Tech Wars Roil Custodian Landscape

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By Karen DeMasters,

The world has seen rapid-fire changes in technology, and so has the financial services industry. Not only do advisors have to keep up, but so do the major custodial firms hoping to serve them, including Fidelity, Charles Schwab, LPL and other firms. Trillions of dollars of custody assets are at stake as these firms try to differentiate themselves and position their tech offerings as special, but also come up with competitive price points. These companies also have to reassure financial advisors that they are not trying to steal retail clients out from under them, and that they are letting the advisors control the relationships.

LPL Financial

Because technology advances at breakneck speed and advisors need a lot of the same products and services, competition among custodians is fierce.

“The custody space is incredibly competitive,” says Robert Pettman, executive president of products and platforms for LPL Financial in Boston. “There is a lot of pressure on custodians” to set themselves apart.

LPL got a boost to its technology at the end of 2018 when it acquired technology company AdvisoryWorld. The advanced technology will be introduced to advisors starting in January through LPL’s ClientWorks Connected, which integrates the digital services offered by LPL.

“Custodians need to deliver value; they can no longer compete only on price,” Pettman says. In LPL’s case, the firm entered the market as a strong contender in 2009, and has become one of the five primary competitors for this type of business, he adds. LPL has 10% of the market share. In 2018, LPL invested more than $100 million in technology, including improvements to performance, resilience and functionality in its ClientWorks program.

LPL has reduced pricing for its Strategic Wealth Management platform, which now offers access to mutual funds with no transaction fee. The firm also added enhancements to its Guided Wealth Portfolios, which enable team-based URLs and support split representative identifications so that more than one advisor can work on an account. Prices were also reduced across corporate and hybrid RIA platforms.

The Guided Wealth Portfolios platform now offers automated annual reviews and digital servicing features that keep the advisor at the center of the client relationship.
In 2019, LPL plans to continue to integrate with third-party vendors and build toward an offering of a core technology stack that will provide an end-to-end solution for advisors who want to simplify their technology experience within the system that powers their practice…

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