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Productivity, Recruiting Push LPL Revenue to Record

Advisor productivity and healthy recruiting activity helped drive net revenues at LPL Financial Holdings to a record $4.1 billion in 2013, the company announced Tuesday.

Advisor recruitment also continued to bounce back, as LPL Financial -- the country's largest independent broker-dealer -- attracted 110 net new advisors in the fourth quarter of 2013, bringing the total for the year up to 321.

Net income, meanwhile, soared 20% to $182 billion in 2013, up from $152 billion last year. Recurring revenue, which reflects the company's stability, represented 64.1% of net revenue for the fourth quarter of 2013 and 64.7% for the year.

Advisors began weighing partnering with different IBDs midway through the year, according to LPL's chief financial officer, Dan Arnold, after spending the first half focused on serving "pent-up" client needs. "Advisors have re-engaged in seeking new partners," Arnold says. "We are expecting this momentum to continue and we have a good strong pipeline for 2014."

Productivity by advisors was driven by investor engagement, strong market conditions "and, in particular, elevated levels of alternative investment sales, resulting in annualized commissions per advisor of $163,000," LPL said in its announcement. However, Arnold says he expects alt sales to "ramp down" this year, reflecting an anticipated decline in liquidity events of non-traded REITs.


LPL also highlighted its ability to retain advisors, with Arnold citing a 97% retention rate for 2013. The total number of advisors grew 2.4% to 13,673 last year from 13,352 in 2012.

Advisory and brokerage assets jumped 17% to $438 billion last year from $373 billion in 2012. LPL also saw assets under custody on its RIA platform, which covers 285 independent RIA firms, skyrocket 54% to $62.9 billion in 2013, compared with $41 billion (from 191 independent RIA firms) in 2012.

Revenue generated by advisors increased by nearly 12% for both the fourth quarter and full-year 2013. The rise, LPL said in its earnings announcement, reflected both an increase in net new advisors and improving commissions per advisor. Commission revenue from advisors increased 14% in 2013, with a particular spike in the fourth quarter, which jumped 19% compared with the same period last year.

Last year LPL focused on its core platform and invested in compliance and service capabilities, the company's chairman and chief executive officer Mark Casady said in a statement. "As we look ahead to 2014, we will expand our commitment of creating a smarter, simpler, more personal LPL as a means to drive productivity and efficiency at more normalized expense levels that sets the conditions for sustainable long-term growth," he said.

In addition, LPL announced it would raise its quarterly dividend 26% to $0.24 per share.

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