LPL Is Reworking Cash Sweep And Platform Fee Pricing, With Answers Due In First Half Of 2027
CEO Rich Steinmeier calls the pricing review "a big body of work" as rivals add platform fees.
LPL Financial, which provides brokerage, advisory and custody services to independent advisors and bank and credit union wealth practices, is weighing changes to cash sweep pricing and platform fees, CEO Rich Steinmeier said on the company's third-quarter earnings call Tuesday. The company expects "to have more to share in the first half of next year," he said, after the quarter produced record adjusted earnings of $5.97 a share, up 15% from a year earlier.
A review with no answer yet
Asked by a Bank of America analyst whether pricing on cash sweep, asset-manager revenue sharing and platform fees could change soon, Steinmeier said any move must be weighed against risks and fit long-term strategy. The work, he said, is
Rivals add platform fees
A Raymond James analyst noted that competitors in the wirehouse and independent channels have added platform fees. Steinmeier said LPL is
Cash sweep and Commonwealth numbers
Odette said the yield on LPL's cash sweep portfolio was 352 basis points in the third quarter, up 16 basis points from the second, and should rise about 20 basis points in the fourth. He cited the full-quarter effect of a methodology change and the September Fed rate hike.
Cash per account has settled near $5,000, which Odette described as the level needed to manage accounts, and client cash ended the quarter at $56.6 billion. For October, he said, cash was heading to just under $55.5 billion.
On Commonwealth, LPL now expects to keep about 83% of assets, with advisors onboarding in mid-November, and puts run-rate EBITDA at about $415 million. LPL bought back roughly $300 million of stock in the quarter and plans another $300 million in the fourth.
No retention loans
Asked about rivals' retention bonuses, Odette said LPL has seen no meaningful change in the environment. The idea of "re-recruiting existing advisors and retention loans is not something we generally see or do," he said.
Management said it expects to share the outcome of its pricing evaluation in the first half of next year.
Sources
- LPL Financial Holdings Non-GAAP EPS of $5.97 beats by $0.28, revenue of $5.34B misses by $10M (NASDAQ:LPLA) | Seeking Alpha — seekingalpha.com
- Life Insurance And IRA Creditor Exemptions Examined In Bagby — forbes.com
- Another ex-LPL Financial advisor in trouble, this time in Iowa. - InvestmentNews — investmentnews.com
- Fidelity's $100M custody minimum forces small RIAs to pick a path - InvestmentNews — investmentnews.com
- Paul Huygens, et al., v. Westwood Wealth Management, et al., — law360.com
