Shares of bank and brokerages that are home to thousands of financial advisors are careening wildly this week as investors attempt to discern the impact of last Friday's failure of Silicon Valley Bank and this week's unease about Credit Suisse Group as it tries to work through a complex turnaround plan.
But some market watchers continue to regard some banks and broker-dealers as investing opportunities. Michael Elliott, an analyst with CFRA Research, Tuesday raised his "opinion" of LPL Financial Holdings Inc. shares (LPLA) to a buy from a hold, noting that the firm, with more than 21,000 financial advisors, will continue to benefit from interest rates than are higher right now than they've been since before the credit crisis.
The federal funds rate was 4.5% at the start of the month, after getting as low as zero at the start of the Covid-19 pandemic in 2020. Higher interest rates are a tonic for the balance sheets of all broker-dealers, which generate income from interest generated from client cash and borrowing
"Looking ahead, we believe asset-based revenues will continue to benefit from 'higher for longer' interest rates as we think a significant Federal Reserve pivot, to rate cuts, remains unlikely since inflation remains at an elevated level,” Elliott wrote in a research note. "After significant market pullback, we believe valuation is now attractive as LPLA's exposure to cash sorting risks remains low. As a result, we think the sell-off in shares over the last few trading days is unwarranted."
Share of LPL Financial Holdings were trading close to $193 at 1:00 p.m. Wednesday, down more than 6% for the session. Last Thursday, LPL shares were trading at close to $250, for a five-day decline of almost 23%.
"We also expect advisor growth to remain a positive for LPLA through 2023, while net new asset growth momentum continues," Elliott wrote. "Shares are currently trading at 11 times the 2023 [earnings per share] estimates, a significant discount to LPLA's 16.5 times 10-year average."
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
