Contact Us

Broker Dealers Industry News

Independent Broker Dealer, Financial Industry News, Broker Dealers

LPL Financial is hiking the cost of E&O insurance per rep by $200 in 2014

Offices of supervisory jurisdictions also face $500 fee per branch for audits . . .

Investment News, Written By Bruce Kelly, November 6, 2013

Recently reported by Bruce Kelly for Investment News: “Rounding out a series of fee increase announcements, LPL Financial LLC has informed its registered representatives and financial advisers that it is increasing the cost of errors and omissions insurance per rep next year by $200, for an annual charge of $3,200, according to two LPL advisers.

Managers of large offices known as offices of supervisory jurisdiction also face a new fee. Next year, larger OSJs will pay $500 per branch for the LPL home office to perform mandatory audits of each branch operating under that manager. “LPL Financial annually assesses its fee structures to ensure they fairly represent the services and support we provide,” she wrote. “The fee adjustments we are announcing thoughtfully balance our firm’s need and cost structure with our advisers’ goal to keep the costs of running their business affordable, reaffirming the value of affiliation with LPL Financial.”

Typically, LPL Financial has typically waited until the fall to announce changes to its fees all at once, thus rankling advisers, who will now face an increase for the third consecutive year. This year, LPL announced the fee increases incrementally, perhaps lessoning the sting for some advisers. The two advisers who provided InvestmentNews with information about the fee hikes declined to be identified. Last month, the largest independent broker-dealer, with more than 13,000 affiliated advisers, informed advisers about fee increases for its third-party money management platform, called Model Wealth Portfolios.

In January, LPL will begin charging 15 or 20 basis points on new accounts in the MWP platform for advisers who choose the firm’s internal research to create model portfolios. Advisers have paid for a variety of choices of money managers in the MWP platform, including BlackRock Inc. and JPMorgan Chase & Co., but until now there had been no charge for model portfolios created internally by LPL. And in July, the firm informed reps who had been responsible for supervising themselves of a $4,800 fee increase in 2015 for those one-person, one-office reps who choose to be supervised by LPL’s home office. A coming rule revision by the Financial Industry Regulatory Authority Inc. is one of the factors pushing LPL to make changes in supervision, the company said at the time.”