Investment Product and Service Launches

LPL announces changes to assist advisers and investors with DOL fiduciary rule change; Center for Fiduciary Management reveals stable value investment monitoring services; AssetMark updates “Investing Evolved” framework. 

LPL Financial Reveals Changes Responding to Fiduciary Rule

Investment advisory and broker/dealer firm LPL Financial announced plans to change pricing and account minimum practices in anticipation of the new Department of Labor fiduciary standard expected to be in place by the close of 2016.

LPL is also simplifying brokerage individual retirement account (IRA) solutions and adding to operational and practice management support for advisers.  

LPL explains the planned changes are “intended to help advisers take proactive steps to adapt to this regulation, enabling them to expand their services to more investors and to continue to provide needed financial advice and flexible solutions to their clients.”

Dan Arnold, president of LPL, says the firm will continue to advocate for a thoughtful resolution to the fiduciary issue, “one that preserves investor choice,” adding that LPL “recognizes the DOL rule will have implications for financial advisers and investors. Since last summer, we have been preparing to ensure our advisers and the firm approach this opportunity from a position of strength.”

Specific changes the firm plans to implement include: 

Price reductions: LPL plans to reduce the pricing of its centrally managed platforms in order to help advisers provide their services more cost-effectively and grow their practices by reaching more investors. In addition to the previously announced elimination of the LPL Research strategist fee and annual IRA maintenance fee in its Model Wealth Portfolios (MWP) advisory platform earlier this year, the firm plans to further reduce MWP pricing in 2017. The change is expected to lower the total cost of accessing quality financial advice for investors in some cases by nearly 30% compared to current pricing.

Lower account minimums: To help ensure that investors continue to have access to financial advice, LPL plans to lower the account minimums in its Optimum Market Portfolios (OMP) advisory platform from $15,000 to $10,000 later this year. As previously announced, LPL eliminated the IRA maintenance fee for OMP at the start of this year.

Simplified mutual-fund only brokerage IRA offering: In anticipation of the additional operational requirements the firm expects for direct business, LPL is planning to create a simplified mutual fund-only brokerage IRA offering to support the continued use of mutual funds in a brokerage relationship as an option for IRA business. This offering would allow LPL to support mutual funds previously held directly with manufacturers. The new offering is not expected to have an annual IRA maintenance fee.

Enhanced practice management capabilities to manage change: The firm plans to provide specialized practice management support to help advisers manage through changes in their practices, including licensing assistance and business analysis.

Operational enhancements to drive efficiency: The firm is also planning simplified operational processes—such as keeping account numbers unchanged when accounts are transitioned from brokerage to advisory accounts—that will allow investors who want to convert their accounts to do so in a more streamlined way.

NEXT: CFFM Revamps Stable Value Monitoring 

CFFM Revamps Stable Value Monitoring

The Center for Fiduciary Management (CFFM), makers of the FiRM and RFP Director retirement adviser toolsets, has released the first of several planned updates to it stable value monitoring and analysis tools for ERISA-focused retirement plan advisers.

This release is comprised of performance data and profiles for 50 stable value products covering all three types of stable value funds used widely by Employee Retirement Incomes Security Act (ERISA) plans: general account, separate account, and synthetic.

The update also includes adviser and plan sponsor educational materials, CFFM explains, and the new service elements can be integrated with the FiRM Investment Due Diligence/Monitoring System, or utilized as a standalone set of data and profiles for people who don’t use FiRM.

“This service will address two key needs for advisers,” says Scott Revare, CEO of CFFM. “The first need is data availability. Traditional industry data providers offer a limited selection of stable value data. Advisers are left with doing their own data collection or more often than not, just not evaluating the plan’s stable value options.”

The second need for advisers is educational material for them and their clients: “Many advisers are unfamiliar with stable value funds,” Revare says. “These investments are unique to the retirement industry, and the key factors to monitor them aren’t the same as other investment options. This service includes educational materials to get advisers up to speed on what they need to know, and presentation material for them to discuss what their plan sponsors should know.”

To source the stable value data and education materials, CFFM has partnered with Blue Prairie Group (

“With the amount of participant assets invested in stable value funds, the fact that these investments are often not evaluated is a potential issue for both advisers and plan sponsors,” adds Connie Mulligan, director of investment research at Blue Prairie Group. “And with money market fund reform hitting later this year, more advisers and plan sponsors are likely to move over to the stable value camp very soon.”

NEXT: AssetMark Updates ‘Investing Evolved’ Framework

AssetMark says the launch of the new “Investing Evolved Framework” will help financial advisers address client behavior issues and protect diversified portfolios.

“Financial advisers need more powerful tools that make it easy to build portfolios that keep investors on track to help them meet their financial goals,” explains Charles Goldman, president and CEO of AssetMark. “Through our Investing Evolved solutions, advisers are better able to construct, compare and test portfolio strategies, as well as communicate those strategies to their clients in a more meaningful way than traditional portfolio construction approaches.”

The first component of Investing Evolved is a portfolio construction framework made up of three primary investment strategies that, when combined, can create optimized portfolios. The strategies are Core Markets, allowing for broad market exposure to participate in global or domestic economic growth; Tactical Strategies, designed to enhance returns or limit losses, based on an investor’s risk profile while taking into consideration the current market outlook; and Diversifying Strategies, used to efficiently diversify equity risk so that investors mitigate the risk of sharp equity market declines, particularly as they approach times when those losses have the most impact on investor goals.

“Importantly, the Investing Evolved framework helps facilitate discussions between advisers and investors on how each portfolio will perform across a range of market conditions,” Goldman says. “These discussions are core to the adviser/investor relationship because they help keep the investor in the market during times of stress.”

“The traditional approach to portfolio construction is no longer adequate because it assumes that investors are always rational and that markets are always efficient,” adds Jerry Chafkin, chief investment officer for AssetMark. “Advisers need to construct portfolios that incorporate elements of both behavioral finance and modern portfolio theory so that their recommendations better align with their clients’ preferences and actual experience. Investors benefit when they understand how their tolerance for loss impacts their potential for growth.”

Taken together, these features allow advisers to create a novice-investor friendly environment in which the adviser can construct and test sample portfolios, compare scenarios to anticipated outcomes, see how investment strategies and asset classes complement each other, and share that information with clients, adds Natalie Wolfsen, executive vice president and chief commercialization officer for AssetMark.

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