LPL Financial FDIC-Insured Bank Deposit Sweep Programs (LPL ICA and DCA)

 

 

ICA QUICK LINKS:

DCA QUICK LINKS:

LPL Financial offers two bank deposit sweep programs which take available cash balances (from securities transactions, dividend and interest payments, cash deposits, and other activities) in clients’ eligible accounts and automatically deposits them (which we refer to as sweeping) into interest-bearing Federal Deposit Insurance Corporation (FDIC) insured deposit accounts (Deposit Accounts) at one or more of the banks or other depository institutions that are available. The two programs, LPL Insured Cash Account (ICA) and LPL Deposit Cash Account (DCA), are available to different types of client accounts.

  • LPL ICA is available to individuals, trusts (where beneficiaries are natural persons), sole proprietorships and entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts, and other organizations.
  • LPL DCA is available only to advisory individual retirement accounts (IRAs).

Though the premise of these two programs is the same, due to different account types being eligible, there are also differences with regard to structure, fees, and other items, which are detailed in the sections below.

 

LPL FINANCIAL INSURED CASH ACCOUNT (LPL ICA) PROGRAM

As mentioned above, the ICA program is available only to individuals, trusts (so long as all beneficiaries of the trust accounts are natural persons), sole proprietorships and entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts, and other organizations . In the future, LPL may at its discretion, deem additional account types eligible for the ICA program.

Program Details

Cash from all eligible accounts are swept to collective accounts at each Bank by LPL, acting as clients’ agent, to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual bank. This insurance amount increases to $500,000 in principal and accrued interest for joint accounts for each FDIC-defined ownership category in an individual bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank, or through an intermediary (such as LPL Financial or another broker-dealer) in the FDIC-defined ownership category, will be aggregated with client funds from the ICA program held at the Bank for purposes of the $250,000 limit. This is why it is important clients monitor the assets they have at all banks and notify their advisor of assets they hold with any bank on the Priority Bank List (PBL) so they may ensure LPL Financial does not sweep ICA assets into that bank.

For more information about FDIC coverage and different FDIC-defined ownership categories, visit the FDIC website.

As clients’ agent, LPL Financial will sweep assets out of LPL Financial accounts and into the Banks on the Priority Bank List. The assets are swept into a collective Deposit Account for all LPL Financial clients whose assets are located at a given Bank on the PBL. LPL Financial, as clients’ agent, will place up to $246,500 of clients’ available cash for an individual or trust account, and up to $493,000 for a joint account, in one Bank. As clients’ agent, LPL Financial will open collective Deposit Accounts at additional Banks so that funds in excess of $246,500 for an individual or trust account (or $493,000 for a joint account) may be swept into those accounts, which are also eligible for deposit insurance. We will allocate funds as clients’ agent up to the ICA program’s current maximum deposit insurance. Current maximum deposit insurance rates can be found on the ICA Interest Rates page on LPL.com. After that maximum is reached, your additional cash will be swept to a money market mutual fund. Please note, clients will not have a direct account relationship with any of the Banks.  LPL Financial, as clients’ agent, will establish these collective Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL Financial. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL Financial does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL Financial is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The amount of anticipated annual interest clients will receive is calculated by taking the amount of cash being swept through the ICA program multiplied by the annual interest rate that corresponds to their household balance tier. Clients will receive the same interest rates on all funds regardless of the Bank in which it is held. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. The interest rates paid are determined by the amount the Banks are willing to pay minus the fees paid to LPL Financial and other parties.

The most up-to-date LPL ICA rates are available here.

The interest rates clients receive will vary based upon the value of the eligible assets for their household in eligible accounts (referred to as Household Balance). In determining clients’ Household Balance, the eligible accounts of all persons at the same address may be linked. LPL Financial may consider requests to link other accounts at our discretion and may change or terminate Household Balance eligibility without notice. The eligible assets of linked accounts are not commingled and all clients linking accounts retain control over, and responsibility for, their individual accounts. It is client’s obligation to notify their financial advisor or LPL Financial of accounts that they would like to be linked.

 

Anticipated Fees

Each Bank will pay LPL Financial a fee equal to a percentage of the average daily collective deposit balance. The fee LPL Financial receives may differ among Banks depending on the interest rate environment and/or any fee reductions made by LPL Financial.  The amount of fee received or waived by LPL Financial will affect the interest rate paid to clients on their funds. The fee paid to LPL may be at an annual rate of up to an average of 400 basis points as applied across all ICA deposit accounts taken in the aggregate. Financial advisors do not receive any of the fees received by LPL Financial from the Banks. The fees LPL Financial receives from the Bank may be greater than the fees LPL Financial receives from other sweep investment options. Upon request, LPL Financial will provide clients with information concerning the fees it receives in connection with the ICA program.  In addition to LPL Financial, other service providers of the ICA program will receive fees. Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the ICA program.

 

THE PRIORITY BANK LIST (PBL)

The most up-to-date LPL ICA Retail PBL divided by state/region is available here.

The most up-to-date LPL ICA Business PBL divided by state/region is available here.

The Priority Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in columns by state or region in the order in which your funds of clients within each state or region will be allocated. The last banks on the list are “Excess Banks” and are noted as such. For all other banks on the PBL except these Excess Banks, LPL Financial as clients’ agent will ensure that their ICA sweep deposits do not exceed the $250,000 (or $500,000 for join account) FDIC-defined ownership category limits. For the Excess Banks, clients’ funds may be deposited without consideration of the $250,000 and $500,000 limits. However, this will only be done when there is insufficient capacity in other Banks on the PBL to take clients’ assets and not break through the $250,000 and $500,000 limits and is meant to be temporary in nature.

Clients may not change the order of the Banks on the PBL. However, they may, at any time, designate a Bank as ineligible to receive their funds. This will result in funds not being deposited into this bank or if already there, we will remove those funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, funds from eliminated Banks will be deposited at the first available Bank set forth on the Priority Bank List, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the Priority Bank List, Banks may be added, removed, or the order of the priority sequence may change. Please consult your financial advisor or LPL.com periodically throughout the month for recent updates and information regarding how these changes may impact your account.  When changes are made, we will update the PBL (located at the link at the top of this section) in real time.  If a Bank at which clients have funds is no longer available through the ICA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If clients choose not to establish a direct depository relationship with the Bank, funds will be transferred to the first available Bank set forth on the Priority Bank List.

 

Insufficient Capacity

The ability of the ICA program to sweep clients’ uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client cash cannot be fully deposited into a participating Bank (including the Excess Banks without limit), it will be automatically invested into a money market mutual fund the following business day just as it will be when clients’ available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the maximum amount of FDIC insurance.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statements. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the collective Deposit Accounts
  • The closing balance of client’s funds in the collective Deposit Accounts at each Bank
  • Interest earned on client’s ICA cash sweep balances

If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL Financial detailed on this site may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the most up-to-date LPL ICA Disclosure Booklet for additional information.

 

LPL FINANCIAL DEPOSIT CASH ACCOUNT (LPL DCA) PROGRAM

The DCA program is available only to individual retirement accounts (IRAs) subject to Section 4975 of the Internal Revenue Code in certain LPL advisory programs. This would include traditional, rollover, Roth, and inherited IRAs, and Coverdell education savings accounts (ESA) held by an eligible person. Plans and IRAs that are subject to the Employee Retirement Income Security Act (ERISA) (including certain SEP and SIMPLE IRAs) are not permitted to use the LPL DCA program. LPL may at its discretion deem an eligible person or account to be an ineligible or account person if LPL becomes aware that the person or account is prohibited as a matter of law from holding funds at any Bank.

 

Program Details

Cash from all eligible accounts is swept to omnibus accounts at each Bank by LPL acting as clients’ agent to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual Bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank or through an intermediary (such as LPL or another broker-dealer) in the applicable FDIC-defined ownership category will be aggregated with clients funds from the DCA program held at the Bank for purposes of the $250,000 limit. This is why it is important that clients monitor the assets they have at all Banks and notify their advisor if they want to designate a Bank as ineligible to receive funds through the LPL DCA Program.

As clients’ agent, LPL will sweep assets out of clients’ LPL accounts and into a single Bank (the “Intermediary Receiving Bank”) from which the third-party administrator will sweep assets to the Banks on the ABL. The assets are swept into an omnibus Deposit Account held for the benefit of all LPL DCA clients whose assets are located at a given Bank on the ABL. The third-party administrator will place up to between $245,000 and $249,000 of client’s available account’s cash in any one Bank. As client’s agent, LPL will allocate your account’s cash in excess of the preceding dollar amounts to omnibus Deposit Accounts at additional Banks so that funds in excess of $245,000 to $249,000 will also be eligible for deposit insurance.

On any business day when clients’ accounts assets are transferred, all accounts’ assets will be held temporarily at a single Bank (the “Intermediary Receiving Bank”).  As a result, client’s account’s assets over $250,000 may be temporarily uninsured at this time.  Once distributed to other Banks on the ABL, client’s account’s assets will be insured, up to the DCA program’s current maximum deposit insurance. Current maximum deposit insurance rates can be found on the DCA Interest Rates page on LPL.com.. The third-party administrator of the LPL DCA program has adopted procedures to ensure the movement of assets in a timely manner and expects that client assets will be transferred by the close of business each day.  In the unlikely event of a failure of wire transfer systems or communication facilities, client assets could remain at the Intermediary Receiving Bank until the next business day.

We will allocate and deposit clients’ accounts’ funds as their agent to multiple Banks on the ABL to obtain up to the current DCA maximum deposit insurance maximum for client’s account’s cash balances. After that maximum is reached, client’s account’s additional cash will be swept to a money market mutual fund (which is not FDIC insured). Please note, clients will not have a direct account relationship with any of the Banks.  LPL, as clients’ agent, will establish these omnibus Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The current LPL DCA interest rate is available here.

Clients account will receive the same interest rates on all funds regardless of the Bank in which cash is deposited. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. If a client closes their account during a month, their account will be credited the pro-rata amount of interest due by LPL and LPL will recoup the amount of this partial month interest payment from the Bank(s) at the close of the month. More information about this process can be found in the DCA Disclosure Booklet.

The interest rates payable under the LPL DCA program are determined by the amount the Banks are willing to pay minus the fees paid to LPL and other parties (detailed below).  The interest rates accruing on client account’s funds may change as frequently as daily without prior notice.

 

Anticipated Fees

Under the LPL DCA program, each Bank will pay to the third-party administrator an amount equal to a percentage of the average daily aggregated omnibus deposit balance. This amount includes the fee for the third-party administrator, LPL’s fees, and interest payable to participating accounts. Different Banks may pay different amounts.  Clients will have no rights to the amounts paid by the Banks, except for interest actually credited to their account. However, amounts collected from the Banks during each period, less interest credited, will be allocated on aper capita basis and used to offset each client’s monthly LPL account fee, as discussed more fully below, for providing the sweep services. Excess amounts will be used to compensate the third-party administrator for its services. 

For its services, the third-party administrator will charge a tiered asset-based fee. This fee may vary period to period based on changes in prevailing interest rates, how assets are allocated amongst the Banks during the period, and the average daily balance of accounts participating in the LPL DCA program during the period. Moreover, the administrator may, from time to time, temporarily reduce its fees during certain periods, such as when necessary to help ensure that the interest rates paid by the Banks during the period equal the applicable disclosed rate for the period. Under such circumstances, the administrator is authorized to recover any such reduced fees, subject to its targeted compensation rate, from future periods. Clients authorize and direct that the third-party administrator to deduct its fees for its services from the amounts paid by the Banks. Based on the calculation method set forth below, the third-party administrator will calculate the fees due to LPL.

For its services under the LPL DCA program, including making the platform available, LPL receives a per account fee each month. LPL’s fee is not based on the amount of assets in the LPL DCA program or each client’s account. LPL’s compensation under the LPL DCA program does not vary, and is not affected by, the actual amounts held in the Deposit Accounts or client’s account.  As provided for below, the LPL DCA program account fee schedule will be indexed to the current Federal Funds Target (FFT) Rate. Under the fee schedule, increases in the Federal Funds Target Rate will result in increased compensation for LPL. LPL can change the applicable fee schedule upon 30 days advance notice to clients.  Although it is generally anticipated that LPL’s fees under the LPL DCA program will be offset by the amounts paid by the Banks, as discussed above, and clients direct the third-party administrator to collect such fees from the Bank and remit such amounts over to LPL, LPL reserves the right to withdraw the monthly account fee, or portion thereof, in the event or to the extent that the amount received from the Banks and paid over to LPL by the third-party administrator for the period is less than LPL’s fee for the same period.

LPL will be paid a maximum monthly per account fee of $15 for its services in connection with maintaining and administering the LPL DCA program. In a lower rate environment LPL’s fee will be reduced based on the FFT, which will increase the likelihood of LPL DCA program investors receiving a positive interest rate. The fees paid to LPL may be reduced to as low as $1 per account per month. For more details about LPL’s per account fee, please reference the DCA Disclosure Booklet.

The fee per account per month will not generally be seen on clients’ statements due to the manner in which LPL recoups its fee from the Bank payments, as discussed above. Financial advisors do not receive any of the fees received by LPL from the Banks. The LPL DCA program fees may be greater than the fees LPL receives from other sweep investment options.  Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the LPL DCA program.

 

THE AVAILABLE BANK LIST (ABL)

The most up-to-date LPL DCA ABL is available here.

The DCA Available Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in alphabetical order and client’s cash may be allocated to any bank on the list at any point in time. For each Bank on the ABL, LPL as clients’ agent will ensure that LPL DCA Program sweep deposits do not exceed the $250,000 FDIC-defined ownership category limits. Note, however, that if clients hold deposits at a Bank on the ABL outside of the LPL DCA program, their total deposits at such bank may exceed the $250,000 FDIC limit.  As described below, clients can contact their advisor to designate any of the ABL Banks as ineligible to receive LPL DCA Program funds to prevent this from occurring.

Clients may not designate which Banks on the ABL receive their accounts’ funds. However, they may, at any time, designate a Bank as ineligible to receive funds. This will result in funds not being deposited into this bank or if already there, we will remove the account’s funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, the funds deposited in eliminated Banks will be deposited in any Bank with capacity set forth on the ABL, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the ABL, Banks may be added, removed, or the order of the priority sequence may change. If we make a change to the ABL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the ABL link below in real time and provide the most up-to-date version of the ABL in clients statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the DCA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If client chooses not to establish a direct depository relationship with the Bank, their funds will be transferred to an available Bank set forth on the Available Bank List.  As discussed in the appendix, any deposit account established directly in client’s name at a bank will be separate from the Deposit Accounts available through the LPL DCA Program, and deposits in such accounts will no longer be reflected in client’s account statement and LPL will have no further responsibility concerning the deposit account.

 

Insufficient Capacity

The ability of the LPL DCA program to sweep uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client’s account’s cash cannot be fully deposited into any participating Bank, it will be automatically invested into a money market mutual fund the following business day just as it would be when client’s available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client’s account’s funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the $250,000 and insurance limits described above.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statement. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the omnibus Deposit Accounts
  • The closing balance of client’s funds in the omnibus Deposit Accounts at each Bank
  • Interest earned on client’s DCA cash sweep balances

Please note that the Banks where client’s cash is swept may change at any time during a month— client’s statement will reflect which Banks hold client’s cash as of the date of the statement. If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their account’s funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL detailed in this document may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL most up-to-date LPL DCA Disclosure Booklet for additional information.

 
 
QUICK LINKS:

 

LPL Financial offers two bank deposit sweep programs which take available cash balances (from securities transactions, dividend and interest payments, cash deposits, and other activities) in clients’ eligible accounts and automatically deposits them (which we refer to as sweeping) into interest-bearing Federal Deposit Insurance Corporation (FDIC) insured deposit accounts (Deposit Accounts) at one or more of the banks or other depository institutions that are available. The two programs, LPL Insured Cash Account (ICA) and LPL Deposit Cash Account (DCA), are available to different types of client accounts.

  • LPL ICA is available to individuals, trusts (where beneficiaries are natural persons), and sole proprietorships. LPL ICA is not available to entities organized for profit (other than sole proprietorships) nor advisory retirement accounts.
  • LPL DCA is available only to advisory individual retirement accounts (IRAs). (LPL DCA will be available starting in July 2016.)

Though the premise of these two programs is the same, due to different account types being eligible, there are also differences with regard to structure, fees, and other items, which are detailed in the sections below.

 

LPL FINANCIAL INSURED CASH ACCOUNT (LPL ICA) PROGRAM

As mentioned above, the ICA program is available only to individuals, trusts (so long as all beneficiaries of the trust accounts are natural persons), and sole proprietorships. Custodial accounts are eligible for the Program if each beneficiary is an eligible person. LPL Financial may at its discretion deem an eligible person to be an ineligible person if LPL Financial becomes aware that the person is prohibited as a matter of law from holding funds at any Bank. Entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts, and other organizations (other than sole proprietorships), and advisory retirement accounts are not eligible for the ICA program.

Program Details

Cash from all eligible accounts are swept to collective accounts at each Bank by LPL, acting as clients’ agent, to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual bank. This insurance amount increases to $500,000 in principal and accrued interest for joint accounts for each FDIC-defined ownership category in an individual bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank, or through an intermediary (such as LPL Financial or another broker-dealer) in the FDIC-defined ownership category, will be aggregated with client funds from the ICA program held at the Bank for purposes of the $250,000 limit. This is why it is important clients monitor the assets they have at all banks and notify their advisor of assets they hold with any bank on the Priority Bank List (PBL) so they may ensure LPL Financial does not sweep ICA assets into that bank.

For more information about FDIC coverage and different FDIC-defined ownership categories, visit the FDIC website.

As clients’ agent, LPL Financial will sweep assets out of LPL Financial accounts and into the Banks on the Priority Bank List. The assets are swept into a collective Deposit Account for all LPL Financial clients whose assets are located at a given Bank on the PBL. LPL Financial, as clients’ agent, will place up to $246,500 of clients’ available cash for an individual or trust account, and up to $493,000 for a joint account, in one Bank. As clients’ agent, LPL Financial will open collective Deposit Accounts at additional Banks so that funds in excess of $246,500 for an individual or trust account (or $493,000 for a joint account) may be swept into those accounts, which are also eligible for deposit insurance. We will allocate funds as clients’ agent up to $1.5 million of deposit insurance ($3 million for joint accounts). After that maximum is reached, your additional cash will be swept to a money market mutual fund. Please note, clients will not have a direct account relationship with any of the Banks.  LPL Financial, as clients’ agent, will establish these collective Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL Financial. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL Financial does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL Financial is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The amount of anticipated annual interest clients will receive is calculated by taking the amount of cash being swept through the ICA program multiplied by the annual interest rate that corresponds to their household balance tier. Clients will receive the same interest rates on all funds regardless of the Bank in which it is held. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. The interest rates paid are determined by the amount the Banks are willing to pay minus the fees paid to LPL Financial and other parties (detailed below).

The interest rates clients receive will vary based upon the value of the eligible assets for their household in eligible accounts (referred to as Household Balance). In determining clients’ Household Balance, the eligible accounts of all persons at the same address may be linked. LPL Financial may consider requests to link other accounts at our discretion and may change or terminate Household Balance eligibility without notice. The eligible assets of linked accounts are not commingled and all clients linking accounts retain control over, and responsibility for, their individual accounts. It is client’s obligation to notify their financial advisor or LPL Financial of accounts that they would like to be linked.

Insured Cash Account Tiered Rates - as of 4/1/2016 8:27:32 AM

Tier Range Tier Rate
1 $0 - $24,999.99 0.010%
2 $25,000.00 - $49,999.99 0.010%
3 $50,000.00 - $149,999.99 0.010%
4 $150,000.00 - $299,999.99 0.010%
5 $300,000.00 - $499,999.99 0.010%
6 $500,000.00 - $749,999.99 0.010%
7 $750,000.00 - $1,499,999.99 0.010%
8 $1,500,000.00 - $4,999,999.99 0.010%
9 $5,000,000.00 - $9,999,999.99 0.010%
10 $10,000,000.00 - $999,999,999.99 0.010%

 

Anticipated Fees

Each Bank will pay LPL Financial a fee equal to a percentage of the average daily collective deposit balance. The fee LPL Financial receives may differ among Banks depending on the interest rate environment and/or any fee reductions made by LPL Financial.  The amount of fee received or waived by LPL Financial will affect the interest rate paid to clients on their funds. The fee paid to LPL may be at an annual rate of up to an average of 200 basis points as applied across all ICA deposit accounts taken in the aggregate. Financial advisors do not receive any of the fees received by LPL Financial from the Banks. The fees LPL Financial receives from the Bank may be greater than the fees LPL Financial receives from other sweep investment options. Upon request, LPL Financial will provide clients with information concerning the fees it receives in connection with the ICA program.  In addition to LPL Financial, other service providers of the ICA program will receive fees. Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the ICA program.

 

THE PRIORITY BANK LIST (PBL)

The most up-to-date LPL ICA PBL divided by state/region is available here.

The LPL ICA Priority Bank List Was Last Updated On: May 2, 2016

The Priority Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in columns by state or region in the order in which your funds of clients within each state or region will be allocated. The last banks on the list are “Excess Banks” and are noted as such. For all other banks on the PBL except these Excess Banks, LPL Financial as clients’ agent will ensure that their ICA sweep deposits do not exceed the $250,000 (or $500,000 for join account) FDIC-defined ownership category limits. For the Excess Banks, clients’ funds may be deposited without consideration of the $250,000 and $500,000 limits. However, this will only be done when there is insufficient capacity in other Banks on the PBL to take clients’ assets and not break through the $250,000 and $500,000 limits and is meant to be temporary in nature.

Clients may not change the order of the Banks on the PBL. However, they may, at any time, designate a Bank as ineligible to receive their funds. This will result in funds not being deposited into this bank or if already there, we will remove those funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, funds from eliminated Banks will be deposited at the first available Bank set forth on the Priority Bank List, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the Priority Bank List, Banks may be added, removed, or the order of the priority sequence may change. If LPL is making changes to the PBL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the PBL (located at the link at the top of this section) in real time and provide the most up-to-date version of the PBL in client statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the ICA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If clients choose not to establish a direct depository relationship with the Bank, funds will be transferred to the first available Bank set forth on the Priority Bank List.

 

Insufficient Capacity

The ability of the ICA program to sweep clients’ uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client cash cannot be fully deposited into a participating Bank (including the Excess Banks without limit), it will be automatically invested into a money market mutual fund the following business day just as it will be when clients’ available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the maximum amount of FDIC insurance.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statements. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the collective Deposit Accounts
  • The closing balance of client’s funds in the collective Deposit Accounts at each Bank
  • Interest earned on client’s ICA cash sweep balances

If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL Financial detailed on this site may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL ICA Disclosure Booklet for additional information.

 

LPL FINANCIAL DEPOSIT CASH ACCOUNT (LPL DCA) PROGRAM

Please note: LPL DCA will be available starting in July, 2016.

The DCA program is available only to individual retirement accounts (IRAs) subject to Section 4975 of the Internal Revenue Code in certain LPL advisory programs. This would include traditional, rollover, Roth, and inherited IRAs, and Coverdell education savings accounts (ESA) held by an eligible person. Plans and IRAs that are subject to the Employee Retirement Income Security Act (ERISA) (including certain SEP and SIMPLE IRAs) are not permitted to use the LPL DCA program. LPL may at its discretion deem an eligible person or account to be an ineligible or account person if LPL becomes aware that the person or account is prohibited as a matter of law from holding funds at any Bank.

 

Program Details

Cash from all eligible accounts is swept to omnibus accounts at each Bank by LPL acting as clients’ agent to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual Bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank or through an intermediary (such as LPL or another broker-dealer) in the applicable FDIC-defined ownership category will be aggregated with clients funds from the DCA program held at the Bank for purposes of the $250,000 limit. This is why it is important that clients monitor the assets they have at all Banks and notify their advisor if they want to designate a Bank as ineligible to receive funds through the LPL DCA Program.

As clients’ agent, LPL will sweep assets out of clients’ LPL accounts and into a single Bank (the “Intermediary Receiving Bank”) from which the third-party administrator will sweep assets to the Banks on the ABL. The assets are swept into an omnibus Deposit Account held for the benefit of all LPL DCA clients whose assets are located at a given Bank on the ABL. The third-party administrator will place up to between $245,000 and $249,000 of client’s available account’s cash in any one Bank. As client’s agent, LPL will allocate your account’s cash in excess of the preceding dollar amounts to omnibus Deposit Accounts at additional Banks so that funds in excess of $245,000 to $249,000 will also be eligible for deposit insurance.

On any business day when clients’ accounts assets are transferred, all accounts’ assets will be held temporarily at a single Bank (the “Intermediary Receiving Bank”).  As a result, client’s account’s assets over $250,000 may be temporarily uninsured at this time.  Once distributed to other Banks on the ABL, client’s account’s assets will be insured, up to a limit of $1.5 million (taking into account deposits client holds at these Banks outside of the LPL DCA program). The third-party administrator of the LPL DCA program has adopted procedures to ensure the movement of assets in a timely manner and expects that client assets will be transferred by the close of business each day.  In the unlikely event of a failure of wire transfer systems or communication facilities, client assets could remain at the Intermediary Receiving Bank until the next business day. 

We will allocate and deposit clients’ accounts’ funds as their agent to multiple Banks on the ABL to obtain up to $1.5 million of deposit insurance for client’s account’s cash balances. After that maximum is reached, client’s account’s additional cash will be swept to a money market mutual fund (which is not FDIC insured). Please note, clients will not have a direct account relationship with any of the Banks.  LPL, as clients’ agent, will establish these omnibus Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The current LPL DCA interest rate is available here.

The LPL DCA Interest Rate Will Be Updated around July 1, 2016

Clients account will receive the same interest rates on all funds regardless of the Bank in which cash is deposited. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. If a client closes their account during a month, their account will be credited the pro-rata amount of interest due by LPL and LPL will recoup the amount of this partial month interest payment from the Bank(s) at the close of the month. More information about this process can be found in the DCA Disclosure Booklet.

The interest rates payable under the LPL DCA program are determined by the amount the Banks are willing to pay minus the fees paid to LPL and other parties (detailed below).  The interest rates accruing on client account’s funds may change as frequently as daily without prior notice.

 

Anticipated Fees

Under the LPL DCA program, each Bank will pay to the third-party administrator an amount equal to a percentage of the average daily aggregated omnibus deposit balance. This amount includes the fee for the third-party administrator, LPL’s fees, and interest payable to participating accounts. Different Banks may pay different amounts.  Clients will have no rights to the amounts paid by the Banks, except for interest actually credited to their account. However, amounts collected from the Banks during each period, less interest credited, will be allocated on aper capita basis and used to offset each client’s monthly LPL account fee, as discussed more fully below, for providing the sweep services. Excess amounts will be used to compensate the third-party administrator for its services. 

For its services, the third-party administrator will charge a tiered asset-based fee. This fee may vary period to period based on changes in prevailing interest rates, how assets are allocated amongst the Banks during the period, and the average daily balance of accounts participating in the LPL DCA program during the period. Moreover, the administrator may, from time to time, temporarily reduce its fees during certain periods, such as when necessary to help ensure that the interest rates paid by the Banks during the period equal the applicable disclosed rate for the period. Under such circumstances, the administrator is authorized to recover any such reduced fees, subject to its targeted compensation rate, from future periods. Clients authorize and direct that the third-party administrator to deduct its fees for its services from the amounts paid by the Banks. Based on the calculation method set forth below, the third-party administrator will calculate the fees due to LPL.

For its services under the LPL DCA program, including making the platform available, LPL receives a per account fee each month. LPL’s fee is not based on the amount of assets in the LPL DCA program or each client’s account. LPL’s compensation under the LPL DCA program does not vary, and is not affected by, the actual amounts held in the Deposit Accounts or client’s account.  As provided for below, the LPL DCA program account fee schedule will be indexed to the current Federal Funds Target (FFT) Rate. Under the fee schedule, increases in the Federal Funds Target Rate will result in increased compensation for LPL. LPL can change the applicable fee schedule upon 30 days advance notice to clients.  Although it is generally anticipated that LPL’s fees under the LPL DCA program will be offset by the amounts paid by the Banks, as discussed above, and clients direct the third-party administrator to collect such fees from the Bank and remit such amounts over to LPL, LPL reserves the right to withdraw the monthly account fee, or portion thereof, in the event or to the extent that the amount received from the Banks and paid over to LPL by the third-party administrator for the period is less than LPL’s fee for the same period.

LPL will be paid a maximum monthly per account fee of $15 for its services in connection with maintaining and administering the LPL DCA program. In a lower rate environment LPL’s fee will be reduced based on the FFT, which will increase the likelihood of LPL DCA program investors receiving a positive interest rate. The fees paid to LPL may be reduced to as low as $1 per account per month. For more details about LPL’s per account fee, please reference the DCA Disclosure Booklet.

The fee per account per month will not generally be seen on clients’ statements due to the manner in which LPL recoups its fee from the Bank payments, as discussed above. Financial advisors do not receive any of the fees received by LPL from the Banks. The LPL DCA program fees may be greater than the fees LPL receives from other sweep investment options.  Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the LPL DCA program.

 

THE AVAILABLE BANK LIST (ABL)

The most up-to-date LPL DCA ABL is available here.

The LPL DCA Available Bank List Will Be Updated around July 1, 2016

The DCA Available Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in alphabetical order and client’s cash may be allocated to any bank on the list at any point in time. For each Bank on the ABL, LPL as clients’ agent will ensure that LPL DCA Program sweep deposits do not exceed the $250,000 FDIC-defined ownership category limits. Note, however, that if clients hold deposits at a Bank on the ABL outside of the LPL DCA program, their total deposits at such bank may exceed the $250,000 FDIC limit.  As described below, clients can contact their advisor to designate any of the ABL Banks as ineligible to receive LPL DCA Program funds to prevent this from occurring.

Clients may not designate which Banks on the ABL receive their accounts’ funds. However, they may, at any time, designate a Bank as ineligible to receive funds. This will result in funds not being deposited into this bank or if already there, we will remove the account’s funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, the funds deposited in eliminated Banks will be deposited in any Bank with capacity set forth on the ABL, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the ABL, Banks may be added, removed, or the order of the priority sequence may change. If we make a change to the ABL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the ABL link below in real time and provide the most up-to-date version of the ABL in clients statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the DCA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If client chooses not to establish a direct depository relationship with the Bank, their funds will be transferred to an available Bank set forth on the Available Bank List.  As discussed in the appendix, any deposit account established directly in client’s name at a bank will be separate from the Deposit Accounts available through the LPL DCA Program, and deposits in such accounts will no longer be reflected in client’s account statement and LPL will have no further responsibility concerning the deposit account.

 

Insufficient Capacity

The ability of the LPL DCA program to sweep uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client’s account’s cash cannot be fully deposited into any participating Bank, it will be automatically invested into a money market mutual fund the following business day just as it would be when client’s available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client’s account’s funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the $250,000 and $1.5 million limits described above.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statement. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the omnibus Deposit Accounts
  • The closing balance of client’s funds in the omnibus Deposit Accounts at each Bank
  • Interest earned on client’s DCA cash sweep balances

Please note that the Banks where client’s cash is swept may change at any time during a month— client’s statement will reflect which Banks hold client’s cash as of the date of the statement. If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their account’s funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL detailed in this document may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL DCA Disclosure Booklet for additional information.

 
 
QUICK LINKS:

 

LPL Financial offers two bank deposit sweep programs which take available cash balances (from securities transactions, dividend and interest payments, cash deposits, and other activities) in clients’ eligible accounts and automatically deposits them (which we refer to as sweeping) into interest-bearing Federal Deposit Insurance Corporation (FDIC) insured deposit accounts (Deposit Accounts) at one or more of the banks or other depository institutions that are available. The two programs, LPL Insured Cash Account (ICA) and LPL Deposit Cash Account (DCA), are available to different types of client accounts.

  • LPL ICA is available to individuals, trusts (where beneficiaries are natural persons), and sole proprietorships. LPL ICA is not available to entities organized for profit (other than sole proprietorships) nor advisory retirement accounts.
  • LPL DCA is available only to advisory individual retirement accounts (IRAs). (LPL DCA will be available starting in July 2016.)

Though the premise of these two programs is the same, due to different account types being eligible, there are also differences with regard to structure, fees, and other items, which are detailed in the sections below.

 

LPL FINANCIAL INSURED CASH ACCOUNT (LPL ICA) PROGRAM

As mentioned above, the ICA program is available only to individuals, trusts (so long as all beneficiaries of the trust accounts are natural persons), and sole proprietorships. Custodial accounts are eligible for the Program if each beneficiary is an eligible person. LPL Financial may at its discretion deem an eligible person to be an ineligible person if LPL Financial becomes aware that the person is prohibited as a matter of law from holding funds at any Bank. Entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts, and other organizations (other than sole proprietorships), and advisory retirement accounts are not eligible for the ICA program.

Program Details

Cash from all eligible accounts are swept to collective accounts at each Bank by LPL, acting as clients’ agent, to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual bank. This insurance amount increases to $500,000 in principal and accrued interest for joint accounts for each FDIC-defined ownership category in an individual bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank, or through an intermediary (such as LPL Financial or another broker-dealer) in the FDIC-defined ownership category, will be aggregated with client funds from the ICA program held at the Bank for purposes of the $250,000 limit. This is why it is important clients monitor the assets they have at all banks and notify their advisor of assets they hold with any bank on the Priority Bank List (PBL) so they may ensure LPL Financial does not sweep ICA assets into that bank.

For more information about FDIC coverage and different FDIC-defined ownership categories, visit the FDIC website.

As clients’ agent, LPL Financial will sweep assets out of LPL Financial accounts and into the Banks on the Priority Bank List. The assets are swept into a collective Deposit Account for all LPL Financial clients whose assets are located at a given Bank on the PBL. LPL Financial, as clients’ agent, will place up to $246,500 of clients’ available cash for an individual or trust account, and up to $493,000 for a joint account, in one Bank. As clients’ agent, LPL Financial will open collective Deposit Accounts at additional Banks so that funds in excess of $246,500 for an individual or trust account (or $493,000 for a joint account) may be swept into those accounts, which are also eligible for deposit insurance. We will allocate funds as clients’ agent up to $1.5 million of deposit insurance ($3 million for joint accounts). After that maximum is reached, your additional cash will be swept to a money market mutual fund. Please note, clients will not have a direct account relationship with any of the Banks.  LPL Financial, as clients’ agent, will establish these collective Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL Financial. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL Financial does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL Financial is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The amount of anticipated annual interest clients will receive is calculated by taking the amount of cash being swept through the ICA program multiplied by the annual interest rate that corresponds to their household balance tier. Clients will receive the same interest rates on all funds regardless of the Bank in which it is held. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. The interest rates paid are determined by the amount the Banks are willing to pay minus the fees paid to LPL Financial and other parties (detailed below).

The interest rates clients receive will vary based upon the value of the eligible assets for their household in eligible accounts (referred to as Household Balance). In determining clients’ Household Balance, the eligible accounts of all persons at the same address may be linked. LPL Financial may consider requests to link other accounts at our discretion and may change or terminate Household Balance eligibility without notice. The eligible assets of linked accounts are not commingled and all clients linking accounts retain control over, and responsibility for, their individual accounts. It is client’s obligation to notify their financial advisor or LPL Financial of accounts that they would like to be linked.

Insured Cash Account Tiered Rates - as of 4/1/2016 8:27:32 AM

Tier Range Tier Rate
1 $0 - $24,999.99 0.010%
2 $25,000.00 - $49,999.99 0.010%
3 $50,000.00 - $149,999.99 0.010%
4 $150,000.00 - $299,999.99 0.010%
5 $300,000.00 - $499,999.99 0.010%
6 $500,000.00 - $749,999.99 0.010%
7 $750,000.00 - $1,499,999.99 0.010%
8 $1,500,000.00 - $4,999,999.99 0.010%
9 $5,000,000.00 - $9,999,999.99 0.010%
10 $10,000,000.00 - $999,999,999.99 0.010%

 

Anticipated Fees

Each Bank will pay LPL Financial a fee equal to a percentage of the average daily collective deposit balance. The fee LPL Financial receives may differ among Banks depending on the interest rate environment and/or any fee reductions made by LPL Financial.  The amount of fee received or waived by LPL Financial will affect the interest rate paid to clients on their funds. The fee paid to LPL may be at an annual rate of up to an average of 200 basis points as applied across all ICA deposit accounts taken in the aggregate. Financial advisors do not receive any of the fees received by LPL Financial from the Banks. The fees LPL Financial receives from the Bank may be greater than the fees LPL Financial receives from other sweep investment options. Upon request, LPL Financial will provide clients with information concerning the fees it receives in connection with the ICA program.  In addition to LPL Financial, other service providers of the ICA program will receive fees. Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the ICA program.

 

THE PRIORITY BANK LIST (PBL)

The most up-to-date LPL ICA PBL divided by state/region is available here.

The LPL ICA Priority Bank List Was Last Updated On: May 2, 2016

The Priority Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in columns by state or region in the order in which your funds of clients within each state or region will be allocated. The last banks on the list are “Excess Banks” and are noted as such. For all other banks on the PBL except these Excess Banks, LPL Financial as clients’ agent will ensure that their ICA sweep deposits do not exceed the $250,000 (or $500,000 for join account) FDIC-defined ownership category limits. For the Excess Banks, clients’ funds may be deposited without consideration of the $250,000 and $500,000 limits. However, this will only be done when there is insufficient capacity in other Banks on the PBL to take clients’ assets and not break through the $250,000 and $500,000 limits and is meant to be temporary in nature.

Clients may not change the order of the Banks on the PBL. However, they may, at any time, designate a Bank as ineligible to receive their funds. This will result in funds not being deposited into this bank or if already there, we will remove those funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, funds from eliminated Banks will be deposited at the first available Bank set forth on the Priority Bank List, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the Priority Bank List, Banks may be added, removed, or the order of the priority sequence may change. If LPL is making changes to the PBL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the PBL (located at the link at the top of this section) in real time and provide the most up-to-date version of the PBL in client statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the ICA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If clients choose not to establish a direct depository relationship with the Bank, funds will be transferred to the first available Bank set forth on the Priority Bank List.

 

Insufficient Capacity

The ability of the ICA program to sweep clients’ uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client cash cannot be fully deposited into a participating Bank (including the Excess Banks without limit), it will be automatically invested into a money market mutual fund the following business day just as it will be when clients’ available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the maximum amount of FDIC insurance.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statements. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the collective Deposit Accounts
  • The closing balance of client’s funds in the collective Deposit Accounts at each Bank
  • Interest earned on client’s ICA cash sweep balances

If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL Financial detailed on this site may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL ICA Disclosure Booklet for additional information.

 

LPL FINANCIAL DEPOSIT CASH ACCOUNT (LPL DCA) PROGRAM

Please note: LPL DCA will be available starting in July, 2016.

The DCA program is available only to individual retirement accounts (IRAs) subject to Section 4975 of the Internal Revenue Code in certain LPL advisory programs. This would include traditional, rollover, Roth, and inherited IRAs, and Coverdell education savings accounts (ESA) held by an eligible person. Plans and IRAs that are subject to the Employee Retirement Income Security Act (ERISA) (including certain SEP and SIMPLE IRAs) are not permitted to use the LPL DCA program. LPL may at its discretion deem an eligible person or account to be an ineligible or account person if LPL becomes aware that the person or account is prohibited as a matter of law from holding funds at any Bank.

 

Program Details

Cash from all eligible accounts is swept to omnibus accounts at each Bank by LPL acting as clients’ agent to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual Bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank or through an intermediary (such as LPL or another broker-dealer) in the applicable FDIC-defined ownership category will be aggregated with clients funds from the DCA program held at the Bank for purposes of the $250,000 limit. This is why it is important that clients monitor the assets they have at all Banks and notify their advisor if they want to designate a Bank as ineligible to receive funds through the LPL DCA Program.

As clients’ agent, LPL will sweep assets out of clients’ LPL accounts and into a single Bank (the “Intermediary Receiving Bank”) from which the third-party administrator will sweep assets to the Banks on the ABL. The assets are swept into an omnibus Deposit Account held for the benefit of all LPL DCA clients whose assets are located at a given Bank on the ABL. The third-party administrator will place up to between $245,000 and $249,000 of client’s available account’s cash in any one Bank. As client’s agent, LPL will allocate your account’s cash in excess of the preceding dollar amounts to omnibus Deposit Accounts at additional Banks so that funds in excess of $245,000 to $249,000 will also be eligible for deposit insurance.

On any business day when clients’ accounts assets are transferred, all accounts’ assets will be held temporarily at a single Bank (the “Intermediary Receiving Bank”).  As a result, client’s account’s assets over $250,000 may be temporarily uninsured at this time.  Once distributed to other Banks on the ABL, client’s account’s assets will be insured, up to a limit of $1.5 million (taking into account deposits client holds at these Banks outside of the LPL DCA program). The third-party administrator of the LPL DCA program has adopted procedures to ensure the movement of assets in a timely manner and expects that client assets will be transferred by the close of business each day.  In the unlikely event of a failure of wire transfer systems or communication facilities, client assets could remain at the Intermediary Receiving Bank until the next business day. 

We will allocate and deposit clients’ accounts’ funds as their agent to multiple Banks on the ABL to obtain up to $1.5 million of deposit insurance for client’s account’s cash balances. After that maximum is reached, client’s account’s additional cash will be swept to a money market mutual fund (which is not FDIC insured). Please note, clients will not have a direct account relationship with any of the Banks.  LPL, as clients’ agent, will establish these omnibus Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The current LPL DCA interest rate is available here.

The LPL DCA Interest Rate Will Be Updated around July 1, 2016

Clients account will receive the same interest rates on all funds regardless of the Bank in which cash is deposited. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. If a client closes their account during a month, their account will be credited the pro-rata amount of interest due by LPL and LPL will recoup the amount of this partial month interest payment from the Bank(s) at the close of the month. More information about this process can be found in the DCA Disclosure Booklet.

The interest rates payable under the LPL DCA program are determined by the amount the Banks are willing to pay minus the fees paid to LPL and other parties (detailed below).  The interest rates accruing on client account’s funds may change as frequently as daily without prior notice.

 

Anticipated Fees

Under the LPL DCA program, each Bank will pay to the third-party administrator an amount equal to a percentage of the average daily aggregated omnibus deposit balance. This amount includes the fee for the third-party administrator, LPL’s fees, and interest payable to participating accounts. Different Banks may pay different amounts.  Clients will have no rights to the amounts paid by the Banks, except for interest actually credited to their account. However, amounts collected from the Banks during each period, less interest credited, will be allocated on aper capita basis and used to offset each client’s monthly LPL account fee, as discussed more fully below, for providing the sweep services. Excess amounts will be used to compensate the third-party administrator for its services. 

For its services, the third-party administrator will charge a tiered asset-based fee. This fee may vary period to period based on changes in prevailing interest rates, how assets are allocated amongst the Banks during the period, and the average daily balance of accounts participating in the LPL DCA program during the period. Moreover, the administrator may, from time to time, temporarily reduce its fees during certain periods, such as when necessary to help ensure that the interest rates paid by the Banks during the period equal the applicable disclosed rate for the period. Under such circumstances, the administrator is authorized to recover any such reduced fees, subject to its targeted compensation rate, from future periods. Clients authorize and direct that the third-party administrator to deduct its fees for its services from the amounts paid by the Banks. Based on the calculation method set forth below, the third-party administrator will calculate the fees due to LPL.

For its services under the LPL DCA program, including making the platform available, LPL receives a per account fee each month. LPL’s fee is not based on the amount of assets in the LPL DCA program or each client’s account. LPL’s compensation under the LPL DCA program does not vary, and is not affected by, the actual amounts held in the Deposit Accounts or client’s account.  As provided for below, the LPL DCA program account fee schedule will be indexed to the current Federal Funds Target (FFT) Rate. Under the fee schedule, increases in the Federal Funds Target Rate will result in increased compensation for LPL. LPL can change the applicable fee schedule upon 30 days advance notice to clients.  Although it is generally anticipated that LPL’s fees under the LPL DCA program will be offset by the amounts paid by the Banks, as discussed above, and clients direct the third-party administrator to collect such fees from the Bank and remit such amounts over to LPL, LPL reserves the right to withdraw the monthly account fee, or portion thereof, in the event or to the extent that the amount received from the Banks and paid over to LPL by the third-party administrator for the period is less than LPL’s fee for the same period.

LPL will be paid a maximum monthly per account fee of $15 for its services in connection with maintaining and administering the LPL DCA program. In a lower rate environment LPL’s fee will be reduced based on the FFT, which will increase the likelihood of LPL DCA program investors receiving a positive interest rate. The fees paid to LPL may be reduced to as low as $1 per account per month. For more details about LPL’s per account fee, please reference the DCA Disclosure Booklet.

The fee per account per month will not generally be seen on clients’ statements due to the manner in which LPL recoups its fee from the Bank payments, as discussed above. Financial advisors do not receive any of the fees received by LPL from the Banks. The LPL DCA program fees may be greater than the fees LPL receives from other sweep investment options.  Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the LPL DCA program.

 

THE AVAILABLE BANK LIST (ABL)

The most up-to-date LPL DCA ABL is available here.

The LPL DCA Available Bank List Will Be Updated around July 1, 2016

The DCA Available Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in alphabetical order and client’s cash may be allocated to any bank on the list at any point in time. For each Bank on the ABL, LPL as clients’ agent will ensure that LPL DCA Program sweep deposits do not exceed the $250,000 FDIC-defined ownership category limits. Note, however, that if clients hold deposits at a Bank on the ABL outside of the LPL DCA program, their total deposits at such bank may exceed the $250,000 FDIC limit.  As described below, clients can contact their advisor to designate any of the ABL Banks as ineligible to receive LPL DCA Program funds to prevent this from occurring.

Clients may not designate which Banks on the ABL receive their accounts’ funds. However, they may, at any time, designate a Bank as ineligible to receive funds. This will result in funds not being deposited into this bank or if already there, we will remove the account’s funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, the funds deposited in eliminated Banks will be deposited in any Bank with capacity set forth on the ABL, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the ABL, Banks may be added, removed, or the order of the priority sequence may change. If we make a change to the ABL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the ABL link below in real time and provide the most up-to-date version of the ABL in clients statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the DCA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If client chooses not to establish a direct depository relationship with the Bank, their funds will be transferred to an available Bank set forth on the Available Bank List.  As discussed in the appendix, any deposit account established directly in client’s name at a bank will be separate from the Deposit Accounts available through the LPL DCA Program, and deposits in such accounts will no longer be reflected in client’s account statement and LPL will have no further responsibility concerning the deposit account.

 

Insufficient Capacity

The ability of the LPL DCA program to sweep uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client’s account’s cash cannot be fully deposited into any participating Bank, it will be automatically invested into a money market mutual fund the following business day just as it would be when client’s available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client’s account’s funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the $250,000 and $1.5 million limits described above.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statement. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the omnibus Deposit Accounts
  • The closing balance of client’s funds in the omnibus Deposit Accounts at each Bank
  • Interest earned on client’s DCA cash sweep balances

Please note that the Banks where client’s cash is swept may change at any time during a month— client’s statement will reflect which Banks hold client’s cash as of the date of the statement. If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their account’s funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL detailed in this document may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL DCA Disclosure Booklet for additional information.

 
 
QUICK LINKS:

 

LPL Financial offers two bank deposit sweep programs which take available cash balances (from securities transactions, dividend and interest payments, cash deposits, and other activities) in clients’ eligible accounts and automatically deposits them (which we refer to as sweeping) into interest-bearing Federal Deposit Insurance Corporation (FDIC) insured deposit accounts (Deposit Accounts) at one or more of the banks or other depository institutions that are available. The two programs, LPL Insured Cash Account (ICA) and LPL Deposit Cash Account (DCA), are available to different types of client accounts.

  • LPL ICA is available to individuals, trusts (where beneficiaries are natural persons), and sole proprietorships. LPL ICA is not available to entities organized for profit (other than sole proprietorships) nor advisory retirement accounts.
  • LPL DCA is available only to advisory individual retirement accounts (IRAs). (LPL DCA will be available starting in July 2016.)

Though the premise of these two programs is the same, due to different account types being eligible, there are also differences with regard to structure, fees, and other items, which are detailed in the sections below.

 

LPL FINANCIAL INSURED CASH ACCOUNT (LPL ICA) PROGRAM

As mentioned above, the ICA program is available only to individuals, trusts (so long as all beneficiaries of the trust accounts are natural persons), and sole proprietorships. Custodial accounts are eligible for the Program if each beneficiary is an eligible person. LPL Financial may at its discretion deem an eligible person to be an ineligible person if LPL Financial becomes aware that the person is prohibited as a matter of law from holding funds at any Bank. Entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts, and other organizations (other than sole proprietorships), and advisory retirement accounts are not eligible for the ICA program.

Program Details

Cash from all eligible accounts are swept to collective accounts at each Bank by LPL, acting as clients’ agent, to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual bank. This insurance amount increases to $500,000 in principal and accrued interest for joint accounts for each FDIC-defined ownership category in an individual bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank, or through an intermediary (such as LPL Financial or another broker-dealer) in the FDIC-defined ownership category, will be aggregated with client funds from the ICA program held at the Bank for purposes of the $250,000 limit. This is why it is important clients monitor the assets they have at all banks and notify their advisor of assets they hold with any bank on the Priority Bank List (PBL) so they may ensure LPL Financial does not sweep ICA assets into that bank.

For more information about FDIC coverage and different FDIC-defined ownership categories, visit the FDIC website.

As clients’ agent, LPL Financial will sweep assets out of LPL Financial accounts and into the Banks on the Priority Bank List. The assets are swept into a collective Deposit Account for all LPL Financial clients whose assets are located at a given Bank on the PBL. LPL Financial, as clients’ agent, will place up to $246,500 of clients’ available cash for an individual or trust account, and up to $493,000 for a joint account, in one Bank. As clients’ agent, LPL Financial will open collective Deposit Accounts at additional Banks so that funds in excess of $246,500 for an individual or trust account (or $493,000 for a joint account) may be swept into those accounts, which are also eligible for deposit insurance. We will allocate funds as clients’ agent up to $1.5 million of deposit insurance ($3 million for joint accounts). After that maximum is reached, your additional cash will be swept to a money market mutual fund. Please note, clients will not have a direct account relationship with any of the Banks.  LPL Financial, as clients’ agent, will establish these collective Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL Financial. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL Financial does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL Financial is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The amount of anticipated annual interest clients will receive is calculated by taking the amount of cash being swept through the ICA program multiplied by the annual interest rate that corresponds to their household balance tier. Clients will receive the same interest rates on all funds regardless of the Bank in which it is held. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. The interest rates paid are determined by the amount the Banks are willing to pay minus the fees paid to LPL Financial and other parties (detailed below).

The interest rates clients receive will vary based upon the value of the eligible assets for their household in eligible accounts (referred to as Household Balance). In determining clients’ Household Balance, the eligible accounts of all persons at the same address may be linked. LPL Financial may consider requests to link other accounts at our discretion and may change or terminate Household Balance eligibility without notice. The eligible assets of linked accounts are not commingled and all clients linking accounts retain control over, and responsibility for, their individual accounts. It is client’s obligation to notify their financial advisor or LPL Financial of accounts that they would like to be linked.

Insured Cash Account Tiered Rates - as of 4/1/2016 8:27:32 AM

Tier Range Tier Rate
1 $0 - $24,999.99 0.010%
2 $25,000.00 - $49,999.99 0.010%
3 $50,000.00 - $149,999.99 0.010%
4 $150,000.00 - $299,999.99 0.010%
5 $300,000.00 - $499,999.99 0.010%
6 $500,000.00 - $749,999.99 0.010%
7 $750,000.00 - $1,499,999.99 0.010%
8 $1,500,000.00 - $4,999,999.99 0.010%
9 $5,000,000.00 - $9,999,999.99 0.010%
10 $10,000,000.00 - $999,999,999.99 0.010%

 

Anticipated Fees

Each Bank will pay LPL Financial a fee equal to a percentage of the average daily collective deposit balance. The fee LPL Financial receives may differ among Banks depending on the interest rate environment and/or any fee reductions made by LPL Financial.  The amount of fee received or waived by LPL Financial will affect the interest rate paid to clients on their funds. The fee paid to LPL may be at an annual rate of up to an average of 200 basis points as applied across all ICA deposit accounts taken in the aggregate. Financial advisors do not receive any of the fees received by LPL Financial from the Banks. The fees LPL Financial receives from the Bank may be greater than the fees LPL Financial receives from other sweep investment options. Upon request, LPL Financial will provide clients with information concerning the fees it receives in connection with the ICA program.  In addition to LPL Financial, other service providers of the ICA program will receive fees. Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the ICA program.

 

THE PRIORITY BANK LIST (PBL)

The most up-to-date LPL ICA PBL divided by state/region is available here.

The LPL ICA Priority Bank List Was Last Updated On: May 2, 2016

The Priority Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in columns by state or region in the order in which your funds of clients within each state or region will be allocated. The last banks on the list are “Excess Banks” and are noted as such. For all other banks on the PBL except these Excess Banks, LPL Financial as clients’ agent will ensure that their ICA sweep deposits do not exceed the $250,000 (or $500,000 for join account) FDIC-defined ownership category limits. For the Excess Banks, clients’ funds may be deposited without consideration of the $250,000 and $500,000 limits. However, this will only be done when there is insufficient capacity in other Banks on the PBL to take clients’ assets and not break through the $250,000 and $500,000 limits and is meant to be temporary in nature.

Clients may not change the order of the Banks on the PBL. However, they may, at any time, designate a Bank as ineligible to receive their funds. This will result in funds not being deposited into this bank or if already there, we will remove those funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, funds from eliminated Banks will be deposited at the first available Bank set forth on the Priority Bank List, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the Priority Bank List, Banks may be added, removed, or the order of the priority sequence may change. If LPL is making changes to the PBL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the PBL (located at the link at the top of this section) in real time and provide the most up-to-date version of the PBL in client statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the ICA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If clients choose not to establish a direct depository relationship with the Bank, funds will be transferred to the first available Bank set forth on the Priority Bank List.

 

Insufficient Capacity

The ability of the ICA program to sweep clients’ uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client cash cannot be fully deposited into a participating Bank (including the Excess Banks without limit), it will be automatically invested into a money market mutual fund the following business day just as it will be when clients’ available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the maximum amount of FDIC insurance.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statements. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the collective Deposit Accounts
  • The closing balance of client’s funds in the collective Deposit Accounts at each Bank
  • Interest earned on client’s ICA cash sweep balances

If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL Financial detailed on this site may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL ICA Disclosure Booklet for additional information.

 

LPL FINANCIAL DEPOSIT CASH ACCOUNT (LPL DCA) PROGRAM

Please note: LPL DCA will be available starting in July, 2016.

The DCA program is available only to individual retirement accounts (IRAs) subject to Section 4975 of the Internal Revenue Code in certain LPL advisory programs. This would include traditional, rollover, Roth, and inherited IRAs, and Coverdell education savings accounts (ESA) held by an eligible person. Plans and IRAs that are subject to the Employee Retirement Income Security Act (ERISA) (including certain SEP and SIMPLE IRAs) are not permitted to use the LPL DCA program. LPL may at its discretion deem an eligible person or account to be an ineligible or account person if LPL becomes aware that the person or account is prohibited as a matter of law from holding funds at any Bank.

 

Program Details

Cash from all eligible accounts is swept to omnibus accounts at each Bank by LPL acting as clients’ agent to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual Bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank or through an intermediary (such as LPL or another broker-dealer) in the applicable FDIC-defined ownership category will be aggregated with clients funds from the DCA program held at the Bank for purposes of the $250,000 limit. This is why it is important that clients monitor the assets they have at all Banks and notify their advisor if they want to designate a Bank as ineligible to receive funds through the LPL DCA Program.

As clients’ agent, LPL will sweep assets out of clients’ LPL accounts and into a single Bank (the “Intermediary Receiving Bank”) from which the third-party administrator will sweep assets to the Banks on the ABL. The assets are swept into an omnibus Deposit Account held for the benefit of all LPL DCA clients whose assets are located at a given Bank on the ABL. The third-party administrator will place up to between $245,000 and $249,000 of client’s available account’s cash in any one Bank. As client’s agent, LPL will allocate your account’s cash in excess of the preceding dollar amounts to omnibus Deposit Accounts at additional Banks so that funds in excess of $245,000 to $249,000 will also be eligible for deposit insurance.

On any business day when clients’ accounts assets are transferred, all accounts’ assets will be held temporarily at a single Bank (the “Intermediary Receiving Bank”).  As a result, client’s account’s assets over $250,000 may be temporarily uninsured at this time.  Once distributed to other Banks on the ABL, client’s account’s assets will be insured, up to a limit of $1.5 million (taking into account deposits client holds at these Banks outside of the LPL DCA program). The third-party administrator of the LPL DCA program has adopted procedures to ensure the movement of assets in a timely manner and expects that client assets will be transferred by the close of business each day.  In the unlikely event of a failure of wire transfer systems or communication facilities, client assets could remain at the Intermediary Receiving Bank until the next business day. 

We will allocate and deposit clients’ accounts’ funds as their agent to multiple Banks on the ABL to obtain up to $1.5 million of deposit insurance for client’s account’s cash balances. After that maximum is reached, client’s account’s additional cash will be swept to a money market mutual fund (which is not FDIC insured). Please note, clients will not have a direct account relationship with any of the Banks.  LPL, as clients’ agent, will establish these omnibus Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The current LPL DCA interest rate is available here.

The LPL DCA Interest Rate Will Be Updated around July 1, 2016

Clients account will receive the same interest rates on all funds regardless of the Bank in which cash is deposited. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. If a client closes their account during a month, their account will be credited the pro-rata amount of interest due by LPL and LPL will recoup the amount of this partial month interest payment from the Bank(s) at the close of the month. More information about this process can be found in the DCA Disclosure Booklet.

The interest rates payable under the LPL DCA program are determined by the amount the Banks are willing to pay minus the fees paid to LPL and other parties (detailed below).  The interest rates accruing on client account’s funds may change as frequently as daily without prior notice.

 

Anticipated Fees

Under the LPL DCA program, each Bank will pay to the third-party administrator an amount equal to a percentage of the average daily aggregated omnibus deposit balance. This amount includes the fee for the third-party administrator, LPL’s fees, and interest payable to participating accounts. Different Banks may pay different amounts.  Clients will have no rights to the amounts paid by the Banks, except for interest actually credited to their account. However, amounts collected from the Banks during each period, less interest credited, will be allocated on aper capita basis and used to offset each client’s monthly LPL account fee, as discussed more fully below, for providing the sweep services. Excess amounts will be used to compensate the third-party administrator for its services. 

For its services, the third-party administrator will charge a tiered asset-based fee. This fee may vary period to period based on changes in prevailing interest rates, how assets are allocated amongst the Banks during the period, and the average daily balance of accounts participating in the LPL DCA program during the period. Moreover, the administrator may, from time to time, temporarily reduce its fees during certain periods, such as when necessary to help ensure that the interest rates paid by the Banks during the period equal the applicable disclosed rate for the period. Under such circumstances, the administrator is authorized to recover any such reduced fees, subject to its targeted compensation rate, from future periods. Clients authorize and direct that the third-party administrator to deduct its fees for its services from the amounts paid by the Banks. Based on the calculation method set forth below, the third-party administrator will calculate the fees due to LPL.

For its services under the LPL DCA program, including making the platform available, LPL receives a per account fee each month. LPL’s fee is not based on the amount of assets in the LPL DCA program or each client’s account. LPL’s compensation under the LPL DCA program does not vary, and is not affected by, the actual amounts held in the Deposit Accounts or client’s account.  As provided for below, the LPL DCA program account fee schedule will be indexed to the current Federal Funds Target (FFT) Rate. Under the fee schedule, increases in the Federal Funds Target Rate will result in increased compensation for LPL. LPL can change the applicable fee schedule upon 30 days advance notice to clients.  Although it is generally anticipated that LPL’s fees under the LPL DCA program will be offset by the amounts paid by the Banks, as discussed above, and clients direct the third-party administrator to collect such fees from the Bank and remit such amounts over to LPL, LPL reserves the right to withdraw the monthly account fee, or portion thereof, in the event or to the extent that the amount received from the Banks and paid over to LPL by the third-party administrator for the period is less than LPL’s fee for the same period.

LPL will be paid a maximum monthly per account fee of $15 for its services in connection with maintaining and administering the LPL DCA program. In a lower rate environment LPL’s fee will be reduced based on the FFT, which will increase the likelihood of LPL DCA program investors receiving a positive interest rate. The fees paid to LPL may be reduced to as low as $1 per account per month. For more details about LPL’s per account fee, please reference the DCA Disclosure Booklet.

The fee per account per month will not generally be seen on clients’ statements due to the manner in which LPL recoups its fee from the Bank payments, as discussed above. Financial advisors do not receive any of the fees received by LPL from the Banks. The LPL DCA program fees may be greater than the fees LPL receives from other sweep investment options.  Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the LPL DCA program.

 

THE AVAILABLE BANK LIST (ABL)

The most up-to-date LPL DCA ABL is available here.

The LPL DCA Available Bank List Will Be Updated around July 1, 2016

The DCA Available Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in alphabetical order and client’s cash may be allocated to any bank on the list at any point in time. For each Bank on the ABL, LPL as clients’ agent will ensure that LPL DCA Program sweep deposits do not exceed the $250,000 FDIC-defined ownership category limits. Note, however, that if clients hold deposits at a Bank on the ABL outside of the LPL DCA program, their total deposits at such bank may exceed the $250,000 FDIC limit.  As described below, clients can contact their advisor to designate any of the ABL Banks as ineligible to receive LPL DCA Program funds to prevent this from occurring.

Clients may not designate which Banks on the ABL receive their accounts’ funds. However, they may, at any time, designate a Bank as ineligible to receive funds. This will result in funds not being deposited into this bank or if already there, we will remove the account’s funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, the funds deposited in eliminated Banks will be deposited in any Bank with capacity set forth on the ABL, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the ABL, Banks may be added, removed, or the order of the priority sequence may change. If we make a change to the ABL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the ABL link below in real time and provide the most up-to-date version of the ABL in clients statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the DCA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If client chooses not to establish a direct depository relationship with the Bank, their funds will be transferred to an available Bank set forth on the Available Bank List.  As discussed in the appendix, any deposit account established directly in client’s name at a bank will be separate from the Deposit Accounts available through the LPL DCA Program, and deposits in such accounts will no longer be reflected in client’s account statement and LPL will have no further responsibility concerning the deposit account.

 

Insufficient Capacity

The ability of the LPL DCA program to sweep uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client’s account’s cash cannot be fully deposited into any participating Bank, it will be automatically invested into a money market mutual fund the following business day just as it would be when client’s available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client’s account’s funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the $250,000 and $1.5 million limits described above.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statement. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the omnibus Deposit Accounts
  • The closing balance of client’s funds in the omnibus Deposit Accounts at each Bank
  • Interest earned on client’s DCA cash sweep balances

Please note that the Banks where client’s cash is swept may change at any time during a month— client’s statement will reflect which Banks hold client’s cash as of the date of the statement. If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their account’s funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL detailed in this document may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL DCA Disclosure Booklet for additional information.

 
 
QUICK LINKS:

 

LPL Financial offers two bank deposit sweep programs which take available cash balances (from securities transactions, dividend and interest payments, cash deposits, and other activities) in clients’ eligible accounts and automatically deposits them (which we refer to as sweeping) into interest-bearing Federal Deposit Insurance Corporation (FDIC) insured deposit accounts (Deposit Accounts) at one or more of the banks or other depository institutions that are available. The two programs, LPL Insured Cash Account (ICA) and LPL Deposit Cash Account (DCA), are available to different types of client accounts.

  • LPL ICA is available to individuals, trusts (where beneficiaries are natural persons), and sole proprietorships. LPL ICA is not available to entities organized for profit (other than sole proprietorships) nor advisory retirement accounts.
  • LPL DCA is available only to advisory individual retirement accounts (IRAs). (LPL DCA will be available starting in July 2016.)

Though the premise of these two programs is the same, due to different account types being eligible, there are also differences with regard to structure, fees, and other items, which are detailed in the sections below.

 

LPL FINANCIAL INSURED CASH ACCOUNT (LPL ICA) PROGRAM

As mentioned above, the ICA program is available only to individuals, trusts (so long as all beneficiaries of the trust accounts are natural persons), and sole proprietorships. Custodial accounts are eligible for the Program if each beneficiary is an eligible person. LPL Financial may at its discretion deem an eligible person to be an ineligible person if LPL Financial becomes aware that the person is prohibited as a matter of law from holding funds at any Bank. Entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts, and other organizations (other than sole proprietorships), and advisory retirement accounts are not eligible for the ICA program.

Program Details

Cash from all eligible accounts are swept to collective accounts at each Bank by LPL, acting as clients’ agent, to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual bank. This insurance amount increases to $500,000 in principal and accrued interest for joint accounts for each FDIC-defined ownership category in an individual bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank, or through an intermediary (such as LPL Financial or another broker-dealer) in the FDIC-defined ownership category, will be aggregated with client funds from the ICA program held at the Bank for purposes of the $250,000 limit. This is why it is important clients monitor the assets they have at all banks and notify their advisor of assets they hold with any bank on the Priority Bank List (PBL) so they may ensure LPL Financial does not sweep ICA assets into that bank.

For more information about FDIC coverage and different FDIC-defined ownership categories, visit the FDIC website.

As clients’ agent, LPL Financial will sweep assets out of LPL Financial accounts and into the Banks on the Priority Bank List. The assets are swept into a collective Deposit Account for all LPL Financial clients whose assets are located at a given Bank on the PBL. LPL Financial, as clients’ agent, will place up to $246,500 of clients’ available cash for an individual or trust account, and up to $493,000 for a joint account, in one Bank. As clients’ agent, LPL Financial will open collective Deposit Accounts at additional Banks so that funds in excess of $246,500 for an individual or trust account (or $493,000 for a joint account) may be swept into those accounts, which are also eligible for deposit insurance. We will allocate funds as clients’ agent up to $1.5 million of deposit insurance ($3 million for joint accounts). After that maximum is reached, your additional cash will be swept to a money market mutual fund. Please note, clients will not have a direct account relationship with any of the Banks.  LPL Financial, as clients’ agent, will establish these collective Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL Financial. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL Financial does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL Financial is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The amount of anticipated annual interest clients will receive is calculated by taking the amount of cash being swept through the ICA program multiplied by the annual interest rate that corresponds to their household balance tier. Clients will receive the same interest rates on all funds regardless of the Bank in which it is held. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. The interest rates paid are determined by the amount the Banks are willing to pay minus the fees paid to LPL Financial and other parties (detailed below).

The interest rates clients receive will vary based upon the value of the eligible assets for their household in eligible accounts (referred to as Household Balance). In determining clients’ Household Balance, the eligible accounts of all persons at the same address may be linked. LPL Financial may consider requests to link other accounts at our discretion and may change or terminate Household Balance eligibility without notice. The eligible assets of linked accounts are not commingled and all clients linking accounts retain control over, and responsibility for, their individual accounts. It is client’s obligation to notify their financial advisor or LPL Financial of accounts that they would like to be linked.

Insured Cash Account Tiered Rates - as of 4/1/2016 8:27:32 AM

Tier Range Tier Rate
1 $0 - $24,999.99 0.010%
2 $25,000.00 - $49,999.99 0.010%
3 $50,000.00 - $149,999.99 0.010%
4 $150,000.00 - $299,999.99 0.010%
5 $300,000.00 - $499,999.99 0.010%
6 $500,000.00 - $749,999.99 0.010%
7 $750,000.00 - $1,499,999.99 0.010%
8 $1,500,000.00 - $4,999,999.99 0.010%
9 $5,000,000.00 - $9,999,999.99 0.010%
10 $10,000,000.00 - $999,999,999.99 0.010%

 

Anticipated Fees

Each Bank will pay LPL Financial a fee equal to a percentage of the average daily collective deposit balance. The fee LPL Financial receives may differ among Banks depending on the interest rate environment and/or any fee reductions made by LPL Financial.  The amount of fee received or waived by LPL Financial will affect the interest rate paid to clients on their funds. The fee paid to LPL may be at an annual rate of up to an average of 200 basis points as applied across all ICA deposit accounts taken in the aggregate. Financial advisors do not receive any of the fees received by LPL Financial from the Banks. The fees LPL Financial receives from the Bank may be greater than the fees LPL Financial receives from other sweep investment options. Upon request, LPL Financial will provide clients with information concerning the fees it receives in connection with the ICA program.  In addition to LPL Financial, other service providers of the ICA program will receive fees. Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the ICA program.

 

THE PRIORITY BANK LIST (PBL)

The most up-to-date LPL ICA PBL divided by state/region is available here.

The LPL ICA Priority Bank List Was Last Updated On: May 2, 2016

The Priority Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in columns by state or region in the order in which your funds of clients within each state or region will be allocated. The last banks on the list are “Excess Banks” and are noted as such. For all other banks on the PBL except these Excess Banks, LPL Financial as clients’ agent will ensure that their ICA sweep deposits do not exceed the $250,000 (or $500,000 for join account) FDIC-defined ownership category limits. For the Excess Banks, clients’ funds may be deposited without consideration of the $250,000 and $500,000 limits. However, this will only be done when there is insufficient capacity in other Banks on the PBL to take clients’ assets and not break through the $250,000 and $500,000 limits and is meant to be temporary in nature.

Clients may not change the order of the Banks on the PBL. However, they may, at any time, designate a Bank as ineligible to receive their funds. This will result in funds not being deposited into this bank or if already there, we will remove those funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, funds from eliminated Banks will be deposited at the first available Bank set forth on the Priority Bank List, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the Priority Bank List, Banks may be added, removed, or the order of the priority sequence may change. If LPL is making changes to the PBL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the PBL (located at the link at the top of this section) in real time and provide the most up-to-date version of the PBL in client statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the ICA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If clients choose not to establish a direct depository relationship with the Bank, funds will be transferred to the first available Bank set forth on the Priority Bank List.

 

Insufficient Capacity

The ability of the ICA program to sweep clients’ uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client cash cannot be fully deposited into a participating Bank (including the Excess Banks without limit), it will be automatically invested into a money market mutual fund the following business day just as it will be when clients’ available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the maximum amount of FDIC insurance.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statements. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the collective Deposit Accounts
  • The closing balance of client’s funds in the collective Deposit Accounts at each Bank
  • Interest earned on client’s ICA cash sweep balances

If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL Financial detailed on this site may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL ICA Disclosure Booklet for additional information.

 

LPL FINANCIAL DEPOSIT CASH ACCOUNT (LPL DCA) PROGRAM

Please note: LPL DCA will be available starting in July, 2016.

The DCA program is available only to individual retirement accounts (IRAs) subject to Section 4975 of the Internal Revenue Code in certain LPL advisory programs. This would include traditional, rollover, Roth, and inherited IRAs, and Coverdell education savings accounts (ESA) held by an eligible person. Plans and IRAs that are subject to the Employee Retirement Income Security Act (ERISA) (including certain SEP and SIMPLE IRAs) are not permitted to use the LPL DCA program. LPL may at its discretion deem an eligible person or account to be an ineligible or account person if LPL becomes aware that the person or account is prohibited as a matter of law from holding funds at any Bank.

 

Program Details

Cash from all eligible accounts is swept to omnibus accounts at each Bank by LPL acting as clients’ agent to obtain insurance from the FDIC, an independent agency of the U.S. government, up to $250,000 in principal and accrued interest per depositor for each FDIC-defined ownership category in an individual Bank. Any deposits, including certificates of deposit that clients maintain directly with a Bank or through an intermediary (such as LPL or another broker-dealer) in the applicable FDIC-defined ownership category will be aggregated with clients funds from the DCA program held at the Bank for purposes of the $250,000 limit. This is why it is important that clients monitor the assets they have at all Banks and notify their advisor if they want to designate a Bank as ineligible to receive funds through the LPL DCA Program.

As clients’ agent, LPL will sweep assets out of clients’ LPL accounts and into a single Bank (the “Intermediary Receiving Bank”) from which the third-party administrator will sweep assets to the Banks on the ABL. The assets are swept into an omnibus Deposit Account held for the benefit of all LPL DCA clients whose assets are located at a given Bank on the ABL. The third-party administrator will place up to between $245,000 and $249,000 of client’s available account’s cash in any one Bank. As client’s agent, LPL will allocate your account’s cash in excess of the preceding dollar amounts to omnibus Deposit Accounts at additional Banks so that funds in excess of $245,000 to $249,000 will also be eligible for deposit insurance.

On any business day when clients’ accounts assets are transferred, all accounts’ assets will be held temporarily at a single Bank (the “Intermediary Receiving Bank”).  As a result, client’s account’s assets over $250,000 may be temporarily uninsured at this time.  Once distributed to other Banks on the ABL, client’s account’s assets will be insured, up to a limit of $1.5 million (taking into account deposits client holds at these Banks outside of the LPL DCA program). The third-party administrator of the LPL DCA program has adopted procedures to ensure the movement of assets in a timely manner and expects that client assets will be transferred by the close of business each day.  In the unlikely event of a failure of wire transfer systems or communication facilities, client assets could remain at the Intermediary Receiving Bank until the next business day. 

We will allocate and deposit clients’ accounts’ funds as their agent to multiple Banks on the ABL to obtain up to $1.5 million of deposit insurance for client’s account’s cash balances. After that maximum is reached, client’s account’s additional cash will be swept to a money market mutual fund (which is not FDIC insured). Please note, clients will not have a direct account relationship with any of the Banks.  LPL, as clients’ agent, will establish these omnibus Deposit Accounts at the Bank(s) and make deposits to and withdrawals from the Deposit Accounts.

Each Deposit Account constitutes a direct obligation of the Bank and is not directly or indirectly an obligation of LPL. Clients can obtain publicly available financial information concerning each Bank at www.ffiec.gov/nicpubweb/nicweb/nichome.aspx or by contacting the FDIC Public Information Center by mail at 3501 North Fairfax Drive, Room E-1005, Arlington, VA 22226, by email publicinfo@fdic.gov, or by phone at (877) 275-3342. LPL does not guarantee in any way the financial condition of the Banks or the accuracy of any publicly available financial information concerning such Banks. LPL is not responsible for any insured or uninsured portion of a Deposit Account.

 

ANTICIPATED INTEREST RATES

The current LPL DCA interest rate is available here.

The LPL DCA Interest Rate Will Be Updated around July 1, 2016

Clients account will receive the same interest rates on all funds regardless of the Bank in which cash is deposited. Interest will accrue daily on balances from the day funds are deposited into a Bank through the business day preceding the date of withdrawal from that Bank. Interest will be compounded daily and credited monthly. If a client closes their account during a month, their account will be credited the pro-rata amount of interest due by LPL and LPL will recoup the amount of this partial month interest payment from the Bank(s) at the close of the month. More information about this process can be found in the DCA Disclosure Booklet.

The interest rates payable under the LPL DCA program are determined by the amount the Banks are willing to pay minus the fees paid to LPL and other parties (detailed below).  The interest rates accruing on client account’s funds may change as frequently as daily without prior notice.

 

Anticipated Fees

Under the LPL DCA program, each Bank will pay to the third-party administrator an amount equal to a percentage of the average daily aggregated omnibus deposit balance. This amount includes the fee for the third-party administrator, LPL’s fees, and interest payable to participating accounts. Different Banks may pay different amounts.  Clients will have no rights to the amounts paid by the Banks, except for interest actually credited to their account. However, amounts collected from the Banks during each period, less interest credited, will be allocated on aper capita basis and used to offset each client’s monthly LPL account fee, as discussed more fully below, for providing the sweep services. Excess amounts will be used to compensate the third-party administrator for its services. 

For its services, the third-party administrator will charge a tiered asset-based fee. This fee may vary period to period based on changes in prevailing interest rates, how assets are allocated amongst the Banks during the period, and the average daily balance of accounts participating in the LPL DCA program during the period. Moreover, the administrator may, from time to time, temporarily reduce its fees during certain periods, such as when necessary to help ensure that the interest rates paid by the Banks during the period equal the applicable disclosed rate for the period. Under such circumstances, the administrator is authorized to recover any such reduced fees, subject to its targeted compensation rate, from future periods. Clients authorize and direct that the third-party administrator to deduct its fees for its services from the amounts paid by the Banks. Based on the calculation method set forth below, the third-party administrator will calculate the fees due to LPL.

For its services under the LPL DCA program, including making the platform available, LPL receives a per account fee each month. LPL’s fee is not based on the amount of assets in the LPL DCA program or each client’s account. LPL’s compensation under the LPL DCA program does not vary, and is not affected by, the actual amounts held in the Deposit Accounts or client’s account.  As provided for below, the LPL DCA program account fee schedule will be indexed to the current Federal Funds Target (FFT) Rate. Under the fee schedule, increases in the Federal Funds Target Rate will result in increased compensation for LPL. LPL can change the applicable fee schedule upon 30 days advance notice to clients.  Although it is generally anticipated that LPL’s fees under the LPL DCA program will be offset by the amounts paid by the Banks, as discussed above, and clients direct the third-party administrator to collect such fees from the Bank and remit such amounts over to LPL, LPL reserves the right to withdraw the monthly account fee, or portion thereof, in the event or to the extent that the amount received from the Banks and paid over to LPL by the third-party administrator for the period is less than LPL’s fee for the same period.

LPL will be paid a maximum monthly per account fee of $15 for its services in connection with maintaining and administering the LPL DCA program. In a lower rate environment LPL’s fee will be reduced based on the FFT, which will increase the likelihood of LPL DCA program investors receiving a positive interest rate. The fees paid to LPL may be reduced to as low as $1 per account per month. For more details about LPL’s per account fee, please reference the DCA Disclosure Booklet.

The fee per account per month will not generally be seen on clients’ statements due to the manner in which LPL recoups its fee from the Bank payments, as discussed above. Financial advisors do not receive any of the fees received by LPL from the Banks. The LPL DCA program fees may be greater than the fees LPL receives from other sweep investment options.  Other than these stated fees, there will be no charges, fees, or commissions imposed on clients’ accounts with respect to the LPL DCA program.

 

THE AVAILABLE BANK LIST (ABL)

The most up-to-date LPL DCA ABL is available here.

The LPL DCA Available Bank List Will Be Updated around July 1, 2016

The DCA Available Bank List is a list of available Banks into which clients’ funds may be deposited. The Banks appear in alphabetical order and client’s cash may be allocated to any bank on the list at any point in time. For each Bank on the ABL, LPL as clients’ agent will ensure that LPL DCA Program sweep deposits do not exceed the $250,000 FDIC-defined ownership category limits. Note, however, that if clients hold deposits at a Bank on the ABL outside of the LPL DCA program, their total deposits at such bank may exceed the $250,000 FDIC limit.  As described below, clients can contact their advisor to designate any of the ABL Banks as ineligible to receive LPL DCA Program funds to prevent this from occurring.

Clients may not designate which Banks on the ABL receive their accounts’ funds. However, they may, at any time, designate a Bank as ineligible to receive funds. This will result in funds not being deposited into this bank or if already there, we will remove the account’s funds from that Bank and designate the Bank as ineligible to receive future deposits. Unless directed differently, the funds deposited in eliminated Banks will be deposited in any Bank with capacity set forth on the ABL, as amended by a client. To make these amendments, clients need to inform their financial advisor.

On the ABL, Banks may be added, removed, or the order of the priority sequence may change. If we make a change to the ABL, in general, we will provide prior notification of changes. However, under certain limited circumstances prior notification may not be possible. We will provide notice of such changes as soon as practicable. When changes are made, we will update the ABL link below in real time and provide the most up-to-date version of the ABL in clients statements at the time statements are generated.

If a Bank at which clients have funds is no longer available through the DCA program, they may choose to establish a direct depository relationship with the Bank, subject to its rules with respect to establishing and maintaining deposit accounts. If client chooses not to establish a direct depository relationship with the Bank, their funds will be transferred to an available Bank set forth on the Available Bank List.  As discussed in the appendix, any deposit account established directly in client’s name at a bank will be separate from the Deposit Accounts available through the LPL DCA Program, and deposits in such accounts will no longer be reflected in client’s account statement and LPL will have no further responsibility concerning the deposit account.

 

Insufficient Capacity

The ability of the LPL DCA program to sweep uninvested cash into Bank deposit accounts depends, however, on the capacity of the Banks to accept new deposits.  If during our sweep process at the end of each day, client’s account’s cash cannot be fully deposited into any participating Bank, it will be automatically invested into a money market mutual fund the following business day just as it would be when client’s available cash exceeds the maximum level of available deposit insurance detailed earlier.  When Bank capacity is restored, client’s account’s funds are automatically moved from the money market mutual fund into deposit accounts with the available Bank(s), subject to the $250,000 and $1.5 million limits described above.

An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

 

Further Information

Transactions and activity with respect to clients’ funds will appear on their periodic account statement. For each statement period, account statements will reflect:

  • Deposits to and withdrawals on client’s behalf into the omnibus Deposit Accounts
  • The closing balance of client’s funds in the omnibus Deposit Accounts at each Bank
  • Interest earned on client’s DCA cash sweep balances

Please note that the Banks where client’s cash is swept may change at any time during a month— client’s statement will reflect which Banks hold client’s cash as of the date of the statement. If clients have any questions about how their account statement reflects their balances at each Bank or to obtain additional information about their account’s funds, they need to call their financial advisor or, if applicable, access their account through LPL AccountView. If clients have not subscribed to LPL AccountView and wish to do so, they need to contact their financial advisor to subscribe. All notices from LPL detailed in this document may be made by means of a letter, an entry on or insert into account statements, or an entry on a trade confirmation or by other means.

Please refer to the LPL DCA Disclosure Booklet for additional information.