LPL Financial and Raymond James reported declining profits and revenues in the period ending June 30 vs. that of a year ago. On theplus side, though, both broker-dealersannounced strong advisor recruiting.
LPL said it ended the second quarterwith 16,973 advisors, up 812 — or about5% — from the year-ago quarter, and up251 — or about 1% — from the prior period.
“In the second quarter, recruited
assets were a new high at $11.1 bil-
lion … ,” said President and CEO Dan
Arnold on a call with analysts in late
July. “Looking at the past year, recruited
assets were nearly $39 billion, which is
also a new high for the team.”
LPL’s advisors now have average year-
ly fees and commissions of $226,000,
and average assets of $45 million. The
firm’s total assets stand at $762 billion,
with overall net new assets in Q2 hitting
“These results, against the backdropin which industry advisor movement wasdown by over 30% from a year ago, are atestament to the appeal of our model andthe performance of our business development team,” Arnold explained.
The independent broker-dealer’s revenue fell 2% from a year ago to $1.37 billion. Its net income, though, decreased30% to $102 million as earnings pershare dropped 26% to $1.27.
For its part, Raymond James said itended the most recent quarter with
8,155 independent and employee advisors. That’s up 251, or about 3%, froma year ago, and seven advisors from thequarter ending March 31.
“We recruited 113 financial advisors
domestically during this quarter alone
which represents $71 million of trailing
12 production at their prior firms, all of
this … with our offices closed for much
of that period,” said Chairman and CEO
Paul Reilly after the firm released its
Over the past 12 months, advisors
with a total of about $290 million of
trailing 12-month production and nearly
$43 billion of assets have joined the firm,
he added, “which is a very strong result.”
The independent channel has been
the dominant growth area in recruiting,
Reilly explained, “and is tracking closely
with our fiscal 2019 results as … the
pipeline remains solid across all of our
Raymond James’ private client busi-
ness has some $833.1 billion in assets
under administration — roughly $102
million per FA. The 113 advisors recruit-
ed in the latest period have average year-
ly fees and commissions of $628,000.
Across the company, total revenuedropped 5% in the most recent quarterfrom a year ago to $1.83 billion. Its netincome weakened 34% to $172 million,while earnings per share fell 32% to $1.23.
Meanwhile, Ameriprise Financial said
it has 9,894 advisors, a drop of 57 from a
year ago. Its total client assets rose 4% to
$630 billion as of June 30, and its aver-
age level of trailing-12-month fees and
commissions per advisor improved 5%
MORE LPL NEWS
LPL Financial launched its employeeadvisor channel in early August, about
15 months after Arnold describedplans for the independent broker-dealer’s affiliation model during aninvestor presentation.
It also takes place “a year and four daysafter we closed the Allen & Companyacquisition, which helped facilitate thismove,” said Rich Steinmeier, head ofbusiness development, in an interview.
LPL says that it offers advisorslooking to work as employees payoutsof 50% to 70% of their revenues andcharges no platform, transaction oradministrative fees.
While some broker-dealers pay littleto nothing for business tied to “smallhouseholds,” meaning those with assetlevels under $250,000, LPL will giveemployee advisors payouts for theseaccounts, according to the executive.In some cases, Steinmeier says, thesesmaller households can make up 10%to 20% of an advisor’s production andabout 20% to 35% of their client base.
Also, the firm plans to give employeeadvisors access to a network of some
1,500 offices nationwide, where theycan work on an “as needed” basis.Currently, LPL has employee offices inFlorida and Boston.
Janet Levaux is editor-in-chief of InvestmentAdvisor. She can be reached at firstname.lastname@example.org.
LPL, Raymond James Post Recruiting Gains
These results came as the industry’s overall advisor movement was “down
by over 30% from a year ago,” says LPL CEO Dan Arnold.