October 27, 2011

LPL Increases Profits, Revenue in Q3; 782 Net New Reps in 2011

Parent company of largest independent BD adds $3 billion in net new advisory assets in quarter; assets in RIA custody unit reach $20 billion

LPL Investment Holdings, parent company of the largest independent broker-dealer, LPL Financial, posted a 39% increase in net income on a 16% increase in net revenue for the third quarter ended Sept. 30, 2011. The company also said it had added 782 net new representatives in the year through September, giving it a total of 12,799 reps; in the third quarter of 2010, it had 12,017 reps, and at the end of 2011’s second quarter it had 12,660 reps.

On the financials, net income was $36.4 million, or $0.32/diluted share, a 39.3% rise from net income of $26.1 million reported in 2010’s third quarter. Net revenue for the period ended Sept. 30, 2011 was $882.9 million, a 16.2% increase from net revenue of $760 million in 2010’s third quarter.

For the first nine months of 2011, LPL reported net income of $130.9 million, up 119.3% compared to the same period in 2010, while net revenue for the period was $2.7 billion, up 15.6% from the first nine months of 2010.  

"Periods of market volatility underscore the value of financial advice and the trusted relationships our advisors share with their clients," said Mark Casady, LPL Financial chairman and CEO, in a statement. “Our performance this quarter illustrates the resiliency of our business model and our ability to produce strong results during challenging economic conditions,” he continued, and that while “client concern is elevated by current market volatility, we have not seen a material change in client behavior."

CFO Robert Moore said the broker-dealer continues to “sustain low double-digit same-store sales growth from our seasoned advisors,” and that recruiting was strong, as evidenced by the 139 net new advisors added to its rep force in the quarter.

Net new advisory assets were $3 billion during the quarter, resulting in total advisory assets under management of $96.3 billion.

For the quarter and year to date, LPL also reported significant increases in its no-longer fledgling RIA custody unit, the LPL Financial Hybrid RIA platform. Assets on the platform grew to $20.2 billion as of

the end of the third quarter, serving 142 RIA firms. In the third quarter of 2010, the platform served 105 RIA firms who custodied $11.6 billion on the Hybrid RIA platform.

Other financial metrics of note that LPL reported included:

  • Commission revenue increased 13.8% for the third quarter compared to the prior year period, with about 80% of the increase coming from increased sales activity, with the remainder due to market movement.
  • Advisory revenue increased 26.2% in the third quarter of 2011 compared to the prior year period
  • Recurring revenue streams of the business represented 63% of net revenue for the quarter.
  • For the third quarter of 2011, total advisory and brokerage assets ended at $316.4 billion, a 7.2% decline from the $340.8 billion reported in the second quarter ended June 30, 2011, though up 7.9% from 2010’s third quarter. There was an 11% increase in its fee-based advisory assets year-over-year, to $96.3 billion, with net new advisory assets, excluding market gains, of $3 billion in the quarter.

For more Q3 news, go to AdvisorOne’s Earnings Calendar for the Finance Sector. http://www.advisorone.com/2011/10/17/advisorones-2011-q3-earnings-calendar-for-the-fina

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