LPL Schools Hybrid RIAs on Rollovers

The IBD just clarified its ‘education-only’ policy tied to advisory accounts

LPL's campus in San Diego. LPL's campus in San Diego.

As with many issues related to the Department of Labor’s new fiduciary rule, LPL Financial’s approach to IRA rollovers is complicated.

The firm says that it has not instituted new policies regarding rollovers. It has, however, shared “new guidance” with its hybrid advisors after some of them asked for such information. This step was complemented by a conference call.

“From an advisor’s perspective, there’s just a lot of change management related to the DOL rule, and some of them wanted more clarity on rollovers,” said LPL spokesman Jeff Mochal, in a statement.

According to the independent broker-dealer, LPL has “an education-only policy with respect to rollovers.”

This means advisors can speak with clients in general terms about rolling over their retirement accounts, along with other options. Advisors also can accept investor-directed rollovers.

This approach has been in place at the IBD for several years, says Mochal.

What the firm did recently, he points out, is to clarify that hybrid advisors may not suggest rollovers that involve brokerage accounts. Advisors can, however, mention rollovers if “they are limiting their recommendation to advisory services through their hybrid RIA firm, and if they follow certain conditions” in order to comply with the DOL rule.

In general, LPL’s policy for the past few years has been to prohibit direct and explicit recommendations of rollovers. Nonetheless, advisors can educate clients about options for their retirement plan assets.

“If investors independently determine that they wish to roll out [assets from an employer-sponsored plan] and [put the assets] into an IRA, then advisors are permitted to assist [them],” Mochal added.

Again, for hybrid advisors, rollover services can be discussed in the context of advisory services offered by a hybrid RIA. Related steps must also be followed, according to the IBD. 

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