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LPL, Raymond James Report Lackluster Recruiting Quarter

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Independent broker/dealer LPL Financial and Raymond James had a lackluster first quarter for recruiting advisors, with LPL adding a net 25 new FAs and Raymond James adding eight from the fourth quarter of 2012.

LPL, which released earnings Thursday morning, said its advisor count is now at 13,377, up 0.2 percent sequentially and 3.2 percent from the year-ago period. Raymond James, which released earnings Wednesday, said its advisor count, including the United Kingdom and Canada subsidiaries, was 6,297, compared to 6,289 at the end of 2012. But the firm’s U.S. advisor count was up only four from the previous quarter.

Mark Casady, chairman and CEO of LPL, attributed the weaker recruiting quarter to the fact that advisors are busy servicing their clients, reflected in the firm’s increased advisor productivity. Average FA productivity was $145,000, up from $140,000 last quarter.

“If we were to see continued strong same store sales, then we would see lower recruits join the firm,” Casady said. “If we were to see the rate we have today stay the same, or even slightly dip, we would see recruiting get back to a little bit more of its classic run.”

The firm has a target of 500 net new advisors this year, and Casady said he still feels good about reaching that, unless same-store sales continue to climb, “because you know advisors are then busy with their clients and therefore are not going to entertain moving as much as they would normally.”

On an analyst call Thursday morning, one analyst said some advisors have said LPL is getting less personal as the firm grows to such a large size. In WealthManagement.com’s annual Independent Broker/Dealer Report Card, LPL’s satisfaction rating fell to 7.5 out of 10, compared to the industry average of 8.9.

In response, Casady pointed out that the firm came in first last year in terms of net new advisor adds, and retention is 96 to 98 percent.

To improve the firm’s service, they will be forward-hiring, meaning they’ve added trained teams in anticipation that volumes will increase, he said. The firm has also knocked down the number of forms that advisors have to fill out from 1,500 to 1,000.  

That said, LPL did see a boost in advisor productivity, and total advisory and brokerage assets were up 11.3 percent from a year ago to $394 billion. The firm’s adjusted earnings per share of $0.64 beat Wall Street expectations by $0.10. As of 10:25 a.m. eastern time, the stock price was up 3.7 percent.

While Raymond James does not report advisor production levels, the firm’s total client assets under administration reached a record $407 billion in the quarter, up 5 percent sequentially. Within the private client group, revenues increased 2 percent from last year to $727 million. Its earnings per share of $0.68 missed expectations by $0.09. As of 10:29 a.m. eastern, the stock was down 7 percent.

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