LPL Raises Broker Fees—Again

Broker/dealers in the LPL Financial LLC network will pay an extra $250 annually in fees for errors and omissions (E&O) insurance.

Beginning next year, LPL will raise the liability insurance fees it charges advisers. “We have leveraged our industry-leading scale to keep these fee increases to a minimum, the company said in a statement to PLANADVISER. The company raised its fees last year as well, so that brokers will be paying $500 more each year than they did in 2011.

E&O insurance shields individuals and companies that provide professional advice and service from bearing the full cost of defending against negligence claims and damages awarded. “We provide our advisers with one of the most comprehensive errors and omissions insurance policies available in our industry,” LPL said.

Pointing to the current environment of increasing costs throughout the industry, LPL defended the fee adjustments as necessary to maintain the highest levels of service and support for their advisers. “We believe the pricing of our E&O policy is extremely competitive,” an LPL spokesman said.  “A number of firms in our industry self insure, which we believe could be dangerous.”

Another rate change is the affiliation fee, which will be $175 per month per broker. Previously, the monthly fee was scaled to office size, with reps in offices of one to four brokers paying $175 apiece and those in offices with five to 11 paying $125. In larger practices of a dozen or more, each rep paid $100.  Fewer than half the firm’s reps (about 25% to 30%) will experience a change in fees, according to published reports. This fee was raised last year for the first time in 20 years, said Bill Dwyer, a managing director and president of national sales and marketing at LPL Financial. The new fee is a leveler since it no longer hinges on the size of an adviser’s practice, Dwyer said.

For the 12 months ended September 30, LPL recruited 495 net new relationships with experienced advisers, a gain that underscores the company’s commitment to help expand adviser businesses that are affiliated with it.

“As with all of the adviser businesses we support, we have always worked closely and collaboratively with our large enterprises [branches] across multiple areas, including business development and practice management,” LPL said.

Citing confidentiality and respect for its advisers, the spokesman said it would be inappropriate to discuss financial arrangements between LPL and its advisers on the record.