LPL Financial is sharing details with its affiliated independent financial advisors about the new mutual fund-only brokerage account it expects to roll out in the first quarter of 2017.
The firm says that new type of account “delivers cost benefits of direct business but with the ability to supervise that comes with LPL custody,” according to a statement: It will have no IRA custodial fees or trading costs, should have an upload charge of 3 to 3.5% with a trail payment and is set to include a selection of products offered by mutual fund families.
LPL adds that it is “working with sponsors on potential to permit exchanges across this set of fund families without triggering new sales charges.”
The broker-dealer said earlier this year that — due to the new Department of Labor fiduciary rule — it planned to end its mutual fund direct business on April 10, 2017.
“As part of our work on the DOL rule, we are planning to introduce the mutual fund-only brokerage account,” Chairman & CEO Mark Casady said during a call with earnings analysts on April 28.
The company says that the new fiduciary standard creates a “heightened need to supervise and surveil all business done in connection with our broker-dealer.”
Earlier this year, Casady acknowledged that some LPL advisors “have placed brokerage mutual fund investments directly with sponsors rather than with LPL to lower some investor cost.”
The firm says “the direct business filled an important need for investors.”
“Our new mutual fund-only brokerage accounts will have no maintenance fee, and all new mutual fund assets will be custodied with LPL,” he explained.
“We believe this will lower cost for investors while also lowering sponsor cost and complexity by outsourcing custody to LPL. We expect it will be more operationally efficient and profitable for us to have these mutual fund assets in our custody,” the executive added.
More recently, Casady noted that while reducing client costs, the new mutual fund-only brokerage account also “aims to … move more brokerage assets into LPL custody …”