LPL Financial reported net income of $49 million, or 43 cents a share for the first quarter of 2011, a 92 percent jump from the first quarter of 2010. Revenues grew 17.5 percent from the year ago quarter to $873.9 million. Nearly 70 percent of that growth was driven by increased sales activity, LPL executives said on a conference call.
The firm saw double-digit increases in both commission-based revenues and fee-based revenues for the quarter. Net new advisory assets were $3.7 billion, versus $1.4 billion in the year ago quarter, while asset-based fees increased 25.7 percent. Total advisory assets in the company’s fee-based platforms were $99.7 billion, up 23.1 percent. And total advisory and brokerage assets reached record $330 billion for the quarter, up 16 percent versus year ago.
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“Improving investor sentiment and market activity helped existing advisors grow their practices,” said LPL Financial CEO Mark Casady. He added that recent enhancements helped the firm’s FAs capitalize on opportunities offered by the improving market environment, like the firm’s recent launch of a fee-based variable annuity platform, and the introduction of third-party exchange-traded funds in model wealth portfolios.
Assets under custody on the firm’s hybrid RIA platform, launched two years ago, reached $15.5 billion. “Since it launched two years ago, LPL financial has become one of the largest RIA custodians in the industry,” said Casady.
The company added 528 net new advisors during the twelve months ended March 31, 2011, bringing total FAs at LPL Financial to 12,554. The newly recruited advisors have slightly higher production than LPL’s current average, and there is a greater number coming from other independent b/ds than usual, said LPL. Retention was also slightly higher than average, the firm said, in line with the historical trend. Retention has improved over the years as LPL has gotten bigger and better able to provide services to advisors, it said.
LPL executives said the firm is interested in b/d acquisitions, has significant cash to make deals, and expects more attractive opportunities to surface in the next few quarters and years. Casady voiced interest in future deals during the firm's last earnings call. The firm is not very interested in the kinds of distressed properties that have been put on the market of late, especially if there isn’t a parent company, because that means assuming the firm’s liabilities. But LPL expects there will be healthier b/ds looking to sell in 2011.
LPL also announced today that a group of minority stockholders would sell about 6 million shares in a secondary offering. LPL went public on the NASDAQ on November 18. Last week, the firm announced plans to purchase Concord Wealth Management—a technology outsourcing firm. “They fit well with our focus on unbiased financial advice to consumers,” said Casady on the conference call. “This is an adjacent market for us that we do not serve today.”