LPL Financial tops 20k advisors, beats earnings estimates

April 29, 2022 11:39 AM

LPL Financial pushed its industry-leading advisor headcount past 20,000 and bested earnings estimates in Q1 despite lower equity markets resulting in declining client assets.

Quarterly earnings statements released Thursday show rising profit, income and planners for the nation’s largest independent broker-dealer, and CEO Dan Arnold said in prepared statements that the firm plans to boost its wealth management platforms in 2022, “including the enhancement of our advisory solutions, in alignment with the secular trend towards advisory, which continues in our business and across the industry.”

“For example, in the first quarter, we expanded the investment options available in our centrally managed platforms by integrating separately managed accounts,” Arnold said. “Doing so makes it easier and more efficient for advisors to leverage separately managed accounts, which can drive higher utilization and further growth of centrally managed platforms. As a result, this enhancement increases our advisory platforms’ value to both existing and prospective advisors.”

To see the key takeaways from LPL’s earnings statements for financial advisors and other wealth management professionals, scroll down our slideshow. For coverage of the company’s earnings in the prior quarter, click here.

Advisor headcount

The number of registered representatives affiliated with LPL rose to a record 20,091 in the first quarter, up 2,419 advisors year over year and up 215 advisors compared to the previous quarter. This continues a trend of planner growth for the firm, and Arnold said in prepared remarks that it plans to keep up the pace.

“For 2022, CUNA is on track to join later this quarter, and we are prepared and ready to onboard their approximately 550 advisors located across almost 300 credit unions who serve $36 billion of brokerage and advisory assets,” Arnold said. “Also within this year, we will onboard People’s United bank, which was acquired by M&T and includes approximately 30 advisors serving $6 billion of brokerage and advisory assets.

“For these institutions, we will use new innovations that will make it easier to transition to LPL and, in turn, help make our offering even more appealing.

Client assets

LPL’s total brokerage and advisory assets dropped 4% from the previous quarter to $1.2 trillion. In prepared remarks, chief financial officer Matt Audette said continued organic growth “was more than offset by lower equity markets.”

“Looking more closely at recruiting, in Q1 recruited assets were $10 billion, which prior to large

financial institutions, was a new high for the first quarter of the year and brought our 12-month total to $76 billion,” Audette said. “We continued to see positive trends in Q1. Advisory net new assets were $17 billion, or an 11% annualized growth rate. With this growth, our advisory assets reached a new high of 54%of total assets as we continue to deliver differentiated capabilities and benefit from the secular trend towards advisory.”

Organic growth

The firm brought in $18 billion in organic net new assets in Q1, growing at a rate of 6%. Organic net new assets were $107 billion over the past 12 months, translating to 11% annualized growth.

The bottom line

LPL earned net income $134 million in Q1, up 3% from one year ago and surging 24% compared to the previous quarter. LPL’s performance translated to diluted earnings per share of $1.64, also up 3% year over year. Earnings per share prior to amortization of intangible assets and acquisition costs increased 10% year over year to $1.95, outpacing Zacks Equity Research consensus estimates of $1.79 per share. Gross profit increased 15% year over year to $669 million, and EBITDA grew by 10% to $267 million.

Remarks from the CEO

Over the past quarter, we remained focused on our mission of taking care of our advisors, so they can take care of their clients," Arnold said in a statement. "This led to the continued enhancement of the appeal of our model in the advisor-centered marketplace and contributed to another quarter of solid business results."