Faced with a stock market that was down almost 20% for the year, LPL Financial Holdings Inc., the powerhouse recruiter in the independent broker-dealer industry, reported late Thursday that recruiting for 2022 was off from the previous 12 months; recruited assets at the giant brokerage totaled $82 billion last year, down approximately 8% compared to 2021.
For the fourth quarter of 2022, the firm recruited $15 billion in assets, according to its financial results.
Despite the annual decline in recruiting advisors and their assets, CEO Dan Arnold was optimistic about the outlook for reeling in new financial advisors in 2023, noting that the fourth quarter was the best period for recruiting last year for the firm's traditional independent broker-dealer business model.
"Looking ahead, we expect to carry this recruiting momentum into the first quarter," Arnold said during a conference call with analysts to discuss the firm's fourth-quarter financial results.
Broker-dealer recruiting has been challenging in the era of Covid-19. Travel has been difficult, business norms have been disrupted, and the broad stock market has seen consecutive year of large swings in both directions, all making it more challenging to hire financial advisors.
Total moves of financial advisors between firms fell 5.3% last year from 2021, according to an analysis of InvestmentNews' Advisors on the Move database. More significantly, the 15,361 advisors who switched firms in 2022 was lower than even in disruption-filled 2020, and down 16.3% from the level in 2019.
Some in the industry believe financial advisors are less likely to move in a bad year for the market because they don't want to explain such a change to clients, who are fretting over their portfolios.
"I think the recruiting environment, I think it's well documented over the last three years, the churn in the industry has slowed, primarily driven on the backs of the pandemic and then the macro volatility last year, which are pretty extreme impacts," Arnold said, adding that that resulted in "less swings in the batter's box" for the firm to add more financial advisors.
Meanwhile, average revenue per advisor, which LPL tallies as annualized advisory fees and commissions, was down 14% at the end of December at $281,000, compared to the end of 2021, when it was $326,000.
Financial advisor head count at LPL at the end of the year was 21,275, up 231 compared to September and 1,399 year-over-year. Total revenue for the year was $8.6 billion, an 11% increase compared to 2021.
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