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LPL Financial Plans to launch Robo-Adviser

| July 27, 2015
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LPL Financial is wading gingerly into the burgeoning automated investment management business, commonly dubbed the robo-adviser.

Dan Arnold, LPL's president, said the firm was launching a robo-adviser pilot program over the next two months and working with 20 financial advisers to do so.

“We believe the robo-adviser will not replace the financial adviser but it will ultimately gain a certain amount of the market,” said Mr. Arnold, who made his comments Monday in Boston at LPL's annual conference, called Focus.

LPL will use a third party for the technology interface, he said. The robo offering will be built on a portfolio of low cost exchange-traded funds. At the same time, LPL is also eliminating certain fees on its model wealth portfolios and optimum market portfolios, which are part of the firm's advisory platform, Mr. Arnold said.

As part of the changes, the strategist fee charged for all LPL research models in model wealth portfolios will be eliminated in early 2016, the company said in a press release Monday afternoon. This fee elimination translates into a cost reduction of 15 to 20 basis points on those portfolios. In addition, the firm announced that the IRA maintenance fee will be removed from its model wealth portfolios and optimum market portfolios, according to the press release.

Mr. Arnold gave no other details about LPL's future robo-offering.

LPL is the latest independent broker-dealer to acknowledge the potential competition of robo-advisers such as Wealthfront and Betterment. Over the past year, top executives with Cambridge Investment Research Inc. and Commonwealth Financial Network, two of LPL's most significant competitors, have said they intend to look at robo-advisers and how they could mesh with their advisers' practices.

Not all traditional firms in the financial advice industry are exploring the robo-adviser. Raymond James Financial Inc. this month said it was not developing a robo-model that would compete with the firm's advisers.

Andrei Jigalin, CFP is attending the LPL National conference in Boston and heard the announcement first hand.  Please contact him for more information. 

Andrei Jigalin, CFP®


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