LPL Tells Brokers to Remove ‘Conflict-Free’ From Websites
LPL Financial, the largest independent broker-dealer by headcount, sent a memo to its roughly 14,100 brokers on Tuesday asking them to remove language from their websites that described their advice as “truly unbiased” and “conflict-free,” according to a memo.
The memo, which was posted to the firm’s internal resource center and not signed, instructed brokers to remove the phrase:
“LPL Financial understands that providing Americans with unbiased investment advice is critical to their financial security. Because the firm has no proprietary products to sell, LPL Financial can provide truly unbiased, conflict-free advice and investment recommendations.”
The move was made in order to “to eliminate any confusion the term ‘conflict-free’ could have for your investors and their understanding of your services,” according to the memo.
LPL said it was responding to an April 7 column in the Wall Street Journal, “Why Your Financial Advisor Can’t be Conflict Free”, raised concerns about the language, which it said was found on roughly 70 websites of LPL affiliates.
The Journal warned investors to “be wary of that label” because it ignored the myriad conflicts such as up-front loans for transitioning clients, higher payouts for certain products and other issues disclosed in detail in advisors’ regulatory filings.
LPL, which said in the memo that it “had begun to transition from using this type of language” over the last several years added that it would follow up with additional instructions.
“We’re developing a process that will outline future actions for all of us to take, and those will be communicated to you with additional instructions and tools to help you complete this important update,” the firm wrote.
An LPL spokesman did not respond to a request for comment. A spokeswoman for the SEC declined to comment on whether it was a violation of adviser advertising rules.
An internet search for the phrase on Tuesday afternoon turned up one firm, Synergy Financial Group, a Towson, Md.-based firm, that was still using the phrase. An executive at the firm did not immediately return a call for comment.