LPL Financial CEO Dan Arnold speaks at the firm’s 2016 national event.

As it prepares to announce its third-quarter earnings results, LPL Financial has removed a hurdle for advisors seeking to join a hybrid registered investment advisory group.

On Monday,  national sales and consulting Managing Director Andy Kalbaugh said the firm is dropping the $50 million advisory assets requirement for new or existing advisors joining a hybrid RIA practice.

Advisors looking to be part of a hybrid RIA with LPL and bringing less than $25 million in advisory assets to its platform, though, will be charged up to 5 basis points. When advisors grow to have  $25 million or more in LPL-custodied advisory AUM, the fee will be eliminated, according to Kalbaugh.

The firm, though, appears to be keeping in place a fee for assets custodied outside the firm.

“It’s good to drop the $50 million requirement,” said recruiter Jon Henschen, in an interview. “But if advisors have under $25 million they get a charge. … And those custodying AUM outside the firm are charged [several] basis points.”

“A lot of represents seem to be under that [$50 million] level,” Henschen explained, “and I imaging that [LPL] got  lots of pushback about that pushing for lowering of the bar.”

LPL CEO Dan Arnold described the firm’s “soul searching” over the $50 million bar this summer during its Focus conference in Boston.

“It’s a great question,” he said. “We try to make make sure that we are aligning the key models that we offer for profitable growth going forward… We would much prefer to change it and are constantly looking at it.”

It seems that between early August and mid-October, a shift in thinking took place.

Last year, in addition to adding the $50 million requirement, LPL “reduced pricing, introduced new capabilities [and] modified transition assistance …,” Kalbaugh said in a memo to advisors this week.

“With a year’s worth of data to analyze, we’ve been able to confirm the effectiveness of these changes, with the exception of one,” he explained. “The minimum advisory asset requirement for advisors to join a hybrid RIA did not contribute to growth as we originally hypothesized.”

Still, Henschen says advisors across the industry prefer choice to limitation.

“Although the production requirement being lowered is a positive, the firm is clearly still moving toward being under the broker-dealer/corporate RIA and holding those assets at LPL clearing, he explained.

“The industry as a whole has been moving in a direction of fewer choices on advisory, including fewer options with third-party money managers and more pressures to custody assets in proprietary managed platforms, which bring the broker dealer the greatest profits,” the recruiter said.

“The pendulum is swinging away from what is in the clients and advisors best interest to what is in the broker dealers best interest for profitability,” Henschen added.

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