This LPL Platform Is About to Get Much More Important
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Tuesday, July 28, 2015

This LPL Platform Is About to Get Much More Important

One of the platforms at the largest independent broker-dealer in the business is about to get a lot more important. And that means that that B-D's research team will be more important for fundsters to pay attention to than ever before.

Daniel Arnold
LPL Financial
Yesterday in the opening session of LPL's gigantic Focus 2015 conference at the Boston Convention and Exhibition Center, president Dan Arnold revealed plans to eliminate LPL's own research strategist fee, typically 15 to 20 basis points, inside of its Model Wealth Portfolios (MWP) program. The fee removal comes as LPL is prepping an FA-friendly robo-advisor-like version of MWP, with low-cost (mostly passive) ETFs as building blocks. And LPL is also eliminating the flat custodial fee for IRA accounts in its MWP and Optimum Model Portfolios (OMP, powered by Delaware's Optimum Funds). LPL's Ryan Parker, managing director of investment and planning solutions, is leading the robo-advisor-like effort.

MWP is a centrally-managed, "rep-as-advisor" platform (not "rep-as-PM"). LPL's home office research team is one of four strategists (the others at BlackRock, Cougar Global Investments, and Quantitative Advantage) that advisors can access through MWP. FAs also choose from one of five investment objectives, six investment theories, tactical or strategic asset management strategies, and mutual funds or ETFs as underlying building blocks (though only LPL itself and BlackRock can use mutual funds; all four strategists can use ETFs). Minimums range from $25,000 to $150,000. LPL managing director and chief investment officer Burt White leads the research team, which in turn is one of FAs' four options for powering MWP.

The strategist fee elimination applies only to MWP accounts (new and existing) where LPL's own research team is the strategist. So the fee cut could make using LPL as a strategist more appealing to FAs, both in comparison to the other strategists on the MWP platform and for FAs not using MWP yet. If so, that would make it even more important for fundsters wares to be on the platform and be known (and liked) by the LPL home office research team.

Arnold tells MFWire that the fee reductions will translate into about $18 million in economic savings that LPL will pass on. He says that the change will "give the advisor flexibility and nimbleness" when it comes to different options for managing different clients' money.

"The only way that LPL wins is when you win," Arnold said yesterday at the close of his remarks.

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