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LPL Prepares Mutual Fund Platform To Comply With DOL Rule
FYI: As the Department of Labor’s fiduciary rule takes effect, the nation’s largest independent broker-dealer will roll out a new mutual fund platform intended to remove conflicts of interest in advisor compensation.
Heaven forbid LPL act as a fiduciary and have NO commissions. Does anyone think salespeople who receive a one-time only commission with no trails will bother to spend any time with those clients, most of which will be very small potatoes? It will be business as usual. Sign them up, get their money, receive a commission, and find the next sucker. One of the other big commission firms announced they were doing a similar "re-working of their business, wherein one of the mutual fund companies to no longer be allowed was Vanguard. Now there's a real fiduciary stance for you. It seems that what I feared would happen is coming true. The non-fiduciary folks are coming up with various interpretations of the DOL rule that still generate nice fat commissions for their salespeople. And heard on the radio recently was a compellingly crafted advertisement for equity-like returns with no downside risk...yep, equity-indexed annuities for your rollover IRA, with no mention of the fees and restrictions, and of course no statement of fiduciary acceptance.
It's worth mentioning that LPL also has a fee-based open-architecture platform, so it isn't accurate to suggest that all advisors who use LPL are commission based.
It's worth mentioning that LPL also has a fee-based open-architecture platform, so it isn't accurate to suggest that all advisors who use LPL are commission based.
You are correct, but the clients in the "fee-based" (Lordy, I hate that term. It's either fee OR commission. Fee based supposedly means fees are offset by commissions or a salesperson can have some clients on commission and others on fee.) accounts will be those with large accounts, not those with accounts below whatever level the company (and others like Merrill, USB, Morgan Stanley, Raymond James, etc) has decided it will move to fees of some kind. The smaller clients would be so much better served by being referred to TR Price, Vanguard, Schwab, or Fidelity.
I'll preface this by saying that I am not an LPL advisor directly; however, my firm uses LPL as our platform for clients.
For the $25,000+ account, the fee is actually set by the advisor. The range I see among colleagues is between 1-1.5%. As for the services a client receives, that is going to vary greatly from advisor to advisor based on what kind of practice they are running. But couldn't that be said of nearly any firm! (Our team focuses on asset allocation, risk management and comprehensive planning--we aren't stock/fund pickers really. We mostly use low cost indexed investment options) The platform itself is open-architecture; equity/ETF trades are a few bucks, many mutual funds are NTF (wish they all were), etc.
I'm right there with you, Bob, that LPL's new mutual fund only platform is bizarre and a step in the wrong direction for smaller clients who often don't have very good options. I sure hope that changes. But I did want to make it clear that LPL also works well for fee-based advisors who run their practices as fiduciaries to their clients. Hope that helps!
Appreciate your insight. I suppose that it is possible, but it seems unlikely there will be many small accounts in the fee platform, unless they are just one of multiple accounts for the same client household. On another note, I have colleagues who recently transitioned from LPL to TDAmeritrade, so I have heard of some of their issues with LPL, which could have been unique. Good to have another fiduciary advisor on this board, districtwanderer!
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For the $25,000+ account, the fee is actually set by the advisor. The range I see among colleagues is between 1-1.5%. As for the services a client receives, that is going to vary greatly from advisor to advisor based on what kind of practice they are running. But couldn't that be said of nearly any firm! (Our team focuses on asset allocation, risk management and comprehensive planning--we aren't stock/fund pickers really. We mostly use low cost indexed investment options) The platform itself is open-architecture; equity/ETF trades are a few bucks, many mutual funds are NTF (wish they all were), etc.
I'm right there with you, Bob, that LPL's new mutual fund only platform is bizarre and a step in the wrong direction for smaller clients who often don't have very good options. I sure hope that changes. But I did want to make it clear that LPL also works well for fee-based advisors who run their practices as fiduciaries to their clients. Hope that helps!