LPL costs

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Feb 8, 2009 9:55 pm

I was talking to a soon to be former Jones guy who is leaving for LPL(is that the next Jones? they seem to have a lot of former Jones guys there) and he was mentioning that he had to mail out prospectuses for every fund he sells and that the clients have to sign a form saying they received it...

 
I have never heard of this before... is this because they are self clearing(Pershing mails out all my stuff) or did he not understand the premise...?
Feb 8, 2009 10:56 pm

Your friend has it pretty much correct, although I'll elaborate on how this happens in real life with LPL.  First of all, virtually all of my SAM accounts are discretionary.  The biggest reason is that discretionary accounts do not need to receive mutual fund prospectuses.

 
Secondly, most of my prospectus receipts are signed while the client is still in the office with me.  If there are several funds involved, I can put the PDF files on a CD for them or send them via email to keep postage costs down.
 
Yeah, it's not the happiest part of my job, but after almost four years of doing it, it seems like just another form...nothing more.
Feb 8, 2009 10:58 pm

He did not. Any new money purchase has to have a prospectus receipt for the 1st buy into that fund only.

Feb 9, 2009 8:20 am

We've been told that the prospectus receipt thing is coming to an end soon as LPL will be mailing out prospectuses for us.  At least thats what we've been told.

Feb 9, 2009 10:25 am

At LPL we do mail out a prospectus receipt--but I do email some of mine and sometimes I email the prospectus receipt also--they sign it and mail it back to me.  Most of the time I have the assistant get up the prospectus and receipt while the client is in the office.  It was something to get use to when I came from Jones--but after two years it is just another form and proceedure to get use to!

Feb 9, 2009 11:42 am
etj4588:

We've been told that the prospectus receipt thing is coming to an end soon as LPL will be mailing out prospectuses for us.  At least thats what we've been told.

 
That would be a welcomed change, but I wonder what they'll charge us for that service...
Feb 9, 2009 11:53 am

With LPL, must you open your own office, or can you find another LPL broker and find a spot in his office?

Feb 9, 2009 12:14 pm
buyandhold:

With LPL, must you open your own office, or can you find another LPL broker and find a spot in his office?

 
You can do either option.  At some point, I will be adding an advisor (who doesn't want to go independent alone) to my office.  There are different levels of independence and for me, I had the skills and desire to run my own office.  Some reps simply want to be free of corporate bureaucracy and joining an established independent office is often a good way to do that.
Feb 9, 2009 2:27 pm

Do these hold up your trades pending signature? FWIW RJ doesn't require this, and all confirms are mailed by the HO, none at my expense.

Feb 9, 2009 3:22 pm
LuvIndy:

Do these hold up your trades pending signature? FWIW RJ doesn't require this, and all confirms are mailed by the HO, none at my expense.

 
No, they don't hold up the trade. I very rarely have to mail one to the client. I just have the clients sign the prospectus receipt when I open the account, or recommend a new fund. It's really not a big deal.
 
I even know a rep who was glad he had one. The client lost quite a bit in a fixed income UIT, and told LPL that the rep "never" gave him a prospectus. Luckily, the advisor was able to pull the form and say, "yes I did, on April 19, 2007, and here's your signature affirming that fact."  The client pretty much shut up after that.
Feb 18, 2009 10:52 am

This is indeed strange. Most firms have a mutual fund log for compliance purposes which logs items such as breakpoints, switching etc. As far as mailing out physical prospectuses prior to each trade, I think this is a little much for a registered rep/ investment advisor to do. I think Clearing firms mail these out on behalf of the broker dealer. Perhaps because LPL is self clearing, they mandate that their reps do this to reduce some of their overhead costs. This of course adds cost in terms of money and time for the rep having to mail out prospectuses. 

Feb 18, 2009 1:30 pm

The reps don't have to mail out prospectuses, they can just hand them to the client across the desk.  The only time you have to mail the prospectus, is if the client is not coming to your office (or you're not going to their home). And, you only give them the prospectus once, after that, you can buy more of the fund without a prospectus.

Feb 18, 2009 1:34 pm

You can also email the prospectus.

Feb 18, 2009 3:20 pm
etj4588:

You can also email the prospectus.

 
I do that quite often.  Most clients have email these days and they don't want the paper any more than we want to send it.