LPL Enforcing ERISA Rule: No Family Member Account Fees for Brokers

LPL Financial told brokers last month that they will no longer be able to receive a commission or fee from the accounts belonging to direct family members of theirs. On January 1st, brokers must hand off accounts to other brokers not related to them, or they will not be able to collect any commissions from the transactions. The rule is for the “lineal family line” which includes parents, grandparents, children, children-in-law and grandchildren. The plans included are individual retirement accounts, 401(k)s and other employer-sponsored retirement plans. This comes on the heels of the Employee Retirement Income Security Act of 1974 (ERISA), and LPL is attempting to get increased enforcement in that area, as other brokerage firms have not been following the rule, nor have regulators been enforcing it. The point of the rule is to eliminate what could be possible conflicts of interest within the industry. LPL has been hit with a series of fines over the past few years, including an $11.7 million fine in May.

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