LPL Revamps Product Pricing Ahead of DOL Rule
June 6, 2017 by Alex Padalka
Like several of its wealth management rivals, LPL Financial is changing its product line ahead of the Department of Labor’s fiduciary rule, which is scheduled to go into effect June 9, InvestmentNews writes.
The firm is restricting the types of no-load mutual funds available in brokerage accounts, aiming to better standardize compensation in the area, according to an LPL memo seen by InvestmentNews. And in an earlier conference call, LPL told its advisors that it’s instituting uniform compensation on fixed annuities as well as unit investment trusts, according to the publication.
The firm also says in the memo that it has been revamping pricing on its product line for 12 months to prepare for the DOL rule, which purports to require retirement advisors to put clients’ interest ahead of their own, InvestmentNews writes.
LPL made compensation level on variable annuities last year and capped its brokers’ commissions on mutual funds to a range of 3% to 3.5% plus a 0.25% trailing fee, according to the publication.
The company is also making management changes to coincide with the rule’s effective date, InvestmentNews writes. Michelle Oroschakoff, managing director and chief risk officer, is taking over David Bergers’ general counsel responsibilities in overseeing LPL’s legal and government relations June 9, according to the publication. Bergers is leaving the firm for a private practice, InvestmentNews writes
LPL’s rivals have been making similar moves on their product lines more recently. Last month, Wells Fargo Advisors limited the mutual funds its reps can sell clients in retirement accounts to T-shares alone, which pay a flat commission of 2.5% and a 0.25% trailing fee. Morgan Stanley, meanwhile, has already reduced the number of mutual funds it offers on its platform by 25% and more recently cut out Vanguard Group mutual funds entirely.