What You Need to Know
- LPL's total client assets grew to $1.35 trillion by the end of 2023, a new record.
- The firm sees opportunity to grow in what it calls a $2.5 trillion market for outsourced wealth management to enterprise groups such as banks and insurance companies.
- LPL ended the year with a new record-high headcount of 22,660 advisors and is investing in growth initiatives on several fronts.
Independent broker-dealer heavyweight LPL Financial added $25 billion of organic net new assets in the fourth quarter, for a total of $100 billion organic NNA added in 2023 — a sign of robust growth within advisors’ practices.
The full-year organic NNA was up 9% over the past year, which had an 8% growth rate.
“Our advisors are both winning new clients and expanding wallet share with existing clients,” LPL’s president and CEO, Dan Arnold, said on an earnings call with analysts Thursday.
The firm is drawing advisors through its many growing affiliation channels. LPL ended the year with a new record-high headcount of 22,660 advisors, a net gain of 256 over the third quarter and 1,385 over the past year.
Recruited assets for the year totaled $80 billion, of which $17 billion came in the fourth quarter. The firm is also looking forward this year to onboarding 2,600 financial advisors from Prudential Financial.
The firm’s total client assets also reached a record-high $1.35 trillion at the end of 2023 — more than double where it was in 2018, according to an earnings slideshow. Client cash balances ended the year at $48 billion, up $1 billion over the prior quarter — “marking the first quarterly increase since the second quarter of 2022,” Matt Audette, the chief financial officer, principal accounting officer and head of business operations, said on the earnings call.
The firm reported a 28% fall in profits for the quarter year over year, as its spending outpaced revenue growth. However, full-year profits for 2023 rose 26% over the prior year, buoyed especially by 107% growth in net interest income during the year. 2023 revenue of $10 billion soared 17% over the past year.
Adjusted earnings per share of $3.51 for the quarter was up 4% from the analyst consensus of $3.38, according to Yahoo Finance. Full-year EPS of $15.72 grew 36% year over year.
LPL’s stock jumped 5% on Friday.
Asset retention for the year was 99%, Arnold said. That reflects record-low advisor attrition of 1%, the firm’s head of business development Rich Steinmeier told ThinkAdvisor in January.
Advisors’ overall payout rate was 87.6%, Audette said. That figure is significantly higher than at some other large BDs. The payout is projected to decline slightly in the first quarter to 86.5% as production bonuses reset in the new year, he said.