LPL cuts ticket charge for some ETFs on key RIA platforms

Transaction charges for three ETF managers will drop 45%

May 30, 2019 @ 2:51 pm

By Bruce Kelly

LPL Financial said on Thursday it was making another move to attract assets by cutting transaction charges on exchange-traded funds on two key advisory platforms for advisers from $9.00 to $4.95.

The new pricing will go into effect in the second half of the year.

The 45% cut in ETF ticket charges are for advisers who use two proprietary LPL advisory platforms: Strategic Asset Management (SAM), and Strategic Wealth Management (SWM).

The cut in transaction charges for ETFs on LPL's platforms are for those offered by State Street, Invesco and WisdomTree, the company said in a statement. LPL is pursuing similar changes with other ETF managers.

When broker-dealers cut fees on transactions, it can turn into a boon for advisers, who can either pocket the difference or pass along the savings to clients.

LPL is the largest independent broker-dealer, with more than 16,000 independent contractor registered reps and advisers. Its price cut for ETFs comes as competitors in the business to custody registered investment adviser assets have also cut fees and moved to offer commission-free ETF trading.

In February, Charles Schwab Corp. and Fidelity Investments said that they were each expanding to more than 500 the number of commission-free ETFs on their respective platforms. Meanwhile, TD Ameritrade in June is expanding its commission-free ETFs to 569, almost double what it currently offers.

LPL is focused on recruiting, and the reduction in charges on ETF fees on its corporate SAM and SWM platforms could make it more attractive to advisers. Some LPL advisers over the years have also questioned the pricing of certain mutual fund transactions, with trades of some funds more expensive than others.

"What you are seeing is us expanding our appeal across a broader market," said Rob Pettman, LPL executive vice president, products and platforms in an email. "Our focus is on enhancing our advisory platforms overall and giving advisers the ability to choose which platform will work best for their clients and their business model. We think it's important to offer competitive platforms across affiliation models."

LPL in January said it was reducing fees for advisers with $25 million to $50 million in assets held in custody on the proprietary SAM platform to a flat eight basis point administrative fee.

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