CHICAGO -- The opening morning of focus11, LPL Financial's national conference, got off to a rocky start Monday as the market took an immediate downturn with news of the Standard and Poor’s downgrade of the U.S. debt rating. LPL’s regular research morning call was scheduled onsite, which was perfect, as the advisors got to hear firsthand what LPL’s take was.
The Dow Jones industrial average would lose more than 600 points, or 6% of its total value, by day's end while the Nasdaq and S&P 500 shed 7%, respectively.
Jeff Kleintop, Chief Market Strategist, at LPL, mentioned how America is the gold standard, so France and the UK are probably worried they are next. Kleintop said, “I don’t want to sugar coat it.” However, he did hope the panic would be over by 10 a.m.
But it only got worse as the trading day progressed.
Kleintop hoped that some good could come from this, such as Washington knowing they have pushed things too far. He noted that the downgrade might push the U.S. government to reconsider the $3.9 trillion debt deal the President rejected.
The real problem will be for Europe, Kleintop said. On the other hand, he believes precious metals will do well. Overall, he did not see the linkages that were associated with the last financial crisis.
A biggie with unique access for advisors
The conference brought in over 5,000 attendees, which included 1,100 employees from the 100 sponsors exhibiting in the massive McCormick Place exhibit hall here in Chicago. There were 200 sessions scheduled with additional learning lounges for attendees to get to know more about the support LPL provides, with the newest edition being a booth focused on social media.
Unlike most conferences where senior executives are only scene behind the podium or they just meet with the top advisors, LPL, the nation's largest independent broker-dealer, took a different approach. There was a welcome area with massive exhibit hall signage, tables and chairs. When not on stage or leading breakout sessions, LPL’s team of leaders could be seen sitting with advisors who walked in to talk without appointments or handlers.
News from LPL
Bill Dwyer, president of national sales and marketing for LPL Financial, opened the general session saying, “We find ourselves in highly unusual times.” He was happy LPL’s conference services has supplied over 200 computers in the exhibit area so advisors could stay in touch with the markets and their offices back home. He praised the attendees saying, “It is times like these that you have continuously shown your value to your clients.”
Dwyer said, “I love the theme, a focus on the future. This is when people will find their advisors. You have the opportunity to grow your business more than ever.”
Dwyer spoke of three areas where they are proud to be helping advisors: retirement income, a health wealth initiative and a woman’s initiative.
Dwyer made a big announcement to attendees, saying, “There is no question that the fixed costs are going up in this industry. We have to pass on some of these costs, but use our scale to save on some expenses.” He went on to say, “Effective January 1, we are dropping trade prices to $9. That is the equivalent of putting $6.5 million back into your businesses each year.”
Dwyer’s other announcement was related to the firm’s efforts in Washington. He said that although they were involved, they needed more help and volume. He added, “When you get involved, that goes a long way.”
This set the stage for the unveiling of their partnership with the Financial Services Institute, in which LPL will pay for the first year of each advisor’s membership.
Dwyer concluded saying, “You are community leaders. The future seems incredibly bright.”
LPL’s chairman
Mark Casady, chairman and CEO of LPL Financial, opened up the market remotely, with a huge Nasdaq screen showing the action live in Time Square.
Casady stated that there are more than 2,700 employees at LPL and that 350 are here to help. He said, “Our business is changing. The future is really about convictions, not predictions. Change is the new constant in our industry and the regulatory environment.
He said that one of the advantages of LPL’s size is that it can amplify each advisor’s voice, especially around the fiduciary standard where he stated the need for one self regulatory body with a harmonization of the rules. Casady encouraged the attendees to talk to their local officials.
Creative partnerships
LPL sees itself as a clear partner with its advisors and other institutions, thus it was perfect to have Michael Eisner speak. Along with being the former CEO of The Walt Disney Company, he is also the author of a new book called, “Working Together -- Why Great Partnerships Succeed.”
Eisner explained the math of partnerships where 1+1 = 3 or 300, which comes out of the theory that two minds that better than one. He explained how some great ideas die without the support of a partner to help them get off the ground.
He also talked about how compatibility is a requirement of good partnerships. He explained that a box has to be set around the budget and the creativity needs to work inside the box. It is his formula for consistently achieving success.
“Strategy needs to be coupled with something else,” Eisner said. Surprising the crowd by adding, “Micro management.” He believes that great business leaders are micro managers because they assume a higher degree of responsibility. He thinks that management by committee leads to less success.
Eisner felt that micro management gets a bad rap from employees that are unhappy with their bosses. With that said, to be good at micro management, managers should not be intrusive.
Looking back how he helped revamp Disney, he stressed the importance of meticulous brand building. He explained that every activity from Disney was like a dot on a picture of the overall brand.
It was interesting to hear him share, “To be successful, you have to fail. Mediocrity is what people get from being afraid of failing. Firms need to have the tolerance to fail.”
Eisner’s last advice about partnerships is what he called the ultimate point.
“They make everything more fun,” he said. He referenced research of what really makes people happy. He added, “It is sustained relationships over a period of time -- the valued long-term interaction with a fellow human being.”
Executive roundtable
When asked about the LPL’s lowest attrition of 3% (based on business, not advisors), Derek Bruton, managing director and national sales manager for LPL Financial Independent Advisor Services, explained part of the reason for the success. He said, “We have taken an important focus on succession planning.” He noted the work with FP transitions. On top of that, he pointed out LPL now begins working with the advisors well before they retire.
Dwyer explained that the conversations have moved from “How do I sell my business?” to “How do I maximize the value of my book?”
Dwyer and Bruton were proud to mention the 2010 Advisor Productivity and Profitability Study that found LPL Financial affiliates are more profitable, earn more revenue per client, are more efficient, service larger relationships and generate higher recurring revenue (suggesting higher valuations) compared to their peers.
At LPL, advisor research is also quite important as it helps them identify ways to create new services and improve the current offering. Dwyer said there are hundreds of improvements in the works. The executives noted retirement, healthcare, ETFs and even social media as areas where they are rolling out programs to help their advisors.
Bruton mentioned a special initiative to help advisor offices become more efficient where 28 offices are participating to help improve their business models. He explained that advisors spend too much time on non-revenue related activities, proving a stat that an advisor only spends 2.8 hours a day with their clients.
John Moninger, the executive vice president for advisory and brokerage consulting services for LPL Financial, explained the power of their business consulting services. He said, “The more engaged, the more the advisors are using [our services], the more successful they are.”
Dwyer wrapped up the roundtable saying, “If we look at the business today, what we see is the greatest period in history for the need of financial advice. Our middle class is very different from the rest of the world. We have a sense of opportunity.”
He explained that LPL wants to drive productivity, sharing “We have 4,400 hundred businesses we support and they are all unique.” He noted that scale is the advantage we offer. Dwyer said, “The largest cost is our staff, but it is our highest selling point.”
The staff and the services, along with a top-notch national conference, help make it clear why LPL Financial has a low 3% attrition rate.
Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at
