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LPL Will Launch No-Transaction-Fee Mutual Fund Platform

The independent broker/dealer is lowering a custody threshold so more advisors can take advantage of a flat-rate administration fee.

LPL Financial said Thursday it’s going to offer a flat-rate administrative fee to more advisors who use its corporate advisory platform and plans to roll out a no-transaction-fee mutual fund platform this summer.

In January 2019, the independent broker/dealer will reduce the threshold of assets custodied on its Strategic Asset Management advisory platform needed for advisors to qualify for a flat administrative fee. Currently, LPL advisors with $50 million in assets or more custodied on the platform pay an administration fee of eight basis points but it’s lowering the threshold to $25 million to qualify.

Advisors with less that $25 million is assets custodied on the platform pay an administrative fee that varies based on their book of business, a spokeswoman for LPL said.

The decision to lower the threshold will benefit the IBD low- to mid-range producers and “reflects what we see as a trend going forward with not only compression of advisory fees being charged but also compression of administrative fees broker/dealers charge,” said Jon Henschen, the founder of Henschen & Associates, an IBD recruiting and consulting firm.

It will also entice advisors to custody assets in LPL clearing accounts rather than at TD Ameritrade or Charles Schwab, he said.

“LPL has been on a push to encourage advisors to hold advisory assets in LPL clearing because they earn LPL twice the margins than advisory assets held away,” Henschen said. “This has resulted in the exit of some large hybrid offices, so in lowering their administrative costs and offering a new NTF platform, perhaps they can curtail some of the hybrids from exiting the firm.”

An LPL spokeswoman said the fee change won’t happen until January 2019 because it will take time to implement and the IBD wants to make sure it rolls out smoothly.

In the same announcement Thursday, LPL said it plans to launch a no-transaction-fee mutual fund network to its Strategic Wealth Management platform. A share class of mutual funds from fund sponsors including AB Funds, Columbia Threadneedle, J.P. Morgan, Legg Mason, MFS, Natixis, John Hancock, Oppenheimer and Putnam, are finalizing agreements to be on the platform at its launch, according to the announcement.

LPL plans to add more sponsors later this year and in 2019, according to a spokeswoman.

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