LPL Moves Closer to Commonwealth Retention Goals as Profit Climbs 11%

Popularity only looks easy to achieve. In reality, it requires hard work, as any politico, celebrity and now even LPL Financial can tell you. 

The leading independent broker-dealer has secured signed agreements from a little more than 80% of advisors from Commonwealth Financial, which it acquired in August. While the number looks high, it’s still lower than LPL’s 90% retention goal, which CEO Rich Steinmeier reiterated during the firm’s fourth-quarter earnings call last week. The firm also reported retaining 97% of its overall assets over the past 12 months.

“I think there are still advisors who are making their decisions over the course of the next couple of months, and maybe even through the next couple of quarters,” Steinmeier said on the call. “When you look at [remaining Commonwealth advisors] on average, they are larger, they are faster-growing, and they are higher producers than those that have decided to go elsewhere.”

Growth Engine

During the fourth quarter, total advisory and brokerage assets rose 36% to $2.4 trillion, while net income climbed 11% year-over-year to $301 million. The growth outpaced analysts’ expectations, due in part to a booming stock market. The results were in line with those of several other wealth management giants that released fourth-quarter reports:

• Bank of America’s wealth management unit reported net income of $1.4 billion in the fourth quarter.
• Profit in Wells Fargo’s wealth management unit rose 29% to $656 million.
• JPMorgan’s wealth management business posted net income of $1.81 billion, up 19%. 

Winter Break. December and January can often be a bit slower for wealth management firms looking to grow organically. LPL recruited around 50 advisors in the fourth quarter, with recruited assets for the quarter hitting $14 billion. CFO Matthew Audette said on the call that it will take some time to “ramp up” recruiting efforts again. “January is usually pretty low, and then as you move [into] February and March, it builds,” he said.