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LPL Rolls Out Blockchain SMA Strategy

June 19, 2018

LPL Financial has introduced a blockchain strategy now available to advisors on a separately managed account platform, ThinkAdvisor writes.

The strategy invests in 50 stocks related to blockchain and requires a minimum investment of $50,000, according to the publication. Blockchain is a digital ledger technology that’s used, among other things, for recording and tracking transactions in cryptocurrencies such as Bitcoin and Ether, ThinkAdvisor writes. The strategy comes with a 0.05% management fee, compared to 0.40% to 0.50% for typical SMA strategies, according to LPL, the publication writes.

LPL’s announcement last week came one day after an SEC official said Ether isn’t a security, and that the SEC will therefore not regulate it, according to ThinkAdvisor. LPL is the first broker-dealer to incorporate blockchain into its portfolio platform, the publication writes. Sixty-seven percent of executives at independent broker-dealers don’t plan to introduce investing in blockchain any time soon, according to an April poll by Investment Advisor magazine, which is affiliated with ThinkAdvisor. And while 30% of executives said such a move is indeed possible, only 2% said they anticipated such an offering, according to ThinkAdvisor.

“At this time, there are very limited investment solutions available for exposure to this opportunity,” Burt White, LPL’s chief investment officer, says in a statement cited by the publication. “We are proud to be able to lead the industry by leveraging our scale and expertise to provide low-cost solutions that support our advisors’ ability to meet market demands.”

Tim Welsh, head of the consulting firm Nexus Strategy and a former Charles Schwab executive, tells ThinkAdvisor that LPL’s launch of the blockchain strategy is “absolutely a smart move.”

“Blockchain is an emerging technology that people want access to efficiently as an investment. These blockchain [holdings] are not cryptocurrencies …,” he tells the publication. “Maybe it’s not for grandma [to invest in], but for those looking for a technology-focused, growth portfolio it could be good exposure.”

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