LPL Financial LLC isn't alone in charging registered representatives and financial advisers a flat fee for doing business with the firm.
Last month, LPL told its reps and advisers that it was increasing the affiliation fee for smaller offices of up to four brokers, with each broker paying an extra $50 a month, or $600 a year. The fee, which hasn't been raised in 27 years, is part of a $1,050 hike in charges that most of LPL's 12,799 reps will see next year.
But comparing such fees is difficult because firms include different items when they charge an affiliation fee, industry observers said. For example, some firms' affiliation fees include software and technology, and others don't.
LPL's affiliation fee differs from most in that it specifically is for working with the firm.
Wells Fargo Advisors Financial Network typically tells its 859 brokers at the start of December what the set fees and charges will be for the following year, said one adviser, who asked not to be identified, as he didn't have the firm's permission to speak. The affiliation fee hasn't gone up for at least the past two years, the rep said.
“I expect a potential increase this coming year,” the adviser said.
“I'm pleased with the way [Wells Fargo] has treated us,” the adviser said, noting that the firm is increasing its capacity for new technology. “It's reasonable to get a fee to do that.”
No one at Wells Fargo was available to comment about potential changes in fees, said spokeswoman Rachelle Rowe.
The affiliation fee also includes marketing and compliance, and can range from $1,620 to $4,260 per rep each year, the Wells Fargo Finet adviser said.
Ausdal Financial Partners Inc., a small but quickly growing independent broker-dealer based in Davenport, Iowa, also is increasing its affiliation fee by $50 a month in 2012. The firm, which has grown to 240 affiliated reps, from 40 in 2008, charges its reps and affiliation fee of $400.
“If you don't change your fees for 20 years, you take it pretty seriously,” said John Hicks, a director with the firm.
The affiliation fee covers such costs as bonding the registered reps, he said, but the fee has been raised due to costly regulatory demands and the need for better back-office systems.
“Nobody likes fees, but the grousing has been minimal,” Mr. Hicks said. “The reps are realistic enough to recognize the environment we're in, and improving our systems is in their best interest.”
Mr. Hicks said that one inclusive fee is a preferable strategy to charging a handful of separate fees, which he likens to “nickel and diming” the firm's advisers.
Lincoln Financial Network, which has 7,973 reps, isn't planning an increase to its affiliation fee, Claudia Wieber, a company spokeswoman, wrote in an e-mail.
WHAT YOU GET
The fee ranges from $1,500 to $3,500 a year and includes, among other things, Lincoln Financial's national planning network and software, national branding support, and reporting and customer relationship management, she wrote.
Securities Service Network Inc. charges its 500 reps and advisers an affiliation fee of $4,200 per year.
The firm has no intention of raising that fee, which has been at that level for about 10 years, said chief executive Wade Wilkinson.
“Our thoughts on pricing are different,” he said.
“The firm has high affiliation fees but is much higher on payouts. It's a more democratic way of charging, because it's a fixed cost for the adviser, with no tiers,” Mr. Wilkinson said.
The firm's payouts for sales of financial products begin at 95% and go up from there, he said.
The firm charges $200 a month for errors-and-omissions insurance.
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