LPL Financial says it wants to be “the most inclusive place for all advisors to do business.”
The nation’s largest independent broker-dealer is looking to its black, Latino, Asian-American and LGTBQ representatives to help guide it toward that goal by creating so-called advisor business communities to meet at least once a year with senior management. LPL also held a session last week with advisors, home-office staff and product sponsors to discuss resources for tapping into underserved markets.
In late January, a panel of executives from other IBDs outlined their multi-front efforts aimed at
Only 23% of CFPs are women and just 3.5% are black or Hispanic, according to the CFP Board, which has challenged to the industry to serve and recruit from a wider base. People of color “have consistently acquired wealth that has been overlooked by the financial services sector, which has resulted in lost business opportunities,”
Many advisors surveyed in the study said mentoring was most likely to make a difference — and LPL’s approach could help advisors advance that way, says Marilyn Mohrman-Gillis, the Center’s executive director. Firms need to be more transparent with their demographic data, though, she says.
Advisors like Marci Bair are helping inform LPL on how best to gather more data on the makeup of its advisor force — and crafting better messaging for approaching diverse communities that addresses their difficulties navigating the industry. They’re also building the business case behind it.
“If you are a growing practice, then you want and need more clients,” says Bair of San Diego-based Bair Financial Planning. “It’s imperative that you as an advisor serve the clients, the communities that are around you — and those demographics are changing. Your practice should reflect those in your community.”
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She and other LGBTQ advisors and allies attended an event with LPL executives called “LGBT Investors Day” last week in Vancouver, Washington. The group discussed how to ensure prospective clients know the firm aims to communicate with them openly, says Bair, who is a lesbian.
A week earlier, eight black advisors met with home-office staff and executives for the first meeting of LPL’s African-American Advisor Business Community. The firm plans to launch Asian-American and Hispanic committees later this year, alongside several existing employee resource groups for advisors.
Advisor Stanley Funches of Intelus Wealth Management doesn’t know how many black LPL advisors there are, but advisors and the firm know there aren’t enough, he says. LPL has an opportunity to dispel myths about “people who have historically been disenfranchised financially,” he says.
For Funches, who is black, the misconceptions start with the view that the African-American community has no capital to invest and that focus should only be on a prospective client’s investible assets rather than all components of net worth. He also hopes LPL can help more black advisors sustain their practices through the difficult first three to five years of launching their businesses.
“If firms aren't showing a path for a new advisor or someone new to the industry to come into the profession, showing them a path where it's economically feasible for them to do it, I think it's going to be difficult to increase those numbers,” says Funches, who is based in Birmingham, Alabama and attended the committee’s meeting at LPL’s corporate office in Fort Mill, South Carolina.
“Until that happens,” he adds, “we can have all the stats we want, we can give all the scholarships we want, and I don't know if that will change.”
LPL’s CEO Dan Arnold and Rich Steinmeier, head of business development, also joined the group at the first meeting. The advisors connected with each other and spoke with senior executives in what LPL called a “strategic conversation” about their community and underserved markets.
“LPL is enhancing its efforts to be the most inclusive place for all advisors to do business,” Lauren Taylor, as assistant vice president for advisor diversity & inclusion, said in an emailed statement. “By creating opportunities to directly engage with advisors, we are able to pair advisors’ business challenges and needs with solutions, as well as create new solutions where there are gaps.”
Advisors at LPL can now self-identify their ethnicity and military status. The firm expects to have more complete information on diversity later this year, according to Taylor. The CFP Board’s center would like to learn more about LPL’s plans as it tracks the industry’s efforts, Mohrman-Gillis says.
Case studies and best practices will form part of a focus towards what Mohrman-Gillis calls “accountability” at the center’s
“Even though it is sobering, and in my view unacceptable, what it does is allows us to then define metrics, create goals and then work to achieve those goals in an open and transparent way. I think that's really important if we're going to make progress,” Mohrman-Gillis says. “The idea of being transparent and challenging yourself in a public way is a measure of accountability.”
LGBTQ advisors have been discussing how best to gather data on sexual orientation and gender identification, according to advisor Laura LaTourette, who is a lesbian and a member of the firm’s advisor inclusion council. The phrasing and execution of such questions make the process complex.
Customizable marketing brochures aimed at the LGBTQ community, along with educational resources for advisors on the proper use of gender pronouns and generational differences in prospective LGBTQ clients will also enable them to bring in more clients, she says.
LaTourette says her view of LPL changed after she was approached by board Chairman Jim Putnam, who pledged 100% support following a panel she sat on at LPL’s Focus conference last year. The founder of North Georgia Wealth Management Group says LPL had begun to feel “top heavy” over her 15-year tenure.
“I all of a sudden drank the Kool-Aid and I’m not a Kool-Aid drinker. I drink bourbon on the rocks,” LaTourette said. “If you give us a couple years, I think we will really look different. I truly believe that.”
Bair hopes connections between advisors and home-office resources will help offer more aid to those who may feel isolated or want to increase their business in underserved communities, she says. For example, LGBT clients are strongly attracted to socially responsible investing tools, she says.
“Any marketing needs to be authentic,” Bair says. “We're very savvy and aware of companies that are just coming in to grab a dollar and not really support the community. It takes forethought, it takes a concentrated effort.”
