LPL Financial is backing away from a contentious policy it created last year with the intent of driving more assets to its corporate RIA platform.
Rolled out in August 2017, the policy required new advisers joining LPL to have at least $50 million in assets held in custody with LPL before working with an LPL hybrid adviser that custodies with third-party firms like
Charles Schwab or Fidelity.
LPL on Monday afternoon said it would eliminate the policy, which some branch managers of large hybrid firms believed made it more difficult to recruit because advisers with less than $50 million could only move to LPL via its corporate RIA platform. The bells and whistles at the hybrid shop became meaningless to a potential adviser recruit with less than $50 million in assets.
LPL does not report the amount of assets its advisers hold at outside custodians, but affiliates have said
in the past it could be at least 10% more profitable for LPL to have adviser assets with its own corporate RIA rather than at a competitor such as Schwab or Fidelity.
Imposing a policy last year of a minimum advisory asset requirement for advisers to join a hybrid RIA "did not contribute to growth as we originally hypothesized," noted Andy Kalbaugh, managing director, national sales and consulting, in a memo sent to advisers Monday afternoon. "Based on this insight, starting today, we're eliminating the $50 million advisory AUM requirement for new or existing advisers joining a hybrid RIA practice."
Instead, advisers who join LPL and work with a hybrid RIA and bring less than $25 million in advisory assets under management under LPL custody will be charged a fee of up to five basis points. The fee will be removed when the adviser has $25 million in assets held in custody with LPL.
LPL this year announced it was
cutting fees for advisers who custody advisory assets on the firm's corporate RIA platform.
"I think it's an example of LPL listening and making changes when appropriate," said John Hyland, managing director of Private Advisor Group, the largest hybrid firm at LPL with $17 billion in client assets and 620 advisers. "It's definitely a pro-adviser move. Giving people more access to choices and solutions is always a better deal."
The policy was introduced last summer, days after LPL announced its purchase of the four broker-dealers in the National Planning Holdings network.
Pointing to the change in policy about housing a new adviser's first $50 million in advisory assets, some NPH advisers said at the time they were not happy with any notion of limiting the choice of where clients' assets were held.
