NEW YORK (Reuters) - LPL Financial Holdings said on Wednesday it will allow clients to maintain less money in their brokerage accounts and cut fees in preparation for an expected rule from the U.S. Department of Labor that will affect how financial advisers treat clients.
LPL said it will reduce prices on certain funds in 2017, offering savings of up to 30 percent. It is also cutting minimums on some of its smallest accounts from $15,000 to $10,000.
The Department of Labor is expected to release a rule for financial advisers, known as the fiduciary standard, in the coming weeks.
The agency issued a proposed rule in 2010 that would require brokers who give retirement advice to act in their clients’ best interest. The goal is to keep retirees from buying unnecessary products that line brokers’ pockets with fees and commissions.
“We’ve been working on this since last summer when it began to be clear we were going to have a rule,” Dan Arnold, president of LPL, told Reuters on Wednesday. “We’ve tried to engage advisers so they are more prepared and ready to execute when the rule is out, rather than have them trying to begin figuring things out then.”
Another financial services firm, Edward Jones, is also preparing for the rule. Edward Jones has a program in a pilot stage that will allow clients with a minimum of $5,000 to get guided support
On Wednesday, the U.S. Chamber of Commerce said it was ready to sue the federal government if it finds the rule unworkable.
Financial and insurance companies have said that the proposed rule would drive up costs and stop them from offering certain retirement services to middle- and lower-income people.
“It’s important we ensure the rule doesn’t sacrifice people’s access to advice,” said Arnold.
As part of its planned changes, LPL will have to change some accounts from brokerage accounts to advisory accounts. It will keep account numbers the same to smooth the transition for clients.
A spokeswoman for Bank of America Corp, which operates one of the largest U.S. wealth management firms, had no comment about the rule. Morgan Stanley, Wells Fargo & Co and UBS Group AG representatives were not immediately available for comment.
Reporting by Tariro Mzezewa; Editing by Leslie Adler