While other firms suffered in the fourth quarter on slow client activity, LPL Financial (Nasdaq: LPLA) announced earnings today of $39.4 million for the quarter, up $156 million from a net loss of $116.6 million in the fourth quarter 2010. Fourth quarter net revenue was up 1.1 percent to $828.7 million from a year ago.
In contrast, Raymond James Financial and Ameriprise Financial posted lower earnings and revenues for the quarter.
For the year, LPL posted record revenue of $3.5 billion, an 11.8 percent gain from 2010, and earnings of $170.4 million, up from a loss of $56.9 million. The company closed two acquisitions last year--Concord Capital Partners and National Retirement Partners. The firm went public in November 2010.
Just last month, LPL announced its intent to acquire Rockville, Md.-based wealth management platform provider Fortigent, a move meant to give LPL a stronger foothold into the RIA and high-net-worth spaces. On a conference call Tuesday evening, CEO Mark Casady said the news was generating interest among the firm’s existing advisors and prospects. The Fortigent deal is expected to close in the first half of this year, and it’s not material, said Robert Moore, CFO.
“Strategically, this positions LPL to more aggressively attract high-net-worth advisors,” Casady said. “This acquisition accelerated LPL Financial’s growing success in the RIA space by leveraging the strength of Fortigent’s high-net-worth oriented solutions, including research, marketing and practice management tools.”
The majority of LPL’s end clients are mass affluent investors, Casady said on the call, but the firm does have a few advisors focused on high-net-worth clients who can use Fortigent’s capabilities to make them more competitive.
The acquisition also resonates with LPL’s RIA platform, which saw assets under custody grow 68.1 percent to $22.7 billion during the quarter. The platform now encompasses 146 RIA firms, up from 114 RIA firms in 2010.
LPL added 172 net new advisors during the quarter and 549 for the year, bringing its total advisor count to 12,847. Advisory and brokerage assets increased 4.4 percent from the third quarter to $330.3 billion.
But LPL wasn’t immune to the market conditions during the fourth quarter. Same store sales growth was flat during the quarter, and cash balances increased due to the market volatility and uncertainty in the global economy, Casady said. Net revenues were down from the third quarter.
“The decline in investment activity combined with weak market levels impacting our asset-based revenues, resulted in a 6 percent decline in fourth quarter net revenue on a sequential basis,” Casady added.
