Independent broker-dealer LPL Financial has launched a variable annuity platform that should offer more appeal to fee-based advisors than many competing offerings.
Unlike many other variable annuity products, the LPL Fee-Based Variable Annuity Platform allows advisors to actively manage investments within the annuity portfolio. The platform also removes bundled commissions so that fee-based advisors can incorporate charges into their overall client consultation fee. The annuities have been streamlined by offering only one share class for investments. All of the carriers on the platform have agreed to limit their mortality and expense charges to no more than 65 basis points. LPL also has eliminated surrender charges, which often make advisors and clients hesitate about buying annuities.
John Moninger, executive vice president of Advisory and Brokerage Solutions at LPL Financial, said the launch reflects both increased demand from financial advisors and from clients, particularly baby boomers, who are looking for lifetime income sources as they are nearing or at retirement.
"The big take-away is that we are focused on the ability to provide discretion, the ability to provide transparency, the consistency of how advisors can implement the strategy, and the most important part is getting to an investor who may not have even been presented this idea before by a fee-based advisor. And in the world of harmonization, if it comes to fruition, these kind of strategies actually fit into that as well," Moninger commented.
Through the platform, purchases of fee-based variable annuities will be integrated in the existing LPL Financial process for opening accounts for investors, and holdings will be viewable through all advisor-facing technologies, including BranchNet, the company's proprietary, Web-based technology platform that allows advisors to manage all critical aspects of their business.
LPL has approximately 12,400 advisors and nearly all have the ability to do fee and commission business.