LPL Financial LLC has announced details of what it calls its “industry-first” mutual fund only (MFO) platform.
According to a press release, the platform is being designed to offer investors enhanced value in brokerage through reduced fees while standardizing compensation for financial advisors. LPL also intends for the platform to expand investor choice by offering exchangeability across fund families within the platform and removing barriers that have tied investors to stay within a single fund family.
The platform is scheduled to be made available to LPL advisors and institutions early in 2018.
Some of the MFO platform’s features include:
- Load-waived shares from 20 mutual fund companies, providing free exchangeability across fund companies for broader choice and greater flexibility to move funds over time as investors’ needs change.
- Standardized mutual fund compensation to the financial advisor through a uniform upfront onboarding commission, cross-fund-company exchangeability and consistent trail, addressing the compensation differences that exist across the mutual fund industry generally. MFO accounts will be subject to a maximum upfront onboarding commission of 3.5% and a 0.25% trail payment. Investors will be eligible for discounts based on the combined amount of brokerage assets held at LPL that are invested in MFO-eligible mutual funds.
- Elimination of certain annual account and trading fees.
How MFO Will Work
When investors add cash to their MFO accounts, the funds will be routed through an institutional money market fund offered by Goldman Sachs Asset Management and then assessed a one-time onboarding commission by LPL. Investors who currently hold positions on LPL’s brokerage platform of MFO-eligible mutual funds will be permitted to avoid the onboarding commission if they transfer those positions into an MFO account.
Once on the MFO platform, investors may move in and out of more than 1,500 mutual funds across 20 participating fund sponsors without incurring any additional upfront sales charges.
The 20 fund companies that are expected to be available on LPL’s MFO platform when it launches include: AB (formerly Alliance Bernstein), American Century Investments, American Funds, BlackRock, Columbia Threadneedle Investments, Eaton Vance Investment Managers, Fidelity Investments (pending final approval), Franklin Templeton Investments, Goldman Sachs Asset Management, Invesco, J.P. Morgan Asset Management, John Hancock Investments, Legg Mason Global Asset Management, Lord Abbett, Delaware & Optimum Funds, MFS Investment Management, New York Life MainStay Investments, OppenheimerFunds, Principal Global Investors and Putnam Investments.
These fund companies were selected after an analysis of the funds that LPL advisors use currently in brokerage and the quality of fund lineups available at fund companies, according to the firm.
The MFO platform is currently being tested with each fund company to ensure quality, and will be beta-tested with a small group of advisors later this year with the goal of launching the platform in early 2018.
