LPL cuts fees for advisers using its corporate RIA platform

The independent broker-dealer is increasing reimbursement fees for advisers using its strategic asset management platform, or SAM

Nov 6, 2017 @ 6:00 pm

By Bruce Kelly

LPL Financial is cutting its administrative fee for advisers who custody advisory assets on the firm's corporate RIA platform.

In a memo to its 14,000 advisers late Monday, LPL said it was introducing a simplified pricing structure on its strategic asset management platform, known as SAM, starting in January.

Right now, the average adviser pays an administrative fee of about 10 to 12 basis points, LPL sources said, but generally gets reimbursed about 2.5 basis points.

The reduction in SAM's pricing will take the form of bigger reimbursements to advisers, according to the memo, which was signed by Andy Kalbaugh, managing director, divisional president.

On average, LPL is lopping off another 2.5 basis points of the administrative fee, according to the memo, which an adviser read to InvestmentNews. Advisers with $50 million to just below $100 million will pay a 5 basis point fee for assets on the SAM platform; advisers with $100 million or more will pay just 3 basis points.

Advisers will not see cash back from the new pricing until next October, said the adviser who asked to remain anonymous.

"These changes make the administrative and compliance services LPL provides through our corporate RIA platform more valuable than ever," according to the memo. "In the future, we will continue to simplify our billing process by directly charging flat basis point amounts on adviser asset levels."

The move to bolster LPL's corporate RIA platform comes at an important time for the firm. In August, it announced a change in policy that would require new recruits to custody their first $50 million in assets at LPL, a move that some branch managers saw as a threat to their ability to recruit because of questions over pricing.

And LPL is also currently trying to convince as many of the 3,200 advisers affiliated with the National Planning Holdings broker-dealers, which LPL acquired in August, to move to LPL and not a competing broker-dealer. The revamped administrative fee should be a positive in those discussions.

At least one adviser cheered the news.

"Kudos to LPL for evolving the corporate RIA platform," said John Hyland, managing director of Private Advisor Group, one of the largest branches at LPL. "This type of change will allow LPL to be an incredibly attractive firm."

The adviser reading the memo said he gets about $1,000 per month in a reimbursement and now he expects that amount to double.

The change vastly simplifies one aspect of pricing on LPL's SAM platform.

LPL's current system of charging administrative fees for SAM assets is currently done on an account by account basis, not in aggregate. The fee can be as high as 20 basis points for accounts less than $100,000 and 15 basis points for accounts between $100,000 and just under $250,000, to as low as 5 basis points for accounts with $1.25 million to $5 million in assets.

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