Special Feature: Interview with Rob Pettman, Products and Platform Management at LPL Financial

The following interview was conducted with Rob Pettman, Executive Vice President of Products and Platform Management at LPL Financial

Q. What major shifts are you expecting in the U.S. Wealth Management industry over the next 12-18 months?

Technology - We have a saying here that platforms are becoming the new products. Product companies are now tailoring their content to complement what is on an advisory platform and the packaging. This trend will continue, with models based approaches leading the way, but the technologies surrounding these platforms will be the key piece that will gain momentum. In the RIA marketplace, we are seeing higher weightings in the platform selection process toward the technology and integration that surround the advisory platform selections rather than on the core investment capabilities. The key to this shift will be a focus on integrations that streamline workflows. It’s not just about saving keystrokes, it’s about increasing an advisor’s capacity to scale by delivering sophisticated capabilities for digital client servicing, model management and planning.

Product innovation - I think the biggest opportunities are in ETFs and advisory packaging. It’s clear that the ETF product construct is not fully mature and has some continued life in its evolution. We will see numerous versions of this product category enter the market and distribution is going to have its work cut out consuming the change and innovation. On the advisory packaging front, I believe we still fall short on income strategies. With continued developments in technology and advisory platforms, there is an opportunity to add more science to income generation which will help us move away from the art form that it currently is today.

Focus on planning - The focus on planning will certainly continue. Advisors will naturally move towards climbing the wealth management value ladder as existing services become automated, scaled and offered at a lower cost. Progress in technology and product innovation will drive this shift and continue to move it forward, allowing advisors to think more about their value to investors.

Q: LPL has been making significant improvements to its platform. Tell us about some of these key enhancements and what prompted LPL to make them?

A: Just as advisors are making a move up the value ladder, technology and business trends are forcing broker/dealers to do the same. Companies can no longer rely on the old ways of doing business to serve the evolving needs of advisors and that means they need to offer a diversified suite of services in order to compete in the future growth of the business.

We are evolving our business to provide more value, and it’s happening in a number of different places as we are not only a broker/dealer: we are also a custodian that competes in the RIA marketplace, and we are an advisory platform provider. The innovation and changes we are making are all about creating value with services that make advisors better with us than without us. We’re doing this in a lot of different ways, but two key examples are through enhancements to our advisory platform and technology that creates integrated workflows.

We are currently releasing an advisor sleeve that exists within our centrally managed platform. This product was intended to solve the simple problem of capacity for advisors, but has grown into a unique value add service. This is the first step for us to create an experience with our advisory platform that makes managing money easier.

To address the need for more integrated and streamline workflows, we’ve developed ClientWorks Connected. ClientWorks Connected addresses the seven key workflows an advisor needs to service an investor from prospect through the life of their relationship. We’ve partnered with a curated group of the top technology providers across the wealth management space to integrate their tools onto our advisor workstation. Previously, our system was closed off to outside providers because we didn’t have the capabilities needed to integrate (a problem for many other large financial services providers as well). With ClientWorks Connected, we are opening up and finding ways for advisors to use the providers and services they prefer through our platform, while simultaneously building some in-house tools that will also connect seamlessly. This model is built on choice, so we wanted to have a couple of options in each level of the stack, but not too many where we would over complicate our ability to create a great end to end experience. Our strategic bet is that by concentrating the menu, we can create levels of efficiency and unique experiences that advisors cannot create by themselves.

Q: How is the rise in global digital wealth management impacting LPL’s business model and what investments has LPL been making into technology?

A: The rise in global digital wealth management is pushing us forward in exciting new ways. We’ve elevated our thinking about technology and are approaching innovation from a few different angles. As I mentioned, we’ve introduced ClientWorks Connected as a way to integrate with best-in-class providers, but we’re also improving and innovating our own core stack. We’re building solutions like goals-based planning tools and a CRM built in-house and offered at no cost and we also bring proposal generation to our core stack. We are also focusing more energy into our investor portal and thinking about how we can help advisors build better relationships with their clients. We will be launching an enhanced version of our investor web application that includes a mobile app later this summer as a first step in connecting more digital servicing capabilities to drive investor engagement with their advisor.

Q: Given the key trends you mentioned in the U.S. Wealth Management industry, are there any products and/or vehicles in greater demand by your advisors?

A: Outside of the ETF structure, I see a growing demand for SMAs, personal indexing, and interval funds. I see a lot of opportunity on the interval fund side and potentially a new place for active to thrive. Not everyone needs daily liquidity, and not having to meet that demand frees up considerable capacity for active management. We need to invest in our infrastructure to help make the distribution and administration of these products easier. I think this is an area where we will see much more demand and can serve our advisors better moving forward. 

Q: As a recognized leader in the industry, do you have any advice for young professionals that are looking to enter the asset management or financial advice business?

A: This is funny because I still consider myself a young professional. The best advice I can give anyone is to be the owner of your brand and to always have a side project. If you don’t own your brand, then others will own it for you. If there are things that you stand for or want to be known for, tell people and live up to it. Don’t be afraid to share your big ambitions with your colleagues. Not just as it relates to the next promotion, but where you want to be 5-10 years from now. I’ve found that people naturally want to help and put you in the place to succeed if you help them understand who you are and where you want to go. Know who you are and what you want and let others help you get there.

When I say have a side project, what I mean is a project outside of your day-to-day activities that adds value and that you find interesting to work on. If you love what you do, this should feel more like a hobby than anything else, but I’ve found that those who show up with new ideas and contributions in addition to excelling in their daily job functions have a tendency to get rewarded.

Q: What passions or interests do you have away from work?

A: My family is the center of my attention, and we like to work hard and play hard. I suppose one unique part of me is that I used to participate in wakeboard competitions and have still held on to that element of my life. I don’t compete anymore, but I spend a lot of time on the lake doing watersports with my wife, children and our friends.



This Q&A contains the current opinion and views of the Manager interviewed, and not necessarily those of PIMCO. These opinions are subject to change without notice. PIMCO is not responsible for the information or views communicated by representatives of other companies. This material is not indicative of the past or future performance of any PIMCO product and should not be considered as investment advice or a recommendation by PIMCO to purchase, sell or hold any securities or strategies discussed. PIMCO has distributed this material for informational purposes only. PIMCO and LPL Financial are not affiliated.