LPL Financial’s fiduciary-friendly platform for affiliated advisors is still about six months from being launched, but the independent broker-dealer shared the names of its 20 mutual fund partners on Thursday.
The mutual-fund-only platform, or MFO, does not include fund behemoth Vanguard. Nor does bond shop Pimco make the list. (ETFs are not part of the new platform, but are sold via general brokerage account and fee-based accounts.)
It does offer clients reduced fees, while advisors get standardizing compensation. The no-load funds do, though, bring advisors upfront onboarding commissions of up to 3.5% and a “consistent” trail of up to 0.25%.
The onboarding charge, though, is waived for investors already holding assets in these funds. About of 80% of client assets in mutual funds now on the brokerage platform are invested in these 20 fund families, according to a memo sent out to advisors.
LPL also says investors can easily move between fund families, rather than sticking with a particular one year after year. Plus, clients may get discounts based on the total amount of brokerage assets invested in MFO-eligible mutual funds. The IBD has also eliminated certain annual account and trading fees.
“With this platform, LPL is striving to preserve choice for investors while managing the evolving regulatory environment,” said Rob Pettman, head of Product and Platform Management, in a statement. “We will be delivering a price competitive solution with the benefit of free exchanges across participating fund companies to help our advisors differentiate their practices in the market and serve a broad range of investors.”
When LPL outlined plans for the MFO platform in August 2016, the IBD said it antipated its initial launch it in the first quarter of 2017
When asked about the one-year delay, a spokesperson pointed to "uncertainty" related to the Department of Labor's new fiduciary rule, which went into effect June 9, as a key factor; the platform also entailed changes to how funds are traded by the IBD and development efforts that included products vendors and sponsors.
The 20 fund companies expected to be available on the new platform in 2018 are:
- AB (formerly Alliance Bernstein)
- American Century Investments
- American Funds
- Columbia Threadneedle Investments
- Delaware & Optimum Funds
- Eaton Vance Investment Managers
- Fidelity Investments (pending final approval)
- Franklin Templeton Investments
- Goldman Sachs Asset Management
- J.P. Morgan Asset Management
- John Hancock Investments
- Legg Mason Global Asset Management
- Lord Abbett
- MFS Investment Management
- New York Life MainStay Investments
- Principal Global Investors
- Putnam Investments
“Goldman Sachs Asset Management is pleased to be working with LPL Financial on the development of its Mutual Fund Only brokerage platform, which will feature the GS Financial Square Government Money Market Fund as a vehicle to access the platform,” said Matt Hostasa, managing director, Goldman Sachs Asset Management, in a statement. “We believe this arrangement will help provide clients with unique investment opportunities for today’s markets.”
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