Fortigent Buy Plays Into LPL's Long-Term Strategy

Wednesday, January 04, 2012 11:47
edit
Fortigent Buy Plays Into LPL's Long-Term Strategy

Tags: LPL

A lot of people are talking about LPL's acquisition of wealth management outsourcing firm Fortigent as a real transformative move for the industry, but few have much detail about what exactly it means.

This Website Is For Financial Professionals Only


 

Fortigent provides outsourced portfolio construction services to a wide range of advisors in banks, brokerage firms, and RIAs.

 

Firms like this essentially create model portfolios -- using best-of-breed third-party ideas -- and charge advisors to build real client portfolios according to those directions.

 

It's a fairly simple proposition that is winning a lot of fans on the private banking side in particular. The relationship managers who know their high-net-worth clients can spend more of their time working with them instead of sitting behind a screen investing client money.

 

Meanwhile, the people who know the most about the way markets work can spend more of their time running simulations and looking for opportunities -- without having to gather the assets themselves.

 

Call it "model-only" or "overlay" or "open architecture" investing, Fortigent managers are now consulted in the way $50 billion in assets are invested.

 

Last fall, LPL made a fairly quiet purchase of overlay technology firm Concord. That gave them the software they needed for their affiliates to roll out overlay portfolios.

 

Yesterday's purchase of Fortigent adds best-of-breed managers to the mix, giving LPL reps the models they need to populate those portfolios.

 

They've just brought the "outsourced" approach in house. And that's a big deal.

Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy