MutualFundWire.com: Here's How LPL's MF Brokerage Biz Is Changing Thanks to the DoL

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Tuesday, August 23, 2016

Here's How LPL's MF Brokerage Biz Is Changing Thanks to the DoL

The LPL team is transforming how their affiliated advisors approach commission-based mutual fund business, and it's all thanks to the Department of Labor's fiduciary reg taking effect next year.

Rob Pettman
LPL FInancial
Senior Vice President

No new direct, mutual fund, brokerage business will be allowed at LPL, confirms Rob Pettman, executive vice president of product management, investment planning and solutions at LPL. Pettman spoke this morning in a main stage panel discussion at the 2016 LPL Focus conference at the San Diego Convention Center. Mimi Bock, EVP of client insights & engagement at LPL, moderated the panel, which also included: Peggy Ho, EVP and chief of staff, legal, and head of government relations at LPL; and Dave Reich, EVP and head of retirement partners, high-net-worth solutions and the private trust company.

When it comes to adapting products to the DoL's fiduciary reg, Pettman says, "mutual funds are the hardest cat out of all of them." That, Pettman adds, is thanks to an abundance of share classes and different fees in different fund families and share classes, as well as different distribution models and platforms.

Because of the cutoff of the direct mutual fund brokerage business, Pettman says, LPL is creating mutual-funds-only brokerage accounts. The LPL team is "pursuing a single class with rights of accumulation," a kind of modified A share with a 300 to 350-basis-point load up front and a 25-bps trail.

They're aiming to include up to 15 mutual fund familes (the 15 fund firms that account for a majority of asset flows at LPL) in the new accounts. "A key differentiator", Pettman says, is that the acounts will include no additional sales loads for making exchanges within the account across those fund families.

"It's innovative and we are making good headway there," Pettman says.

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