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Regulation and Compliance > Federal Regulation > DOL

LPL Cuts Prices, Account Minimums Ahead of DOL Fiduciary Rule

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LPL Financial (LPLA) said Wednesday that it would cut prices and account minimums and roll out a fund-only brokerage IRA option to get its affiliated advisors ready for the expected new fiduciary rule that the Department of Labor should release over the next few weeks.

“While we continue to advocate for a thoughtful resolution to the fiduciary issue — one that preserves investor choice — LPL recognizes that the DOL rule will have implications for financial advisors and investors,” said LPL President Dan Arnold, in a statement.

“The changes announced today position both LPL and our advisors for growth and increased market share, while offering choice and flexibility to serve a range of investors seeking both ongoing and occasional advice,” Arnold said.

Planned Changes

The firm says it will drop the pricing of centrally managed platforms, so advisors can offer services “more cost-effectively and grow their practices.”

The broker-dealer said earlier this year that it was getting rid of the research strategist fee and annual IRA maintenance fee in its Model Wealth Portfolios. Now, it plans to “further reduce MWP pricing” next year.

“The change [in 2017] is expected to lower the total cost of accessing quality financial advice for investors in some cases by nearly 30% compared to current pricing,” according to LPL.

In addition, LPL says it intends to lower the account minimum in its Optimum Market Portfolios from $15,000 to $10,000 later this year. It eliminated the IRA maintenance fee for these portfolios in early 2016.

The firm says it expects the new fiduciary standard to result in additional operational requirements for its IRA business. As a result, LPL says it plans “to create a simplified mutual fund-only brokerage IRA offering to support the continued use of mutual funds in a brokerage relationship as an option for IRA business.”

Furthermore, the new offering – which should let LPL support mutual funds previously held directly with manufacturers – is not likely to have an annual IRA maintenance fee.

To support these and other changes, LPL says it is enhancing its practice management support, which in the future will include licensing assistance and business analysis.

In terms of operating efficiency, the company expects to simplify certain processes. For instance, it intends to keep account numbers unchanged when these accounts are transitioned from brokerage to advisory accounts.

“While much uncertainty remains as to what the final DOL rule will look like, LPL is taking a proactive approach by making changes to our platform and capabilities that we believe will help advisors grow their practices and support more investors in need of financial advice,” added Arnold. “We are proud to use our size and scale as a market leader to further strengthen the transparency and value LPL provides to investors and the advisors who serve them.”

— Check out DOL Rule Will Mean Cheaper Annuities, More Robo-Advice: Cerulli on ThinkAdvisor.


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