LPL payout inches up as revenue per adviser dips

LPL payout inches up as revenue per adviser dips
'Tis the season? LPL points to 'seasonality' to explain the slight bump in the rate of adviser pay in Q2.
AUG 03, 2022

LPL Financial's army of financial advisers saw their payouts increase almost 1% in the second quarter as a result of what the company refers to as "seasonality," or advisers' hitting higher revenue targets or tiers as the year progresses.

Those payouts — the percentage per dollar of revenue a financial adviser ultimately pockets — should continue to increase in the third quarter, said Matthew Audette, LPL's chief financial officer and managing director.

"In the second quarter, our payout rate was 87%, up about 90 basis points from the first quarter due to typical seasonality," Audette said Tuesday afternoon during a conference call with analysts to discuss LPL's latest earnings report. "Looking ahead to Q3, we anticipate our payout rate will increase to roughly 88%, driven by the typical seasonal build in the production bonus as well as the onboarding of CUNA."

With a keen focus on its clearing and custody business, LPL said in June 2021 that CUNA Brokerage Services Inc. would move its $36 billion of brokerage and advisory assets and close to 550 advisers, who work at credit unions, to LPL early this year.

Meanwhile, in the face of turbulent markets, annualized revenue per LPL financial adviser decreased only slightly when compared to the same time last year, the company reported. At the end of June, annualized advisory fees and commissions per adviser totaled $308,000, compared to $314,000 in June 2021, down just 2%.

For the quarter, LPL Financial reported that its financial adviser head count was 20,871, up 780 compared to March and 1,757 year-over-year. During the second quarter, LPL reached an agreement to acquire the private client group business of Boenning & Scattergood, a firm with roughly 40 financial advisers and approximately $5 billion of advisory and brokerage assets.

During the quarter, LPL added total net new assets of $37.2 billion. Total advisory and brokerage assets decreased 4% when compared to June 2021, to $1.06 trillion.

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