LPL Financial continues to revamp its pricing of investment products in preparation for the Department of Labor's fiduciary rule, informing advisers on a conference call on Thursday morning that, going forward, there would be level compensation on fixed annuities and unit investment trusts.
In a memo describing the changes sent to LPL's 14,000 advisers later in the day, the firm said it also restricting the purchase of no-load mutual funds in brokerage accounts in order to move to greater standardization in compensation in the mutual fund category.
Brokerage firms have been adjusting their investment platforms over the past year in preparation for the fiduciary rule, which is scheduled to take effect June 9.
Last year,
LPL moved to make the commissions on variable annuities uniform. The firm is considering capping sales commissions on mutual funds in a range of 3% to 3.5%, while also paying the broker a standard 25 basis point trailing fee.
LPL Financial is not alone in making such changes. Last month, Wells Fargo Advisors
told advisers of new limits on mutual fund share classes and types of securities advisers can sell or recommend in a client's retirement account. And Morgan Stanley in April announced a series of pricing, policy and product changes designed to further raise the standard of care for the firm's clients. The fallout included
eliminating new sales of Vanguard Group mutual funds from the platform.
"In this new regulatory environment, LPL has developed prudent process selections within ClientWorks (the firm's technology platform for advisers) that enable advisers to capture the reasoning for investment recommendations based on the investor's financial circumstances, needs, risk tolerance and investment objectives," according to the memo.
"LPL has been proactive in its DOL readiness efforts to enable our advisers to differentiate their practices and remain competitive as the regulatory landscape evolved," according to the memo. "Over the last 12 months, LPL has implemented changes and enhancements to products, platforms and adviser resources to be able to maintain choice, align to new requirements and support advisers and their clients through the changes underway."
Meanwhile, LPL also said on Thursday that Michelle Oroschakoff, current managing director and chief risk officer, will expand her responsibilities to include oversight of the firm's legal and government relations functions as chief legal and risk officer, effective June 9. She takes over general counsel duties following the departure of David Bergers, who is leaving LPL to accept a position in private practice.
