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LPL Lowers Pricing on Small 401(k) Platform

Effective in January, platform fees for advisors serving small retirement plans will be lowered from 20 to 10 basis points.

In its latest move to improve pricing for advisors, LPL Financial is lowering the platform fees on its small retirement plan platform from 20 to 10 basis points, effective in January. The firm also added two new recordkeepers to the platform this year and will add more next year.

“I think they’re working on a cultural overhaul—trying to be more open to the reps’ input and trying to alleviate the ivory tower mentality, where you set up layers between the advisor and upper management,” said Jonathan Henschen, president of the recruiting firm Henschen & Associates in Marine on St. Croix, Minn. “There’s been a lot of cost-cutting there, and it’s rep-directed.”

In April, the firm reduced pricing on its Strategic Asset Management advisory platform. The firm also lowered the asset size required to join a hybrid advisory firm from $50 million to $25 million.

“You’d think, ‘Well, they’re cutting all these costs. Isn’t that going to affect their bottom line?’ The flip side of that is, it makes it a more attractive broker/dealer to join, and it’ll help on their retention,” Henschen said. “It’s expensive to bring new reps on board, and if you can keep the reps you have and have higher retention, that’s very profitable.”

The firm has also been improving its services to retirement plan advisors. In July, LPL revised the qualifications for its Retirement Plan Consulting Program, allowing more advisors to serve retirement plans under its corporate registered investment advisory.  

The latest enhancements to the Small Market Solution platform are aimed at advisors serving small employer retirement plans in a 3(38) fiduciary capacity. Through the platform, the firm provides consulting expertise, research, investment monitoring, fee analysis and benchmarking and periodic plan reviews.

Some of the wirehouses have recently expanded services for advisors serving small and midsize retirement plans. UBS Global Wealth Management debuted a program in October that enables its advisors to serve small 401(k) providers. Also in October, Morgan Stanley announced improvements to its Financial Wellness Program for plan sponsor employees.

LPL also plans to double the number of regional workshops for specialist advisors, and the b/d will hire four new regional consultants to help advisors grow in the retirement plan space.

“All the growth things they offer, like practice management marketing and education and workshops—all that stuff is a win-win for both sides,” Henschen said. “When the reps make more money, the broker/dealer makes more money. There’s no downside to that formula, and I’m surprised more firms don’t do that aggressively.”

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