Welcome to Financial Advisor IQ

LPL Grows AUM 6% Year Over Year

By Alex Padalka May 6, 2019

LPL Financial posted healthy growth in assets under management and added 80 advisors in the first quarter, the company says.

Client assets have reached a record $684 billion, a 6% increase year over year, according to LPL’s first-quarter earnings report. The firm saw $4 billion in net new asset inflows, representing a 2.5% annualized rate of growth, LPL says. Net new advisory assets, meanwhile, were $4.6 billion in the first quarter, which translates to a 6.5% annualized rate of growth, according to the report.

Furthermore, LPL added 80 advisors in the first quarter, bringing its total ranks to 16,189, which is 122 more than the year prior, the company says. LPL is focused on organic growth but is also open to mergers and acquisitions, Dan Arnold, LPL’s president and CEO, said in a call with analysts.

Commission-based revenues dropped 3% from the same period a year ago to $461 million, according to the report. But advisory revenues rose 7% to $454 million, asset-based revenues jumped 35% to $296 million and transaction and fee revenues rose 5% to $123 million, LPL says. Total net revenue rose 10% to $1.372 billion, according to the report.

In the call with analysts, Arnold also said that its no-transaction-fee mutual fund offerings have been popular with advisors and the firm therefore plans to reduce fees on some ETFs from $9 to $5. The move will be financially “neutral” for LPL as it earns sponsor revenue from the ETF providers in place of transaction revenue, Arnold added.

“We continue to focus on providing differentiated capabilities to help our advisors win in the marketplace,” Arnold says in a statement. "In the first quarter, we introduced new [customer relationship management] capabilities, rolled out goals-based planning, and integrated our AdvisoryWorld acquisition. These capabilities will help our advisors digitize their workflows to more efficiently turn prospects into clients. Looking ahead, we remain focused on our strategic priorities of growing our core business and executing with excellence.”

LPL was also able to hold on to $8 billion, or about two-thirds, of the $12 billion in brokerage and advisor assets following the departure of Independent Financial Partners, which left LPL last year and announced that it would be setting up its own broker-dealer, Arnold told analysts. At the same time, LPL was able to hold on to more than 50% of IFP’s advisors, “which would suggest we retained, on balance, the more productive advisor,” said Arnold.