Blaming the DOL fiduciary rule, LPL sees recruiting stall for second straight quarter

The company said the DOL rule has created uncertainty on the part of advisers

Oct 26, 2017 @ 5:59 pm

By Bruce Kelly

For the second consecutive quarter, recruiting stalled at LPL Financial, typically an industry powerhouse when it comes to hiring new advisers.

In its third-quarter earnings release issued Thursday, parent company LPL Financial Holdings Inc. said it had 14,253 advisers at the end of September. That's essentially flat compared with the previous quarter, when the firm reported a quarterly net loss of close to 100 advisers.

The company said that loss of advisers had been expected and pointed to uncertainty due to the regulatory outlook — more specifically the Department of Labor's fiduciary rule — as the culprit for the recruiting slowdown.

LPL has historically been an industry leader in recruiting, with 300 to 400 net new advisers annually joining the firm. The slowdown in recruiting doesn't mean LPL has put the brakes on the growth of the number of advisers at the firm. Indeed, it is set against the backdrop of the biggest merger in LPL's history, the August acquisition of the four broker-dealers in the National Planning Holdings Inc. network, with 3,200 reps and advisers and $120 billion of client assets.

LPL paid an initial price of $325 million for NPH and a potential contingent payment of up to $123 million next year, depending on how many NPH advisers and assets eventually move to LPL. The firm is in its first phase of bringing those advisers on board and they were not represented in the third-quarter numbers.

On a conference call with analysts, LPL's CEO Dan Arnold said that the NPH acquisition was an "important milestone for us," and that recruiting was once again weak due to advisers' uncertainty around the DOL.

LPL is seeing many NPH advisers "who are excited about joining us," Mr. Arnold said, particularly as they become familiar with LPL's advisory and technology platform.

However, not all NPH advisers are a "good fit," with some looking at smaller firms and competitors offering financial packages that don't work for LPL, he added.

Mr. Arnold said that the company would release an update of the number of NPH advisers moving to LPL on November 8, when the company is holding an investors' day.

Many broker-dealers last year saw strong recruiting results as advisers jockeyed for position in preparation for the Department of Labor's fiduciary standard rule. They were looking for firms well prepared to handle the rule and bolting from those who they believed were not getting ready.

In February, LPL reported that 2016 was its best recruiting year ever, adding 323 net financial advisers.

LPL Financial reported net income of $58 million, or 63 cents per share, for the third quarter, compared with net income of $52 million, or 58 cents per share during the same quarter last year. LPL advisers control $560 billion of client assets.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

B-D Data Center

Use InvestmentNews' B-D Data Center to find exclusive information and intelligence about the independent broker-dealer industry.

Rank Broker-dealers by

Featured video

INTV

When can advisers expect an SEC fiduciary rule proposal and other regs this year?

Managing editor Christina Nelson and senior reporter Mark Schoeff Jr. discuss regulations of consequence to financial advisers in 2018, and their likely timing.

Recommended Video

Path to growth

Latest news & opinion

Fidelity charging new fee on Vanguard assets held in 401(k) plans

The 0.05% fee is ostensibly a response to Vanguard's distribution model, but may also make the company's funds less attractive due to higher cost.

TD Ameritrade launches all-night trading for ETFs

Twelve funds now can be traded after-hours, but the list will grow, company says.

Cutting through the red tape of adviser regulation is tricky

Don't expect a simple rollback of rules under the Trump administration in 2018 — instead, regulators are on pace to bolster financial adviser oversight.

Bond investors have more to worry about than a government shutdown

Inflation worries, international rates pushing Treasuries yields higher.

State measures to prevent elder financial abuse gaining steam

A growing number of states are looking to pass rules preventing exploitation of seniors.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print