LPL Cuts Small Market Platform Fee Amid Competition for Talent

LPL Financial announced enhancements to its Small Market Solution (SMS), including the anticipated integration of several new recordkeepers and a cut in the fee for the investment outsourcing platform from 20 to 10 basis points, effectively in January 2019.

An LPL spokeswoman told PLANADVISER the platform will establish integrations with new recordkeepers in the near future, with the goal of providing more choice to address the needs of advisers and their clients. While she declined to name the new recordkeepers expected to come on board, citing the need to finalize certain details, she said it is expected that two new providers will be added by the end of 2018 and several more throughout 2019. Today, providers linked into the platform include Nationwide, Paychex and Ascensus.

Reflecting comments made previously to PLANADVISER, Matt Enyedi, LPL Financial executive vice president for national sales and consulting, said the firm is continuing its overall effort of better allowing advisers to leverage LPL’s centralized resources in order to focus more on the relationship management role, and to expand the sizes and types of clients LPL-backed practices can effectively serve.

According to LPL leadership, there are a lot of retirement plan clients who want a pure 401(k) specialist who will directly act as a fiduciary investment adviser—but there are also still common situations where the need is not as great for, say, a small plan client to work with a pure 401(k) specialist. Advisers in this position can outsource a small plan’s investment management work to LPL via SMS, while they continue to do their job of working with the client to set goals, compare strategies and measure progress.

From LPL’s perspective as a broker/dealer, the priority is to create an advisory support solution that will not just be focused on a few hundred specialists in its formal “Retirement Partners Consulting Program (RPCP).” The leadership instead wants to deliver something that is available to advisers across the enterprise and that leverages the firm’s scale.

For context, the LPL RPCP specialist structure allows advisers to serve along the lines of the traditional rep-driven model, where they are the lead fiduciary taking more direct care of client portfolios. But with moves like the SMS fee cut, the firm has also been building out capabilities on the other side, again because there are a lot of advisers that want to take a centrally managed, outsourced approach to steering retirement plan client portfolios. In the wake of the defeat of the DOL fiduciary rule expansion, they see this as a turnkey way to serve retirement plans without dramatically increasing fiduciary exposure or client service workloads.

Alongside the fee reduction, LPL is also increasing the resources and support available to advisers regionally. LPL will double the number of regional workshops offered to specialist advisers, increasing access to education, insights and best practices that can help them grow their business. Four new regional consultant positions have been created so that more advisers can take advantage of the retirement plan tools, resources and expertise available to help them grow.

LPL evolution continues as industry advances

It was less than two years ago that high-level staffing changes were announced at LPL, to the effect that David Reich, former head of the Retirement Partners Group, was leaving the firm. Before that point, LPL had structured its specialized clients (including retirement plans), high-net worth, insurance, and trust businesses in a way that delivered siloed support to advisers serving these niche markets. Coinciding with Reich’s departure, the firm began an effort to unify these groups into one common entity that would provide sales and support across all advisers and institutional clients.

At the time, an LPL spokeswoman told PLANADVISER that doing so would “create increased awareness and greater access to the depth and breadth of resources and expertise LPL has available to support advisers.”

She said the firm was taking action because its executives believed unifying business units to deliver a full suite of specialized services and resources would help its advisers grow their businesses and would be a differentiator in the market. While competitors raised questions about the strategy, LPL leadership for its part said the firm would remain fully committed to each of these areas of business, including retirement plans.

“The integrated approach enables us to move our business forward in a way that aligns with the direction of the industry, and provides us the opportunity to deepen the value we deliver to our advisers,” the spokeswoman said.