To be clear, that’s what our Small Market Solution is aligned to do,” he said. “It allows advisers to leverage our expertise and then focus more on the relationship management role. This work reflects something that the industry is currently grappling with, I think. There are a lot of clients who want a retirement plan specialist who will directly act as a fiduciary investment adviser. But there are also situations where the need is not as great for the adviser to become a pure 401(k) specialist, and they can outsource that work to LPL while they continue to do their job in the relationship management role.”