LPL Financial’s Recruiting Pipeline Supports Organic Growth: CEO

LPL Financial’s advisor recruiting pipeline and expanding institutional relationships continue to support the firm’s organic growth strategy, according to Chief Executive Officer Rich Steinmeier. 

He stated on the firm’s earnings call that the firm’s advisor recruiting efforts are “progressing at the normal cadence that we’ve seen at historical levels” and that advisors who ultimately choose LPL’s platform are seeing them “replaced with new opportunities” into its pipeline. 

“The vast majority of recruiting took place in our traditional markets where we added approximately $23 billion in assets during Q3 and captured an industry-leading share of advisers in motion while maintaining strong recruiting pipelines,” Steinmeier said. 

He went on to note that while the firm’s expectations for organic growth could be pushed, it’s generally determined by contributions made by large institutional onboarding, as well as individual advisor recruitment. 

In the third quarter that ended Sept. 30, LPL added $24 billion in recruited assets, which boosted the firm’s total for the trailing 12 months to $81 billion.

In part, the broker-dealer has been holding “more active dialogues” with institutions than it has had in the past, and those conversations are ramping up, as the firm gains “a growing pipeline of diverse potential partners,” Steinmeier stated. 

Those institutions include retirement recordkeepers and insurance product manufacturers, in addition to traditional banks and credit unions, he added. 

LPL reported advisor headcount at 32,597 at quarter-end, beating Wall Street expectations of 32,550 advisors for the quarter. 

Concurrently, LPL anticipates onboarding Commonwealth Financial Network’s advisors in mid-November and is expecting to retain about 83% of Commonwealth’s assets. LPL maintains an asset-retention target of about 90% as of the second quarter. 

“I’ll just start on the landing at 83. So, I think, we started a deal underwriting at 90%. I think if you look at where we were last quarter, we were right around 85% for folks that had signed. And we just had a small number of advisors that had signed decide not to stay,” Chief Financial Officer Matt Audette said on the call. 

LPL announced its acquisition of Commonwealth last March and closed the transaction last August. 

Separately, the firm has begun deploying its proprietary artificial intelligence agent, Cyan, and plans for a full launch by the end of the year, with additional capabilities for the tool by early next year.  

Total client assets reached about $2.56 trillion at the end of the quarter, up 10% from the previous quarter and a 34% increase from the prior-year period. 

Total revenue for the quarter reached about $5.34 billion, up 3% quarterly and up 17% year-over-year.