Rich Steinmeier, who was recently appointed to the CEO role at LPL Financial following the sudden firing of Dan Arnold earlier this month, led his first quarterly earnings call Wednesday, along with Matt Audette, CFO and president. There were no new details on the reasons behind the recent leadership change, and Steinmeier, a long-time LPL executive, did not indicate any large change in the firm’s overall strategy.
“Our opportunity is clear: to assert our leadership and shape both the advisor and institutional market,” Steinmeier said, in his opening remarks.
He outlined three top priorities for the firm that emerged from discussions with the newly formed management committee.
“The first is, we’ve got to maintain the client-centricity that this firm is known for—that is in serving our advisors and our institutions and allowing them to serve their end clients with distinction,” he said. “It’s what the firm was built on, and so for us that is one of the top priorities as we advance making sure we don’t lose sight of what’s made us special.”
His second priority, which he pointed out was a “slight pivot” from the previous leadership agenda, is to give more decision-making power to the firm’s employees.
“This is the ability to take the employees who sit at all levels of this firm, who are deeply connected with our clients and empower them to make the decisions to help those clients achieve success in however they may define it,” he said.
Giving employees the information they need to make those business decisions will “allow us to feel nimbler and more direct in serving the clients,” he said.
Steinmeier’s third priority is to “drive operating leverage,” he said. The firm has grown rapidly over the last several years, moving into several different service areas and affiliation models for advisors. He pointed to Audette’s expanded role, taking over operations, service, compliance and supervision duties, as one step toward bringing the pieces together at the operational level.
He also pointed out that the firm’s success has not been based on advisors’ relationship to the CEO.
“These relationships we have with our clients have been built over years and decades,” he said. “But it’s not relationships with me as the CEO. It’s relationships with relationship managers, advisory consultants, branch managers, supervisory consultants, transition specialists. What I’ve seen in the last three weeks are those employees have stepped up in a major way.”
LPL reported $26 billion in recruited assets during the third quarter, up from $24 billion in the second quarter but down from $31 billion in the year-ago period. That included $23 billion recruited into its traditional independent channel. The new affiliation models, including LPL’s Strategic Wealth Services, employee and RIA offering, recruited $3 billion in assets during the quarter. The firm posted $87 billion in recruited assets for the trailing 12-month period, up about 12% from a year ago.
The IBD’s advisor headcount was 23,686 at the end of the quarter, up 224 sequentially and 1,282 year-over-year.
Earlier this month, LPL closed on its acquisition of Atria Wealth Solutions, with 2,200 advisors and 160 banks and credit unions and $110 billion in assets. Audette said the firm is on track to meet an 87% retention rate. And that business is estimated to deliver a run-rate EBITDA of $150 million, up from the original estimate of $140 million.
The firm ended the quarter with $1.6 trillion in total advisory and brokerage assets, up 29% year-over-year. Total organic net new assets were $27 billion, a 7% annualized growth rate. Excluding the exit of some large offices of supervisory jurisdiction, total organic net new assets were $33 billion, a 9% annualized growth rate.
Overall, the firm reported net income of $255 million, or $3.39 a share, up 16% year-over-year, on revenue of $3.11 billion, up about 23% year-over-year, beating analysts’ expectations by $70 million, according to SeekingAlpha.com. Adjusted earnings per share grew 11% from a year ago to $4.16, beating expectations by 45 cents.
