LPL reports increases in net income, total assets in first quarter

LPL's advisor head count totaled 21,521 at the end of Q1, an increase of 246 advisors from the previous quarter and up 1,430 year over year.

LPL Financial achieved increases in net income and total assets in the first quarter thanks to solid organic growth, firm officials said after the market close Thursday.

The independent-broker dealer reported net income of $339 million from January through the end of March, compared to $134 million in the same time frame last year.

That performance resulted in earnings per share of $4.24 so far this year, up 159% from $1.64 per share in the first quarter of last year. The net income in the first quarter compared to the $319 million, or $3.95 per share, LPL reported in the fourth quarter.

LPL’s stock price is down 5.9% this year through Thursday, which compares to a gain of 8.3% by the S&P 500 Index over the same period.

LPL’s total assets increased to $1.18 trillion in the first quarter, a 1% boost from $1.16 trillion a year ago and a 6% increase from $1.11 trillion in the fourth quarter.

The firm also experience a boost in recruited assets, which were $13 billion in the first quarter. They were $85 billion over the trailing 12 months, up approximately 12% from a year ago.

“These results were driven by the ongoing enhancements to our model and our expanded adjusted market,” LPL CEO Dan Arnold said Thursday on a conference call with analysts.

The total number of LPL financial advisors was 21,521, an increase of 246 advisors over the previous quarter and up 1,430 year-over-year. The firm provides a range of business services to advisors in its network, who operate in both brokerage and advisory models. It also has financial institution affiliates in its enterprise channel.

Brokerage assets increased to $554.3 billion in the first quarter from $538.8 billion last year, while advisory assets decreased to $620.9 billion in the current quarter from $624.3 billion in the first quarter of 2022.

Arnold said BMO Harris Bank will onboard the wealth management business of Bank of the West to LPL’s enterprise platform. The firm also is preparing to add Commerce Bank’s financial advisory operations. The two deals will add approximately $11 billion of brokerage and advisory assets in the second half of the year.

LPL obtained a total of $21 billion in organic net new assets in the first quarter, which represents 7.5% in annual growth. The advisory channel accounted for $14 billion of the new organic assets for 9% annualized growth. The brokerage channel garnered $7 billion in new assets for 5% annualized growth.

Arnold said LPL increased “same-store sales” thanks to the “differentiated experience” its advisors gave their clients.

“As a result, our advisors are both winning new clients and expanding wallet share with existing clients, a combination that drove a sequential improvement in same-store sales,” he said. “This increase occurred across all affiliation models, led by solid growth in our enterprise chain.”

LPL’s recruiting in traditional markets — independent brokerages — reached a new first quarter high of approximately $9 billion in assets, Arnold said. “In the quarter, we continued to increase out win rate and expand the depth and breadth of our pipeline despite advisor movement in the industry remaining at lower levels.”

LPL recruited approximately $3 billion in new assets from its “new affiliation models” — strategic wealth and an enhanced registered investment advisory offering, among others — delivering its strongest quarter to date, he said.

“We expect to carry this recruiting momentum into [the second quarter] for both our traditional markets and our new affiliation models,” Arnold said.