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July 28, 2023 at 04:47 PM
What You Need to Know
- The firm expects another strong recruiting quarter ahead, CEO Dan Arnold says.
- Arnold says LPL wants to
- The firm is developing new services around CFO essentials, digital marketing and payroll.
LPL Financial saw strong advisor recruitment results in the second quarter ended June 30 that Dan Arnold, its CEO and president, said he expects will continue into the third quarter.
The firm ended Q2 with 21,942 advisors, an increase of 421 from the end of Q1 and up 1,071 from the end of Q2 last year, it said.
“We expect to carry this recruiting momentum into Q3 for both our traditional independent market and our new affiliation” model, Arnold told analysts Thursday on an earnings call.
Regarding LPL’s overall Q2 performance, he said: “We delivered another quarter of solid results while also continuing to make progress on the execution of our strategic plan.”
During Q2, LPL net income grew to $286 million, or $3.65 per share, up from $161 million, or $1.97 per share, in Q2 last year, the firm said.
Total LPL assets increased to $1.2 trillion in Q2, while organic net new assets were $22 billion, representing 7.4% annualized growth, or about 8% when adjusted for seasonal tax payment, he said. That “contributed to organic net new assets over the past 12 months of $84 billion, representing approximately an 8% organic growth rate.”
Recruited Assets
In Q2, recruited assets were $19 billion, a quarterly record for the firm, excluding periods when on-boarding large enterprises, Arnold said about LPL, which is a 2023 ThinkAdvisor LUMINARIES award finalist.
That outcome was “driven by the ongoing enhancements to our model as well as our expanded addressable market,” he said.
“Our advisors remain focused on serving the clients and delivering a differentiated experience,” Arnold explained. “As a result, our advisors are both winning new clients and expanding wallet share.
When it comes to retention, he said, “we continue to enhance the advisor experience through the delivery of new capabilities and technology, as well as the evolution of our service and operations functions.”
As a result, asset retention for Q2 and over the last 12 months was about 99%, Arnold noted.
Business Models and Services
Turning to the progress LPL made on its strategic plan, he said: “Our long-term vision is to become a leader across the advisor center market, which for us means being the best at empowering advisors and enterprises to deliver great advice to their clients and to be great operators of the business.”
The CEO added: “To bring this vision to life, we are providing the capabilities and solutions that help advisors deliver personalized advice and planning experiences to their clients. And, at the same time, through human-driven technology-enabled solutions and expertise, we’re supporting advisors in their efforts to be extraordinary.”
To “execute on our strategy,” he said LPL “organized our work around two primary categories: horizontal expansion, where we look to expand the ways that advisors and enterprises can affiliate such that we can compete for all 300,000 advisors in the advisor-mediated market, and vertical integration, where we focus on providing capabilities that solve for a broader spectrum of advisor needs.”
In doing so, Arnold explained, “durable, differentiated value” is being created.
