LPL says it’s on track to recruit 70% of National Planning Holdings revenue

Rivals have picked off some big NPH teams, but LPL said it is getting the lion's share of revenue from the acquisition.

A number of large teams in the National Planning Holdings adviser network have moved to rivals, but LPL Financial assured investors that in the initial phase of moving advisers from two of NPH’s broker-dealers, it is on track to transfer 70% of adviser revenue, according to a presentation Wednesday morning.

LPL announced in August that it bought the NPH broker-dealer network for $325 million from Jackson National, an insurance company. NPH was comprised of four firms with 3,200 advisers and $120 billion in client assets.

On top of the initial purchase price, the deal included a potential payment of up to $123 million, based on the amount of revenue that ultimately landed on LPL’s platform.

LPL has called advisers from NPH broker-dealers National Planning Corp. and Investment Centers of America “wave one,” as they are moving first and scheduled to transfer to LPL by the start of next month. The second wave or group is comprised of Invest Financial Corp. and SII Investments. Those advisers are scheduled to move early next year.

Combined, National Planning Corp. and Investment Centers of America generated $490 million of total revenues last year. Seventy percent of that total is $343 million. Altogether, the four NPH broker-dealers generated $909 million in revenue in 2016, according to InvestmentNews data.

LPL said the the NPH advisers who have come over to LPL so far represent 80% of EBITDA — earnings before interest, taxes, depreciation and amortization — at those two NPH firms. EBITDA is a key cash flow metric for brokerage firms.

Last month, InvestmentNews, citing industry sources, reported that LPL would likely pick up 50% to 70% of NPH revenue.

Over the past few months, there’s been a scrum for NPH advisers. Three key LPL rivals, Commonwealth Financial Network, Cambridge Investment Research Inc. and Securities America Inc., are expecting to pick up at least $100 million in revenue from NPH advisers, according to industry executives.

During the investor presentation held Wednesday morning in New York, LPL CEO Dan Arnold said that he knew the fight for NPH advisers would create a “competitive environment” among brokerage firms.

Since the deal was announced, LPL has “approximate production retention at 70%, and that could vary slightly or marginally,” Mr. Arnold said, as advisers are due to move in the coming weeks.

He added that it was “too early to call” about the percentage of revenue moving to LPL early next year, but that there had been great engagement and LPL was optimistic about the ultimate results.