Efforts to increase the number of advisers at
LPL Financial hit a wall during the volatile last three months of 2015, with the firm's adviser headcount dropping 19 in the fourth quarter, to 14,054.
For the year, LPL saw a paltry gain of 18 advisers, having finished 2014 with 14,036.
Long the dominant recruiter in the independent brokerage industry, LPL in the past has stated an annual goal to gain 300 to 400 net new advisers.
LPL saw lower-producing advisers walk out the door in 2015 and was successful in recruiting bigger-producing advisers, said CEO Mark Casady on a conference call with investors Thursday.
(Related: LPL's recent adviser departures, via the Advisers on the Move database)
“There was an elevated departure of low-producing advisers in 2015,” Mr. Casady said.
Revenue from commissions at LPL, like across the brokerage industry, declined in the fourth quarter. LPL reported commissions of $464 million in the last three months of 2015, down 4% from the prior quarter. For the year, LPL reported $1.98 billion in commission revenue, a 7% drop from 2014.
“Sales commissions declined, mostly due to an industry-wide slowdown in alternative investments, and trailing commissions were relatively flat,” the company said in a statement.
Sales of alternative investments by broker-dealers slowed last year as the industry took stock of the proposed Department of Labor fiduciary rule, which could halt the sale of illiquid alternative investments in retirement accounts.
(More: B-Ds prepare for the reality of the DOL fiduciary rule)
LPL's net revenues for the year declined 2%, to $4.28 billion. Mr. Casady noted the shift at LPL to a business that looks more like a registered investment adviser than a broker-dealer.
“Advisory assets have doubled in the last five years and are now 40% of the business,” he said.
Assets in advisory accounts are more valuable than those in brokerage accounts, he said. LPL is on a march to be predominately advisory in assets, he said.
LPL's net income for the fourth quarter was 37 cents per share. That was a drop of 44% when compared to the same period in 2014, when LPL reported earnings of 66 cents per share.
