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What's Up With the LPL-Morningstar Relationship?

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LPL campus in San Diego. LPL campus in San Diego.

Is LPL Financial looking to limit how advisors use a certain Morningstar tool for client reports?

Only in a limited number of cases, says LPL Financial, in response to a blog post Friday by attorney Max Schatzow, who told ThinkAdvisor he had spoken with a compliance professional with a hybrid LPL-affiliated advisor about the matter.

“We are NOT discontinuing use or prohibiting advisors at LPL from using Morningstar,” LPL said in a statement, adding that “only 25 LPL offices are impacted by this issue.”

“The blog post may be referring to an issue related to Morningstar Office, and the use of certain reporting functions,” according to the independent broker-dealer. “We recently communicated to our advisors about this issue.”

The IBD explained that “the way Morningstar’s systems work limits LPL from having the visibility we need, and requires a change in how our advisors use Morningstar Office moving forward.”

The issue, according to LPL, is specific “to Morningstar Office reporting functions “and does not affect other Morningstar applications.

“We continue to work with Morningstar in many other ways, and we continue to work with them to help resolve this issue,” it explained.

In an email sent to ThinkAdvisor on Friday afternoon after LPL clarified the situation, Schatzow said: “It makes sense that it [seems to] only appl[y] to hybrid advisors, because a truly independent investment advisor that only maintains accounts at LPL should be free to use any software or product that they want.”

He added: “It seems like the statement suggests it only impacts 25 LPL hybrid advisor offices. I am curious whether any other LPL representatives are impacted by this decision.”

Morningstar said Friday in a statement: “We value our long-term relationship with LPL, and we are disappointed by their decision not to allow their advisors downloading LPL data to use Morningstar Office for consolidated reporting.”

The IBD’s decision “is not related to the quality or computation of Morningstar’s data or research, and it does not relate to any other Morningstar products or services,” the firm added.

The discussion over the LPL-Morningstar relationship comes less than a month after the independent broker-dealer added the research analytics platform YCharts into its vendor program for advisors.

It also follows communications between LPL and its advisors around Morningstar Office, which were unrelated to hypothetical back-tested performance.

“LPL has requested unique modifications to the advisor reporting functions of Morningstar Office, and we have received no similar requests from any other client,” Morningstar explained.

“Over the past several years, our teams have implemented many customizations to support LPL’s unique needs. We are continuing discussions with LPL to determine if there are reasonable ways to meet their new set of specific requests while not sacrificing core Office functionality for our clients,” the research firm added.


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