LPL Financial

LPL to Lower Transaction Fees on ETFs

The independent broker/dealer announced the change—along with several other upcoming improvements for advisors—during an earnings call.

Last year, LPL Financial announced the launch of a new no-transaction-fee mutual fund platform. Now the firm is planning something similar for ETFs.

Later this year, the firm will reduce transaction charges on select ETFs from $9 to $5, in partnership with product sponsors.

The change will “provide advisors with simpler and lower advisory pricing for their clients,” said CEO Dan Arnold on the firm’s first quarter earnings call. The move will be revenue-neutral for LPL, he added, with sponsor revenue from ETF manufacturers replacing the lost transaction revenue.

“Advisors tell us they’re experiencing a renewed focus on them and how we’re helping to expand their value through new capabilities and the way we’re making it easier to do business by taking friction out of the system,” Arnold said during the call with analysts Thursday. “They’re enthusiastic about our continued focus on these areas and our vision to deliver an experience that is unique in the financial services space.”

Arnold outlined other recent changes at the firm, including new customer relationship management capabilities, goals-based planning and the integration of a new proposal generation solution—a result of LPL’s acquisition of AdvisoryWorld.

The independent broker/dealer also recently introduced its Advisor Sleeve functionality, allowing advisors to use their own asset allocation models in its centrally managed platform, while outsourcing portfolio allocation and trading to LPL.

The firm is currently working on the next version of its advisor desktop, ClientWorks 2.0.

“The focus of version 2.0 is creating more streamlined and intuitive experiences across core functionalities such as new account opening, cash management and account transfers,” Arnold said. “Rolling out these enhancements will help advisors save time and increase their capacity to serve clients.”

As far as the firm’s service to advisors, LPL will move from a traditional call center to a customer care approach, a model that has worked in other industries, Arnold said. That new approach will provide multiple channels for advisors to engage with the firm, allowing “intelligent routing of their inquiries and case management for complex issues.”

Overall, the firm’s earnings per share during the quarter were up 77% year over year to $1.79. Net income during the quarter was $155 million, up 66% over the prior-year period.

The firm reported brokerage and advisory assets of $684 billion, up 6% year over year, driven by organic growth and increasing market levels. It added $4 billion in net new assets during the quarter, a 2.5% annualized growth rate. Arnold said the firm has seen positive trends in new store sales, as prospective advisors reengaged in recruiting conversations during the first quarter, and same store sales, as investors moved back into the market following December’s correction.

The firm recruited advisor teams with a total $7.1 billion in assets during the quarter, bringing total head count to 16,189, up 80 sequentially and 122 over the first quarter 2018.

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