Four months after announcing it was buying leading independent broker-dealer and top rival Commonwealth Financial Network for $2.7 billion in cash, LPL Financial Holdings and its CEO Rich Steinmeier are confident they can reach its target of retaining 90% of the roughly 3,000 financial advisors who work with $300 billion in client assets, regardless of trade press reports to the contrary.
The 90% target has been the stated goal for LPL Financial since it announced the acquisition at the end of March. The deal is scheduled to be closed Friday, and the integration of the two firms will occur in the second half of 2026.
During a conference call Thursday afternoon to discuss second quarter earnings, Steinmeier was asked about various reports in trade publications about individual Commonwealth advisors and practices leaving for competitors or to open their own registered investment advisor firms.
His response was sanguine.
Steinmeier noted that LPL has made commitment to retain Commonwealth as a distinct business and culture under LPL, which works with close to 30,000 financial advisors.
“Staying with Commonwealth is their only option,” he said. “But like as with any transaction or competitive recruiting events, some advisers will prioritize differently. And that exact dynamic is contemplated in our retention target.”
“We continue to feel confident about our ability to capture 90%, which does mean we understand that 10% of the advisers will make a different choice and go somewhere else,” Steinmeier added.
Later in the call with analysts, Steinmeier said: “Even at 90%, what you are going to see is announcements of folks that are going to leave. But on balance, we think that center of gravity sits around 10% in spite of the fact that really, it seems like each and every one of those stories is being amplified by the trades.”
The broad stock market in the second quarter traded at or near all-time highs, and wealth management and brokerage firms such as LPL Financial and its competitors benefit from larger amounts of assets, which translates into greater fees charged to clients.
For the three months ending in June, LPL Financial reported total advisory and brokerage assets increased 28% year-over-year to $1.9 trillion; total organic net new assets were $21 billion, representing 5% annualized growth; and recruited assets were $18 billion, down 24% from a year ago.
“Looking ahead, strong organic growth, rising client cash, expense discipline, and the Commonwealth deal should drive strong top- and bottom-line growth in the coming quarters despite interest rate pressures,” wrote William Blair analyst Jeff Schmitt Friday morning in a note about LPL to clients.
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