Strategic CPA Partners
Q: Are there any restrictions on the traditional accounting services a CPA representative can provide to a client while also being the joint investment representative for the client's LPL account?
A: Yes. Many conflicts of interest may arise from this scenario. A CPA should first contact their state accounting regulatory board to determine if the dual relationship is permissible, what restrictions may exist and what written disclosures are required to be made to the client. LPL may also prohibit or restrict certain activities and require written consent be obtained from the client.
Q: Can a CPA representative advertise their office location as an LPL branch office?
A: No. The CPA representative's office can not be independently advertised. Please refer to the CPA Guidelines and the Advertising Compliance section of the Operating Independently Manual for further restrictions on the advertising of satellite office locations.
Q: Can the CPA representative advertise his or her accounting practice and his or her association with LPL on the same business card, letterhead or in some other manner?
A: No, because the activities are separate and distinct separate business cards and stationary are required. LPL's Advertising Compliance Department must review and approve all business cards, letterhead, advertising and sales literature prior to use.
Q: Can the CPA representative have access to Branch Net?
A: Yes. However because of the fees involved and the restrictions prohibiting the CPA representative from meeting with LPL clients to discuss their LPL accounts without the presence of the full-time LPL representative, access may not be necessary.
Q: Can the CPA representative offer fee-based accounts?
A: Yes, provided the CPA representative and the full-time LPL representative meet the appropriate state licensing requirements.
Q: Can the CPA representative offer variable and fixed insurance products?
A: Yes. All variable insurance would have to be offered jointly with the full-time LPL representative through the joint representative identification number. Both the CPA representative and full-time LPL representative would have to assure that they were appropriately appointed with the investment sponsor and appropriately state insurance licensed. A CPA may be permitted to offer fixed insurance to clients independent of their relationship with LPL and the LPL representative provided that an Outside Business Activity Notification form was submitted to and approved by LPL disclosing the fixed insurance activity.
Q: Can the CPA representative turn over or share their commission with unlicensed CPA firm/partners?
A: No. Only persons appropriately licensed with LPL can participate in commission or fee-based revenue. This prohibition includes the direct or indirect sharing of revenue with non-licensed persons. An SEC No Action letter issued in May 2001 clarifies the SEC's position on the issue of CPAs and securities compensation.
Q: Can the full time LPL representative pay for the CPA representative's fees?
A: Not at this time. As we assist with the growth of your business LPL is looking for individuals committed to the securities industry. LPL will not permit CPA representatives to obtain their licenses and then "hang" their licenses with LPL without generating any securities revenue. Requiring that the CPA representative pay his or her own fees is one way of demonstrating his or her commitment to you, LPL and the securities industry.
Q: Does a CPA representative have to be sponsored by an OSJ registered principal?
A: Yes.
Q: Does an individual need to be a CPA in order to participate in the CPA Alliance program, or can an accountant, enrolled agent, or tax preparer participate?
A: To participate in the program an individual must be a CPA. The program and program documentation were created for CPA participation only. Other options may be available for other professionals.
Q: Does the CPA keep investment client files at their office?
A: No. All files must be maintained at the OSJ branch office location.
Q: Does the CPA representative have to have Errors and Omissions insurance coverage through LPL?
A: Yes, as a fully licensed LPL representative, the CPA representative is required to have full E&O coverage through LPL. This insurance coverage is separate and apart from any insurance the CPA representative may already have for his or her accounting practice.
Q: Does the CPA representative have to meet securities industry continuing education ("CE") requirements?
A: Yes, in addition to any CE requirements a CPA must meet for his or her accounting practice an LPL CPA representative will have to meet both industry and firm element CE requirements to maintain his or her securities licenses in good standing.
Q: How will the split of commissions between the CPA representative and the full time LPL representative be determined?
A: Once a joint representative identification number has been established between the CPA representative and the full-time LPL representative the commission splits are negotiated between the two parties and documented through the Split Commission/Fee Agreement form.
Q: Is the CPA representative required to pay representative fees?
A: Yes. As a fully licensed LPL representative, CPAs are required to pay fees. The CPA representative is the joint representative of record for each LPL account along with the full time LPL representative.
Q: What is the primary difference between the LPL CPA Program and the LPL Partners Program?
A: Through the LPL CPA Program, the CPA representative becomes a fully licensed LPL representative with both the NASD and the appropriate state agencies. The CPA representative, upon proper licensing, is thus permitted to share in securities commission and advisory revenue. . Through the LPL Partners Program a CPA affiliates only with LPL's Registered Investment Adviser as a "cash solicitor." A CPA is prohibited from sharing in any revenue generated from brokerage activity and is restricted to sharing in only a percentage of the advisory fee paid on LPL advisory accounts for the client referral.
Q: What securities licenses is the CPA representative required to obtain?
A: A CPA representative is required to have the same securities licenses as the full- time LPL representative he or she will be conducting joint business with. For example, if the full time LPL representative has a Series 7 the CPA representative will also be required to have a Series 7. Depending on the state and the type of investments the CPA representative wants to offer to clients, the CPA representative may also be required to obtain the Series 63, 65 and/or 66 licenses and appropriate insurance licenses.
Q: Will a CPA representative be able to have his or her own accounts or will all business have to be done jointly with an experienced full-time LPL representative?
A: All business will be required to be done through a joint representative identification number with a full-time experienced LPL representative. The CPA representative will be prohibited from having his or her own clients.