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Raymond James, LPL Cut Broker Compensation

July 12, 2017

LPL Financial and Raymond James are reducing compensation for some of their advisors, InvestmentNews writes. While LPL attributes the cuts to the Department of Labor’s fiduciary rule, Raymond James points to the more stringent regulatory environment overall, according to the publication.

LPL is getting rid of a “general securities bonus” tied to trading in equities and bonds, two sources who wished to remain anonymous tell InvestmentNews. While it’s not clear how the level of trading determines the bonus or how much LPL will be saving as a result, the cut affects a limited number of brokers who’ve been with the firm a long time, an LPL branch manager tells the publication.

More recently hired brokers do most of their trading in packaged investment products, such as variable annuities and mutual funds, InvestmentNews writes. LPL has been evaluating compensation in light of the DOL’s rule, a company spokesman tells the publication, who adds that the recent cut does not affect standard production bonuses.

Last month, LPL instituted uniform compensation on fixed annuities and unit investment trusts and restricted the types of mutual funds sold in brokerage accounts. The move came just days ahead of the June 9 partial implementation of the DOL’s fiduciary rule, which purports to force retirement account advisors to put clients’ interests first and reduce conflicts of interest.

Meanwhile, advisors in Raymond James’ employee channel making more than $300,000 in annual revenue are getting a 1% cut, according to a memo from Tash Elwyn, president of Raymond James & Associates’ private client group, seen by InvestmentNews.

Even such a seemingly small change in compensation could fly in the face of major rivals. As Raymond James moves to look for cuts to advisor grids, super regional Stifel tells FA-IQ it plans to stick to longstanding policies to provide more incentives to FAs producing $300,000-plus in annual revenue

Raymond James attributed its cuts, which go into effect at the end of September, to rising costs “in light of the regulatory and legal environment,” as well as expenditures on technology and higher advisor productivity, Elwyn wrote in the memo, according to the publication. Earlier this month, Raymond James announced that it’s putting its advisors on a single payout grid, starting next year.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.