LPL Touts ‘Strongest’ Recruiting Quarter Based on Assets
LPL Financial Chief Executive Dan Arnold boasted the firm’s “strongest” quarter and 12-month stretch for recruited assets, as the $35 billion brought onto the independent broker-dealer’s platform since the end of March lent itself to a new trailing 12-month high of $80 billion.
The recruiting spike, aided in the second quarter by the firm’s onboarding of assets from BMO Harris Financial Advisors and M&T Bank’s retail brokerage and advisory unit, “reflects our ongoing progress on enhancing the appeal of our model and expanding our addressable markets,” Arnold said on a Thursday call with analysts reviewing the San Diego-based company’s results.
From BMO Harris, LPL added $3.1 billion in brokerage assets during the second quarter, substantially completing the onboarding of its $15 billion in total assets. From M&T Bank, it added $15.6 billion in assets during the quarter, with remaining assets of roughly $6.3 billion held directly with sponsors and expected to onboard over the next several months, according to the company’s results.
LPL’s recruiting results increased in each of its markets, Arnold said, with around $22 billion flowing into its institution services model, more than $10 billion in its traditional independent model, and another $2.5 billion into its new affiliation models. The $35 billion in total recruited assets for the quarter more than tripled the amount reported in the year ago quarter, while the $80 billion total assets over the past 12 months doubled the total at the same point last year.
“These broader and more diversified results help position us to drive higher levels of recruiting going forward,” Arnold told analysts, noting that these expectations were “despite advisor movement in the overall industry remaining lower.”
Arnold highlighted additions over the quarter of five practices across LPL’s Strategic Wealth Services and employee models, and a new firm that joined its RIA-only offering in May after the channel’s relaunch in April.
Among LPL’s competitors also reporting results this week, Raymond James Financial CEO Paul Reilly struck the most optimistic note about his firm’s recruiting performance after it boosted offers to prospects in it’s employee channel earlier this year.
Ameriprise Financial CEO James Cracchiolo and Stifel Financial CEO Ron Kruszewski each signaled slowdowns in their recruiting pace amid an increasingly competitive market and challenges with brokers still working remotely.
LPL’s advisor headcount ballooned more than 1,400 from the end of March, largely thanks to its acquisition of Waddell & Reed, which closed in April, as well as other additions that helped push LPL’s total client assets past $1 trillion during the quarter.
The firm had 19,114 financial advisors at the end of June, up 1,442 from the end of the first quarter and up 2,141 year over year, according to the company’s results. The quarter’s tally includes more than 900 advisors from the Waddell deal and more than 200 advisors from its recruitment of the M&T Bank unit.
Waddell advisors serving $69 billion in client assets, representing roughly 98% of the acquired firm’s client assets, have committed to join LPL, up slightly from the first quarter and well beyond LPL’s original modeling assumption of 70%, according to the firm’s results.
LPL’s total advisory and brokerage assets hit $1.1 trillion as of the end of June, a 16% quarter-over-quarter increase from $958.3 billion, and a 46% year-over-year increase from $761.7 billion. Arnold attributed the climb largely to the Waddell & Reed transaction, market appreciation and organic growth.
The firm’s total revenues in the second quarter rose to $1.9 billion, up 11% quarter over quarter and 39% year over year, but total operating expenses also reached $1.71 billion, representing increases of 15% over the quarter and 41% over the year. Its net income for the quarter slipped to $118.1 million, representing an 8% dip from the prior quarter but still 17% higher than the year ago quarter.