LPL adds 385 advisers in record-setting first quarter

LPL Financial added 385 advisers during the first three months of 2021, bringing the total head count to 17,672, the company reported after the stock market closed Thursday.

While advisory assets increased by 54% on a year-over-year basis to $497 billion, and advisory assets as a percentage of total assets increased to 51.8%, from 48.1% a year ago, LPL’s net income during the quarter was down from the same period a year ago.

The first-quarter net income of $130 million, or $1.59 per share, compares to $156 million, or $1.92 per share, during for the first quarter of 2020. The current-quarter net income was up from $112 million, or $1.38 per share, during the final quarter of 2020.

“Over the past quarter, our advisers continue to be a source of extraordinary support and guidance for their clients, and at the same time, we remain focused on our mission of taking care of our advisors so they can take care of their clients,” Dan Arnold, LPL's president and chief executive, said during the earnings call Thursday.

“This combination positions us to deliver another quarter of solid results while also continuing to make progress on our strategic plan,” he added.

Arnold underscored LPL’s new high of more than $950 billion in total assets, a more than 40% increase from a year ago.

“This increase was primarily driven by continued organic growth and equity market appreciation,” he said. “With respect to organic growth, first-quarter net new assets were $29 billion, which included $12 billion from BMO Harris Financial Advisors.”

That translated to double-digit annualized growth of 13%, driven by continued strength across new store sales, same-store sales and retention, he explained.

Recruited assets during the first quarter were at $24 billion, including $15 billion from BMO, and total recruited assets over the past year reached a new high of $56 billion.

“Our continued progress on recruiting is primarily driven by the appeal of our model, our ongoing innovation for the future and the expanded flexibility of our platform,” Arnold said.

LPL’s stock price, which is up more than 51% from the start of the year, opened strong Friday morning to gain more than 2% in midday trading.

The S&P 500 Index, by comparison, is up 13.1% from the start of the year and was down about 60 basis points in midday trading Friday.

“We aspire to expand beyond our old vision of extending our leadership in the independent space and redefine the independent model over time, and by doing so, become the leader across the entire advisor-centered marketplace,” Arnold said during his opening remarks.

“As we discussed last quarter, we see several pathways for continued business solutions growth, including partnering with more of our advisers, introducing new solutions to the portfolio and experimenting with serving advisers outside LPL,” he added. “In the first quarter, our subscription base continued to scale to about 1,700 monthly subscriptions, that generated annualized revenue of approximately $19 million. This growth was primarily driven by our ongoing expansion and evolution of the value proposition of our existing portfolio.”

During the first quarter, LPL launched M&A solutions, which Arnold said is “generating solid demand, including over 50 advisers who are leveraging this offering today.”

In the current quarter, LPL plans to launch its “seventh business solution, Client Engage,” which Arnold said, “evolved from our existing marketing offering and is focused on providing advisers with a digital approach to effectively and efficiently staying connected with their clients.”

“As we look outside LPL, we plan to begin marketing M&A solutions later this year,” he added. “By experimenting with this scalable technology-driven solution, we can efficiently learn from serving outside advisers, while continuing to focus our resources and investments on delivering business solutions to LPL advisers.”