Like other firms in the advice business, LPL Financial recently reported its fourth-quarter and full-year results.
But unlike many rivals, the largest independent broker-dealer also highlighted a long list of details both on the sources of its recent growth and on the strategies and programs that it expects to propel further expansion.
First, the latest key performance indicators: Its financial advisor headcount stands at 16,464 vs. 16,109 a year ago, a jump of 355; it added 115 net new advisors in the fourth quarter of 2019.
Total client assets are $764.4 billion vs. $628.1 billion a year ago; net new assets were $8.8 billion in Q4’19 vs. $5.9 billion in Q4’18. Assets from recruited advisors in Q4’19 topped $10 billion, bringing LPL’s full-year total to $35 billion.
Advisors affiliated with the independent broker-dealer have an average of $46.4 million in client assets and about $246,000 in yearly fees and commissions — up 19% and 5% year over year, respectively.
President and CEO Dan Arnold, speaking with equity analysts late Thursday, said net new assets from existing advisors grew close to 4% in 2019 vs. about 2% in 2018.
The IBD reported fourth-quarter earnings of $1.53 per share, up 13% from Q4’18. Net income improved 5% year over year to $126.7 million, as revenues rose 10% to $1.45 billion.
Here’s what the firm has in store for the future:
1. More Ways Advisors Can Join
As for future growth, the IBD’s “first strategic play involves winning in our traditional independent and institutional markets while also expanding our affiliation models,” Arnold said.
As for its latest new affiliation models, its premium offering for RIAs — launched in Q3’19 — “has been well received and generated good feedback from prospective advisors,” according to the CEO.
“We now have our first couple of committed practices, which we expect will join over the next few months, and we are encouraged by our growing pipeline of interested advisors,” he said.
The IBD exec also said one affiliation model LPL is in the process of building is “focused just 100% on an RIA-only firm.”
Overall, LPL plans to go to market with a new affiliation model in the second quarter and with another one “later this year,” according to Arnold. “We are receiving good feedback with respect to the value proposition associated with those programs, … and … we feel good about the results from last year and our pipeline as we move forward.”
2. Race to Zero
As for pricing, which the firm hopes will help its advisors stand out in the field, LPL has been adjusting its advisory platforms and transaction costs. In Q4’19, it introduced a no-transaction-fee ETF offering on its corporate and hybrid advisory platforms.
“In 2020, we are taking the same approach in light of the continued secular industry trends towards advisory solutions and lower retail trading commissions,” Arnold said.
3. Enhancing the Client Experience
The firm also intends to create “an industry-leading service experience that enhances our ability to attract and retain advisors,” he added. This effort includes “intelligent routing of their inquiries and case management for complex issues.”