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.
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.