LPL planting flag in ETF price war

LPL planting flag in ETF price war
Firm erases commissions for three ETF brands on two of its platforms.
DEC 05, 2019
Wading into the pricing war over the cost of trades, LPL Financial said Thursday it is eliminating the $9 ticket charge for transactions on a handful of exchange-traded funds for certain advisory platforms available to its 16,000 advisers. Advisers can now trade ETFs for free in LPL's in-house Strategic Asset Management and Strategic Wealth Management platforms. Three leading ETF brands, State Street Global Advisors, Invesco and Wisdom Tree, will reflect the new pricing, starting on Friday. [Recommended video: Ed Slott: Make sure your small business clients consider this before they convert IRAs to Roths] One LPL adviser was enthusiastic about the change. "It's fantastic and primarily helps the clients, because we don't pay the transaction cost," said Doug Flynn, co-founder of Flynn Zito Capital Management, which uses LPL as its broker-dealer. "We do a lot of re-balancing of client portfolios, and this drives down the underlying costs." A larger issue facing the firm, as well as its competitors, is how far LPL will push the line between cutting pricing and fees for transactions and whether that will have an impact on service, said another LPL adviser, who asked not to be named. "If all the RIA custodians strip out their revenue line from transactions, what does that mean for the level of service to the adviser," he asked. As the calendar turns to 2020, LPL is likely to add more ETF managers to the no-transaction fee network, said Rob Pettman, executive vice president of Investor and Investment Solutions at LPL. "We're off to a good start," he said. LPL, like all other major brokerage firms, has been scrambling since October when discount broker and RIA custodian Charles Schwab Corp. ignited a price war by eliminating commissions for online trading of U.S. stocks, ETFs and options. At the time, LPL signaled it was contemplating a move to cut transaction costs. LPL also has recently reduced commissions on certain products.

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