In his first earnings call as LPL Financial CEO, Rich Steinmeier boasted of a bumper quarter for recruiting asset hauls but made no mention of his recently ousted predecessor.
Wednesday's call was full of congratulations to Steinmeier and his freshly minted Chief Financial Officer Matt Audette for their new roles and the results they helped produce in a strong quarter for the large independent broker-dealer. But neither analysts nor Steinmeier and Audette themselves mentioned the recent turmoil at the top of the firm
Instead, Steinmeier and Audette painted a picture of business as usual as they described how recent recruiting hires and acquisitions helped propel the company to a record for total assets. LPL reported assets in its brokerage and advisory accounts rose by nearly 30% year over year to $1.59 trillion by the end of the quarter.
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Driving that increase has been a steady string of recruiting and merger-and-acquisition deals.
Excluding quarters in which LPL brought on large amounts of assets from big institutions, that $26 billion figure marked a record high for the firm.
"We have outsized gains in advisors that change firms, and that growth has enabled us to fuel our strategy of investing back in our platform and our capabilities," Steinmeier told analysts. "I think that strategy should persist, and it will give us the opportunity to outperform over the longer term."
Always more heads to count
LPL's recruiting deals also helped to drive its advisor headcount to 23,686 at the end of the third quarter. That figure was up by 224 from the previous quarter and 1,282 year over year.
Alongside recruiting, LPL has pushed its headcount figure skyward through a recent series of big acquisitions. Earlier this month, for instance, it completed its
LPL is also in the midst of moving wealth managers and assets over from two other big deals. Both the wealth management arms of the
"Collectively, these two partnerships will add approximately $76 billion of brokerage and advisory assets by early 2025," Steinmeier said.
Audette said LPL expects the strong inflows to continue, although there is usually a slowdown around the end-of-year holidays.
"Looking ahead to Q4, in addition to the expected onboarding of one of our largest institutional partners, Prudential, we continue to have a strong pipeline," Audette said. "However, I would note the natural seasonal headwinds to advisor movement during the back half of December related to (the Financial Industry Regulatory Authority's) shut-down and the holidays."
Loss of OSJs
But LPL's asset count was also depressed in the third quarter by the departure of two large advisory firms technically known as
Revenue and net income
Those rising assets drove LPL to $255.3 million in net income for the quarter on nearly $3.1 billion in total revenue. Those figures respectively were up 14% and 23% year over year.
The bulk of the revenue — nearly $1.4 billion — came from advisory accounts. That number was up 27% year over year.
Measured by annual revenue, LPL came in as the largest independent broker-dealer in Financial Planning's
Expenses and $18 million AML set-aside
LPL saw its expenses increase by 25% year over year to nearly $2.8 billion. The bulk of that was made up of nearly $2 billion in production-related compensation paid to advisors, a figure up 31%.
Outside of its regular expenses, LPL noted that it logged an $18 million charge in the third quarter in anticipation of a coming settlement with the Securities and Exchange Commission over alleged breaches of federal anti-money laundering rules. LPL also paid $40 million in the quarter as part of a
No mention of Arnold
It would have been tough to tell from the remarks Wednesday that any sort of turmoil recently took place at the top of LPL. Firm executives have so far declined to shed further light on what led to the sudden
Rather than dwell on his own succession drama, Steinmeier drew attention to how LPL is helping advisors hand clients off to colleagues when they choose to retire. LPL reported that it spent $34 million in the third quarter on six liquidity and succession deals to compensate wealth managers for books of business they had been building their entire careers.
Steinmeier said he recently met with about 15 teams or advisors who had entered into those agreements and was left feeling like "the belle of the ball."
Steinmeier was also at pains to show that nothing has changed in the firm's fundamental business plans.
"As a reminder, our long-term vision is to become the leader across the advisor-centered marketplace," he said. "To do that, our strategy is to invest back into the platform and provide unmatched flexibility in how advisors can affiliate with us, and to deliver capabilities and services to help maximize advisors' success throughout the lifecycle of their businesses."
