LPL Retirement Leader Departure Reflects an Evolving Adviser Industry

David Reich is out as head of LPL’s Retirement Partners Group, and the firm has also announced plans to reorganize the retirement-focused portion of its business, among other changes.

At a high level, Reich’s duties overseeing LPL’s extensive-but-heavily-siloed retirement business will be at least in part passed to Steve Lank, “executive vice president of operations within service, trading and operations.” Lank is tasked with building and leading a new, integrated team that will essentially present one centralized place for LPL advisers serving retirement plans to access the various solutions and services LPL provides.  

LPL confirms that the internal changes involve “a new, unified strategy that aligns our teams supporting specialized clients, including retirement planning, high-net worth, insurance, and trust businesses.” Previously, LPL says it “structured these businesses in a way that delivered direct support to advisers serving these niche markets. Moving forward, we will unify these groups into one common entity that will provide sales and support to all our advisers and institutional clients. Doing so creates increased awareness and greater access to the depth and breadth of resources and expertise LPL has available to support our advisers.”

While Lank will take on key parts of Reich’s role, the firm also explains Bill Beardsley, senior vice president, will technically take the helm of LPL Retirement Partners. Beardsley joined LPL in 2013, and has decades of industry experience. The firm is clearly hoping the Lank-Beardsley duo can reinvigorate a part of the LPL advisory family that has faced challenges in recent years: Advisers working with LPL as their broker/dealer and provider of other back-office services have been heard complaining in widely published trade media reports that it has become cumbersome to work with LPL and that lines of communication within the large organization are complicated and at times even tenuous. 

Indeed, rumors had been circulating in the industry that such a move was coming, but coverage of the top-level staff and business structure reorganization came first from RIABiz, which reported less-than-happy commentary from advisers within LPL, arguing the departure should be viewed “within the broader effort to streamline a spaghetti bowl of channels in a post-Mark Casady era.”

Casady, readers may likely recall from earlier PLANADVISER coverage, was the former CEO of LPL Financial, remembered for his charismatic and at times controversial leadership of the firm toward a siloed approach to sales and service. When Casady retired last year, Jim Putnam, LPL’s lead director of the board, said the choice to go with Dan Arnold as CEO coincided with the leadership team’s commitment to investing in the business, adding that the company would focus on “improving the adviser experience through technology, enhancing capabilities to support adviser growth, and driving operational efficiency” under Arnold’s leadership.

It has already been noted by some advisers that Arnold joined LPL through its acquisition of the UVEST broker/dealer—a provider of investment services to banks and credit unions—which he led as president and chief operating officer. And so the hope is presumably that his experience seeing his former company’s staff and solutions integrated into LPL will help him bring better communication and internal efficiency to the firm as a whole.

Another important part of this history is the fact that a significant portion of LPL Financial’s retirement business was only somewhat recently acquired, in 2010, when it purchased NRP. The historical exercise of tracing NRP’s own development in the last decade is not exactly an easy one, but it reveals the complicated way large retirement planning entities often come to be—and how their big organizational challenges arise. 

As laid out in previous PLANADVISER reporting, the advisory brand and it’s executives started their run in 2003 as 401k Advisors USA, changing to the NRP brand in 2005. By 2008, NRP was approaching and quickly surpassing 100 affiliated firms, and the following year the advisory group brought on dozens more acquisitions. Then-CEO Bill Chetney made frequent pledges to race past 200 or even 300 affiliations. At the time he told PLANAVISER that NRP was seeing such strong growth in its advisory footprint because of its “relentlessly retirement-focused adviser model.”

“The fact is that the brokers that are leaving the wirehouses and other broker/dealers are looking for a home, and the ones that are focused on retirement are still flocking to us,” he said.

NEXT: Fiduciary rule adds context 

Chetney’s influence on the industry led LPL Financial to take notice, given its own aspirations for growth in the retirement adviser market, and in 2010 LPL announced that its parent company, LPL Holdings Inc., would acquire major retirement assets from NRP and that NRP’s advisers would have the opportunity to join LPL Financial. As a result, the supercharged LPL Retirement Partners entity was to be led by Chetney, in collaboration with Casady.

As LPL explained at the time, the strategic acquisition was meant to further enhance the capabilities and presence of the traditionally retail-focused firm in the group retirement plan space, while providing unique benefits for NRP advisers who joined LPL Financial, particularly in the individual retirement account (IRA) domain. At the time, NRP advisers were told they would “benefit from the scale, resources and services offered by the LPL Financial broker/dealer platform, which will directly support the continued growth of their businesses.”

Fast forward to today and all signs are that the marriage of NRP and LPL has not gone quite as smoothly as envisioned. Chetney has transitioned within the business in order to start yet another venture, the GRP Advisor Alliance. But there is still the presence of great hope and expectation for what a more efficient LPL could accomplish for itself and for its adviser force, including those formerly with NRP: The general retirement advisory landscape continues evolving dramatically into a business where product manufacturers are declining in clout while professional intermediaries are becoming key influencers and conduits. Plan sponsors are relying more than ever before on their expert advisers for help in designing and running their plans. Yet, the advisers aren’t exactly being served to the full potential by their broker/dealers, who are generally speaking more focused on retail clients, high-net-worth clients, etc.

Providing some additional context in all of this is the recent hire of Scott Seese, who will join LPL as managing director and chief information officer (CIO) effective July 10. Arnold says the hire is about “transforming our technology products and platforms” and “building and delivering customer-centric technologies.” Seese was previously CIO of American Express’s global consumer business unit, where he was responsible for “leveraging technology for revenue growth, gaining new customers and lowering costs.” All of these goals are surely on the agenda for the evolving leadership team at LPL.

It is also not a stretch to imagine how the Department of Labor (DOL) fiduciary rule implementation may be adding to the organizational challenges faced by LPL—and indeed by other similarly situated broker/dealers aiming to maintain and grow scale in the highly competitive retirement advisory marketplace. Many advisers are in the position of having to significant change the way they make recommendations and track compensation—and the full support of the broker/dealer is needed to meet the demands of the strict new conflict of interest rulemaking. Against this backdrop, LPL executives say a more unified business model will aide transparency and help identify/remedy any real or perceived conflicts from the end-investor’s point of view.

As the firm explains: “In a post-DOL world, we believe advisers will need to align to a financial planning model to increase their value to investors. We believe unifying these business units to deliver a full suite of specialized services and resources will help our advisers grow their businesses and will be a differentiator in the market.”