Non-Sweep Money Market Mutual Funds. Clients are able to invest cash balances in a limited number of money market mutual funds other than as part of a sweep arrangement (such funds, “Non-Sweep Money Market Funds”). Depending on interest rates and other market factors, investment returns of money market mutual funds have been, and may continue in the future to be, lower than the aggregate fees and expenses charged by LPL in connection with the transaction. This may result in a client experiencing a negative overall investment return with respect to cash reserves invested in the Non-Sweep Money Market Funds. Clients should understand that in many cases the share class offered for a particular Non-Sweep Money Market Fund charges higher fees and expenses than other share classes that are offered by the same Non-Sweep Money Market Fund but are not available on LPL’s platform. A share class is selected by LPL, in certain cases, because the Non-Sweep Money Market Fund pays to LPL a portion of the fees and expenses charged by the money market fund as compensation for the administrative, shareholder servicing, and recordkeeping services LPL provides with respect to LPL clients who invest in the share class. LPL receives compensation for the LPL client assets invested in the Non-Sweep Money Market Funds for recordkeeping, shareholder servicing and administrative services it provides for the funds and in connection with marketing support services LPL provides to the fund sponsors as described in this document. This compensation is retained by LPL and is not shared with LPL Financial Advisors. Unlike other types of mutual funds available on LPL’s platform, LPL makes available Non-Sweep Money Market Funds from only a limited number of mutual fund sponsors. By making available a limited number of Non-Sweep Money Market Funds, LPL is able to negotiate greater compensation from the fund companies for services it provides to the funds. Because of the limited number of Non-Sweep Money Market Funds available on the platform and the fees paid by those funds, other money market mutual funds not available through LPL’s brokerage platform are likely to have higher returns than the Non- Sweep Money Market Funds.
