LPL Financial on Monday morning confirmed it had halted access to a reporting tool that is part of Morningstar Office — a suite of portfolio management tools for investment professionals — at 25 offices due to concerns about client supervision and surveillance.
With 17,000 reps and advisers, LPL told advisers of the change near the start of the month. The announcement became public on Friday when an industry attorney, Max Schatzow, wrote a blog that said LPL was cutting advisers' ability to use Morningstar products in general, a clear overstatement of the change.
He later updated the blog to correct the scope of the decision.
LPL had issue with its ability to conduct surveillance of accounts using the specific Morningstar product. The firm is not cutting ties with Morningstar's broad array of products and applications and is working with the mutual fund tracker to determine if there is a solution to address the current concerns.
"We recently communicated to our advisers about this issue, and the way Morningstar’s systems work limits LPL from having the visibility we need, and requires a change in how our advisors use Morningstar Office moving forward," said Jeff Mochal, an LPL spokesperson. "The issue is specific to Morningstar Office reporting functions, though, and does not impact other Morningstar applications."
The changes do not apply to LPL adviser firms that are not affiliated with LPL’s broker-dealer, he added. Mochal declined to say the total number of advisers at those 25 offices, however, LPL has some offices with hundreds of financial advisers under its watch, so the number of advisers affected could be substantial.
"I overstated the issue and it was unintentional," said Schatzow, an attorney with Stark and Stark.
LPL consistently changes its technology. Last month, the company said it partnered with the business messaging app Slack as its next communication platform to be rolled out to the firm’s 17,000 financial advisers.
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