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Review of LPL Financial

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

LPL Financial is the largest independent broker-dealer in the United States based on gross revenue. Dually registered as an investment advisor, the firm supports a network of over 16,000 affiliated advisors who operate their own businesses. LPL Financial is based in Boston, and it also has offices in San Diego and Fort Mill, S.C. The network of advisors it supports are located throughout the country. The firm’s advisors oversee nearly $159.1 billion in assets under management (AUM).

All information included in this profile is accurate as of January 23rd, 2020. For more information, please consult LPL Financial’s website.

Assets under management: $159,099,423,965
Minimum investment: Varies by service and portfolio type
Fee structure: Percentage of AUM, hourly fees, fixed fees and commissions
Headquarters: 75 State Street
22nd Floor
Boston, MA 02109
617-423-3644
www.lpl.com

Overview of LPL Financial

LPL Financial was founded in 1989 after the merger of two smaller brokerage firms, Linsco and Private Ledger. With 16,109 advisors and 17,205 licensed insurance agents on its staff, LPL has $159.1 billion in assets under management LPL Financial is owned by LPL Financial Holdings, a publicly traded firm.

Advisors often choose to affiliate with LPL to tap into the firm’s technology, investment research and business building support, for which the firm earns a fee. LPL advisors maintain their own relationships with clients and negotiate their own fees and service offerings independently. LPL does not sell any of its own proprietary financial products, so advisors are free to recommend whichever investments and financial products they believe are in their clients’ best interests.

What types of clients does LPL Financial serve?

LPL Financial’s advisors serve mostly individual investors. In addition, the firm serves:

  • High net worth individuals
  • Trusts and estates
  • 401(k) plans
  • Individual retirement accounts
  • Pensions and profit-sharing plans
  • Charitable organizations
  • State and municipal entities
  • Corporations

The minimum amount of assets required to work with an LPL advisor varies depending on the service you receive. LPL does not have a minimum asset requirement for its financial planning, consulting or research services. For customized investment advisory plans, the investment minimum is up to the discretion of the advisor and is detailed in the client agreement.

Clients who opt to use one of the firm’s portfolio programs will be subject to minimum requirements that vary by program. Minimums start as low as $5,000 for Guided Wealth Portfolios and go up to $250,000 for Personal Wealth Portfolios (see more details on these options below).

Services offered by LPL Financial

LPL’s financial advisors offer the full gamut of financial planning and advisory services, such as budgeting, financial projections and selling insurance, though not all advisors offer every type of service. Among the services LPL advisors may offer are:

  • Investment advisory services and portfolio management
  • Wrap programs
  • Financial planning
  • Insurance
  • Retirement plan and pension consulting
  • Selection of other advisors
  • Workshops and seminars
  • Brokerage services

In addition to the services that LPL advisors provide directly to clients, when advisors affiliate with LPL, they get access to a range of services to help them build and manage their businesses. This includes business building ideas, compliance and technology support, investment research and the execution of trades.

How LPL Financial invests your money

Because LPL’s advisors work independently, investment approaches and strategies vary from advisor to advisor and client to client. Advisors can offer customized investment advisory services, and LPL also provides advisors with programs for investing client funds.

One option offered by LPL is the Strategic Asset Management program, which allows a high level of customization so clients can choose to exclude certain investments or emphasize others. The program offers access to a full range of investment options, including mutual funds, exchange-traded funds, equities, fixed income and alternative investments, such as non-traded real estate investment trusts and non-traditional exchange-traded funds.

Advisors who want to take a more hands-on approach with their high net worth clients can use a separately managed account wrap program from LPL called Manager Select. With this program, LPL reviews and recommends outside institutional portfolio management firms for inclusion.

For advisors who don’t want to create customized portfolios, there is also the option to invest clients’ money in one of LPL’s model portfolios. These portfolios — which include Personal Wealth Portfolios, Model Wealth Portfolios, Optimum Market Portfolios and Guided Wealth Portfolios — are professional asset allocation strategies that are created, managed and monitored by LPL. Mutual funds and ETFs make up the investments within these portfolios, but the exact mix will depend on a client’s responses to an online questionnaire about their financial goals, investment horizon and risk tolerance.

Portfolio Name Investment Strategy
Strategic Asset Management
($25,000 minimum)
Open architecture program that allows advisors to invest client assets in mutual funds, ETFs, individual equities, variable annuities and other investments.
Manager Select
($50,000 minimum)
Separately managed wrap program for high net worth clients that uses LPL-researched and monitored institutional portfolio managers.
Personal Wealth Portfolios
($250,000 minimum)
Asset allocation investment program that combines mutual funds, ETFs and investment models for high net worth investors.
Model Wealth Portfolios
($10,000 minimum)
Program that uses strategic asset allocations to take advantage of market opportunities that will persist for the next 3 or 5 years; designed for more aggressive investors.
Optimum Market Portfolios
($10,000 minimum)
Suite of model portfolios that invests in up to six mutual funds from the Optimum Funds family.
Guided Wealth Portfolios
($5,000 minimum)
Digital investment platform for low-balance investors.

Fees LPL Financial charges for its services

It’s up to LPL advisors to determine how to charge for their services. Advisors use several fee models, including a percentage of assets under management, hourly fees, fixed fees and commissions. Fees are negotiated between clients and their advisors and detailed in the client agreement. All fees are paid directly to LPL, and LPL then shares a portion with the independent advisor representative.

That said, the firm typically charges for financial planning consulting services on an hourly or per plan basis, which is a flat rate. The maximum hourly fee that LPL advisors will charge is typically $400 per hour, while the maximum flat fee is typically $15,000.

For customized advisory services, LPL typically charges based on a percentage of assets under management. A client’s rate will be set out in their agreement with the firm. LPL states in its Form ADV that the maximum rate it generally charges is 1.50%.

For clients who opt to participate in one of the programs offered by LPL that’s laid out above, they will also pay a fee based on a percentage of assets under management. The maximum account fee is generally 2.50%.

Along with the account fees, clients may pay other miscellaneous administrative or custodial-related fees and charges. Clients are notified of these fees when they open an account, and LPL provides clients with a list of fees on its website.

LPL Financial’s highlights

  • Awards and recognition: LPL advisors consistently appear on top advisor lists. In 2019, for example, 65 LPL advisors ranked among the best advisors in their states in Forbes’ list of Best-in-State Wealth Advisors. Deborah Danielson, an advisor based in Las Vegas, ranked No. 3 in her home state on Barron’s list of 1,200 Top Financial Advisors in 2019.
  • Advisors for all types of clients: Because LPL has a vast network of advisors across the U.S., clients are likely to find an advisor whose specialty matches their needs. In addition to one-on-one advice with advisors, clients can also tap into technology-assisted portfolio management platforms similar to what they might find at a robo-advisor.
  • Inclusive workplace: Human Rights Campaign gave LPL a 100% score in its Corporate Equality Index as one of the “Best Places to Work for LGBT Equality.”

LPL Financial’s downsides

  • Advisor defections: Over the last few years, several big RIA firms have left LPL, citing the firm’s lack of service to their advisor groups. These groups included Retirement Benefits Group, which managed $10 billion, and Resources Investment Advisors, which oversaw $5 billion.
  • Potential conflicts of interest: Some LPL advisors are dually registered, meaning that they are able to charge fees for financial advice as well as for products they recommend, such as 12b-1 fees, paid to cover distribution costs for mutual funds. This could incentivize advisors to sell certain products. One way that LPL has attempted to mitigate these potential conflicts is to credit back certain fees to client accounts, thus eliminating the financial incentive.
  • Numerous disclosures: Over the years, LPL has been fined on several occasions for failing to supervise its brokers carefully, leading to sales of inappropriate and complex investment products.

LPL Financial disciplinary disclosures

LPL has had a long history of disciplinary disclosures, many of which are centered around the firm’s failure to properly supervise its brokerage practices. The firm has been ordered to pay fines and restitution as a result.

Among the most serious instances of wrongdoing, LPL was fined $26 million in 2018 for failing to establish and maintain reasonable policies and procedures to prevent the sale of unregistered, non-exempt securities to its customers.

In 2015, the firm was fined $11.7 million for “broad supervisory failures” in a few key areas, such as non-traditional ETFs, variable annuities, non-traded real estate investment trusts and other complex investment products. The firm was ordered to pay an additional nearly $1.7 million in restitution directly to clients who had bought non-traditional ETFs.

LPL Financial’s onboarding process

Advisors have their own onboarding process when they sign on new clients. LPL has recently streamlined its sign up process by reducing the number of fields clients must fill in and introducing a progress bar.

If you are interested in working with an LPL advisor, you can find one near you by searching on the firm’s website. You can either search for a specific advisor by name or take a look at the advisors in your area.

Is LPL Financial right for you?

With LPL’s vast network of affiliated advisors, potential clients should be able to find an advisor who can address their needs. However, LPL’s size does bring downsides — indeed, the firm has faced numerous disciplinary actions in recent years. Further, some of LPL’s advisors are dually registered as brokers and receive commissions for sales, which could create potential conflicts of interest. Some investors may prefer a smaller, more intimate advisory practice with fewer potential conflicts of interest and a more personalized feel.

Before choosing a financial advisor, it’s always important to do your research and compare several options to ensure your advisor is the right fit for you.

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Investing

Review of Thornburg Investment Management 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Thornburg Investment Management is an investment firm based in Santa Fe, N.M. The firm offers a lineup of both domestic and international equity funds and fixed income mutual funds for individuals, which are available exclusively through financial advisors. In addition, Thornburg provides portfolio management services for individual and institutional investors. Thornburg currently has $40.5 billion in assets under management (AUM), overseen by its 39 investment advisors on staff.

All information included in this profile is accurate as of December 30th, 2019. For more information, please consult Thornburg Investment Management’s website.

Assets under management: $40,523,499,464
Minimum investment: Starts at $100,000 for individual investors
Fee structure: Percentage of AUM, performance-based fees
Headquarters: 2300 North Ridgetop Road
Santa Fe, New Mexico 87506
https://www.thornburg.com/
505-467-7200

Overview of Thornburg Investment Management

Thornburg Investment Management was founded in 1982 by Garrett Thornburg, who is currently the firm’s chairman and owns 100% of the firm’s voting shares. Prior to founding the firm, Thornburg served as a limited partner at global investment bank Bear Stearns & Co., where he was a founding member of the firm’s public finance department. He was also chief financial officer of New York State’s Urban Development Corporation and a financial advisor to the State of New Mexico’s Board of Finance.

With the founder’s strong background in the public finance market, the firm’s first foray was in municipal bond funds. Thornburg only launched its first stock fund in 1995; it waited another three years to open its second. Today, Thornburg Investment Trust, a client of Thornburg Investment Management, has a lineup of 20 publicly available mutual funds covering domestic, global and international equity, as well as taxable and tax-exempt bond funds. The firm also  offers separately managed accounts and institutional strategies.

What types of clients does Thornburg Investment Management serve?

According to Thornburg’s Form ADV, the bulk of its clients are individual investors, in addition to high net worth individuals, investment companies, pension and profit-sharing plans, corporations and charitable organizations.

Individual clients can access Thornburg’s investments through mutual funds, separately managed accounts and wrap programs. Minimum investment requirements vary by offering:

  • Mutual funds: For individual clients who want to invest in mutual funds offered by the firm, minimums of $5,000 for regular accounts and $2,000 for individual retirement accounts apply.
  • Separately managed accounts: Private client separate accounts have minimums of between $100,000 and $500,000 for a Private Client Equity Separate Account and $1 million to $25 million for Private Client Fixed Income Separate Account. However, the firm notes that it can waive minimums at its discretion.
  • Wrap programs: Each wrap program sponsor has its own minimum account size, which typically ranges from $100,000 to $500,000 for equity accounts and from $1 million to $25 million for fixed income accounts. Thornburg has the discretion to waive account minimums.

For institutional separate accounts, minimums range from $10 million to $50 million, depending on the investment strategy.

Services offered by Thornburg Investment Management

Thornburg Investment Management provides investment services covering a broad range of strategies, including municipal bond, taxable bond, domestic stock and international stock categories. The firm provides these investment strategies for its mutual funds, separately managed accounts and investment services for institutions and government entities.

Additionally, Thornburg participates in third-party wrap programs in which investors of some brokerage firms can choose to invest in a mutual fund from a select list for a reduced sales charge. Investors in third-party wrap programs do not pay fees directly to Thornburg. The sponsor pays Thornburg’s fee from the wrap fee paid by investors.

Here is a complete list of the services offered by the firm:

  • Mutual funds
  • Separately managed accounts
  • Portfolio management for institutional clients, including corporations, pensions and government entities
  • Wrap programs

How Thornburg Investment Management invests your money

Thornburg uses an active approach to manage more than 60 equity and fixed-income mutual funds and strategies. These funds and strategies cover both domestic and international markets. In addition, Thornburg has a sizable lineup of tax-exempt funds.

For the equity funds, Thornburg employes a bottom-up style with analysts and portfolio managers constructing the portfolio on a stock-by-stock basis rather than relying on macro calls on sectors, economies or interest rates. Thornburg considers itself a long-term, value-driven investor and likes to keep turnover low. Managers seek out securities that are well-priced relative to the stock’s long-term prospects.

A hallmark of Thornburg’s fixed-income strategy is the bond ladder, which calls for buying bonds at staggered maturities along a “ladder,” so a portion of the portfolio’s assets matures each year. This strategy helps to reduce interest rate and investment risk.

Here is a full list of the strategies and funds that the firm offers to both individuals and institutions:

Portfolio/Fund Name Investment Strategy
 Thornburg Investment Income Builder Global Equity
Thornburg Global Opportunities Global Equity
Thornburg International Value International Equity
Thornburg Better World International International Equity
Thornburg Value Domestic Equity
Thornburg Core Growth Domestic Equity
Thornburg Low Duration Income Global Fixed Income
Thornburg Limited Term U.S. Government Global Fixed Income
Thornburg Limited Term Income Global Fixed Income
Thornburg Strategic Income Global Fixed Income
Thornburg Low Duration Municipal Tax Exempt Bond
Thornburg Limited Term Municipal Tax Exempt Bond
Thornburg Intermediate Municipal Tax Exempt Bond
Thornburg California Limited Term Municipal Tax Exempt Bond
Thornburg New Mexico Intermediate Municipal Tax Exempt Bond
Thornburg New York Intermediate Municipal Tax Exempt Bond
Thornburg Strategic Municipal Income Tax Exempt Bond
Thornburg Long/Short Equity Alternatives

Fees Thornburg Investment Management charges for its services

Private client and institutional client separate account fees

Thornburg generally charges a fee based on a percentage of assets under management for its institutional and private clients separate accounts. The fees charged to separate accounts are negotiable and will vary depending on the type of client, the amount of assets under management and whether the client chooses to place restrictions on Thornburg’s discretionary investing authority.

The firm may charge a limited amount of performance-based fees as well, though this fee only applies only to institutional separate account clients and to certain private funds managed by the firm. Performance-based fees are charged when the portfolio manager produces positive returns.

Note that investors participating in institutional or private client programs pay less due to higher initial minimum investment requirements. These are the fee schedules for institutional separate accounts and private client separate accounts. Rates do not include additional charges that clients may pay, such as custodial fees, third-party money manager fees, brokerage and exchange fees and fees for certain trades.

 

International ADR Strategy ($25 million minimum)
Up to $25 million 0.70%
$25 million to $75 million 0.65%
Over $75 million negotiable
International Equity Investment Strategy ($10 million minimum)
Up to $25 million 0.70%
$25 million to $75 million 0.65%
Over $75 million negotiable
All Cap Growth, International Equity ESG, International Growth ADR and Ultra Focused International Equity Investment Strategies
($10 million, $25 million, $10 million and $10 million minimums, respectively)
Up to $25 million 0.75%
$25 million to $75 million 0.65%
Over $75 million negotiable
Developing World and Emerging Markets ADR Strategies ($25 million minimum)
All assets 0.80%
Ultra Focused Equity and U.S. Equity Investment Strategies ($10 million minimum)
Up to $25 million 0.60%
Over $25 million negotiable
Global Quality Dividend ($25 million minimum)
Up to $25 million 0.75%
Over $25 million negotiable
Global Opportunities ($25 million minimum)
Up to $25 million 0.75%
Over $25 million negotiable
Investment Income Builder Investment Strategies ($100 million minimum)
Up to $25 million 0.75%
Over $25 million negotiable
Long/Short Equity Investment Strategy ($50 million minimum) 
Up to $50 million 1.25%
Over $50 million negotiable
Multisector Opportunistic and Strategic Municipal Income Investment Strategies ($50 million minimum)
$50 million to $100 million 0.50%
Over $100 million negotiable
All Other Municipal Fixed Income Investment Strategies ($1 million minimum)
Up to $25 million 0.30%
$25 million to $75 million 0.25%
Over $75 million 0.20% or negotiable
All Other Taxable Fixed Income Investment Strategies ($25 million minimum)
Up to $25 million 0.35%
Over $25 million 0.30%

Wrap program fees

Clients in Thornburg’s wrap programs pay the program’s sponsor an annual fee, typically from 1% to 3% of assets under management. Thornburg receives an annual fee ranging from 0.30% to 0.75% of the assets it manages, depending on the size of the wrap program and the investment strategy.  The exact rate will depend on factors including the size of the wrap program and the investment strategies offered.

Wrap program fees generally covers all brokerage commissions on executed trades, though clients will pay additional fees when trades are made with broker-dealers other than the sponsor.

Mutual fund fees

Shareholders in Thornburg Investment Management’s mutual funds pay a percentage of their assets under management. Fees vary depending on the strategy.

Fees for domestic equity funds range from 1.27% to 1.48%, while fixed-income funds charge between 0.77% and 1.05%. In addition, shareholders are charged upfront commissions of up to 4.50% for A shares of the mutual funds.

Thornburg Investment Management’s highlights

  • Municipal bond expertise: Thornburg sets itself apart with its emphasis on municipal bond investing. The firm has an extensive lineup of municipal bond funds and strategies including for residents of New York, California and New Mexico. Investors residing in these states can benefit from tax-free yields on bonds issued by their home state.
  • Unique laddering strategies: Thornburg’s bond laddering strategy helps boost returns in its bond funds without taking on additional credit risk. This can be especially beneficial in a low interest rate environment. By investing at different maturities, the average yield of the fund can be higher for the same average maturity (due to higher yields on longer dated maturities) than it would be if the fund had only invested at the average maturity.
  • Aligned interests: Portfolio managers invest in the funds they manage, which aligns their interests with that of shareholders.
  • Awards and recognition: Thornburg was named “Global Core Equity Manager” of the year in Institutional Investor Magazine’s 2015 U.S. Investment Management Awards.

Thornburg Investment Management’s downsides

  • Above-average fees for mutual funds: Individual investors in Thornburg’s mutual funds pay above-average fees. For example, the expense ratio for the Thornburg Value fund is 1.33%, while the average expense ratio for actively managed domestic equity funds is 1.12%, according to Morningstar Inc., a mutual fund research firm.
  • Performance-based fees: Thornburg charges performance-based fees to certain clients, which could lead portfolio managers to take greater risks to bolster returns. When Thornburg charges a performance-based fee, it has an incentive to maximize gains in that account (and, therefore, maximize its performance-based fee), and it could make investments for that account that are riskier or more speculative in an attempt to do so. Thornburg also has an incentive to favor accounts for which it charges a performance-based fee over other types of client accounts, by allocating more profitable investments to performance-based fee accounts or by devoting more resources toward the management of those accounts.
  • Investment management only: Thornburg does not offer traditional financial planning services. Those who want to receive financial planning alongside portfolio management will not be able to find those services through Thornburg.

Thornburg Investment Management disciplinary disclosures

Thornburg’s disciplinary disclosures are minor, with only one such action reported. Disclosures are any criminal charges, regulatory actions or legal actions against the firm or its affiliated persons, and all SEC-registered firms are required to report these on their Form ADV filed with the SEC.

In the disclosure reported in Thornburg’s Form ADV, the firm was accused of failing to file three voting rights notifications in a timely manner with Bunesanstalt Fur Finanzdienstleistungsaufsicht (BaFin), a financial regulatory authority for Germany. According to the Form ADV, the notifications were filed on time but with errors. By the time Thornburg was notified of the errors, corrected them and refiled the notifications, the deadline had passed. This resulted in a fine of 100,000 euro (approximately $111,000), though Thornburg maintains that because the filings were “materially correct,” the filings were therefore timely.

Thornburg Investment Management onboarding process

If you want to learn more about working with Thornburg Investment Management, you can contact the firm by filling out the contact form provided on its website. You can also call the firm at  800-847-0200 or email at [email protected]

Thornburg mutual funds are available through financial intermediaries. Contact your financial advisor if you want to invest in a Thornburg fund.

The bottom line: Is Thornburg Investment Management right for you?

Thornburg Investment Management offers a well-regarded lineup of mutual funds covering major asset classes. With its roots in municipal bond investing, Thornburg remains a leader in this corner of fixed-income investing, and its unique bond ladder strategy is another way Thornburg that makes its mark.

The bulk of the firm’s clients are individual investors, and it also works with high net worth individuals and institutional investors. The firm’s account minimums, which start at $100,000 for separately managed accounts and wrap programs, make it more accessible compared with many other firms.

However, prospective clients should be aware that the firm does not offer financial planning services. Additionally, clients will want to be aware that performance-based fees apply to certain private funds managed by the firm and that fees for certain funds may be above-average compared to comparable funds on Morningstar. Before choosing a financial advisor, it’s always important to shop around and compare your options to ensure you find the best fit for you.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.