The larger broker-dealers and investment groups had a fairly mixed performance in the fourth quarter of 2011, despite the market's comeback–including a 25% rise in the S&P 500–and the overall sector's very strong Q4 earnings results.
The financial sector overall saw its earnings jump close to 240% from the year-ago quarter, according to Reuters. The general bank sub-sector, though, saw its earnings fall 5%, and the investment banks/brokerage sub-sector's earnings dropped an average of 225% in the period, as of Tuesday.
Here are 10 companies, most of which were ranked on AdvisorOne's Best & Worst list for Q3, selected as the five Best and five Worst performers in Q4, based largely on how they out- or underperformed broker-dealer rivals.
5th Best:
TD AMERITRADE
TD Ameritrade (AMTD) saw its fiscal first-quarter net income (for the period ended Dec. 31, 2011) increase about 10%, even though the Omaha, Neb.-based company also said that its sales fell a tad, less than 1%, to $653.4 million.
A key driver of Ameritrade's revenue, the fees it charges for transactions, was affected by growing worries about the European debt crisis. The average number of trades per day dipped to 367,479 from 371,916 in the same period a year earlier.
4th Best:
WELLS FARGO
Wells Fargo & Co.'s (WFC) fourth-quarter profit jumped by 20% thanks to a steadier mortgage business, higher commercial lending and an increase in deposits. The San Francisco-based bank, which ranked as the fifth-best broker-dealer in Q3, said its loan balances expanded 2% to nearly $770 billion.
The company's financial advisors numbered 15,263 (up 75 from three months ago), 11,119 of whom are in the traditional brokerage channel (representing a jump of 39 from the previous quarter). WFA is part of the wealth, brokerage and retirement unit, which had net income of $325 million in Q4 vs. $291 million in Q3 and $197 million in the year-ago period.
3rd Best:
CHARLES SCHWAB
Charles Schwab (SCHW) said its earnings rose 29% in the fourth quarter, putting it in the third-best spot for the second quarter in a row. The company's sales, though, dropped 1% year over year to $1.113 billion.
Net new assets in advisor-services accounts totaled $9.2 billion in the fourth quarter, a drop of 13% from the previous quarter and a decline of 44% from the year-ago period. Assets in advisor-services accounts stood at $679 billion in the most-recent period, a 4% year-over-year gain and a 6% jump from the third quarter.
2nd Best:
LPL
LPL Investment Holdings (LPLA), the parent company of LPL Financial, grew its earnings 129%, according to Reuters' data, moving it up from its position as the fourth-best performing broker-dealer in Q3. It reported a fourth-quarter profit of $39.4 million, and net revenue rose 1%, to $828.7 million.
Total advisory and brokerage assets increased nearly 5% during the quarter to $330.3 billion vs. $315.6 billion a year ago. LPL said it added 172 new advisors during the fourth quarter, but it also lost 124 advisors related to the UVest platform conversion. The firm ended 2011 with 12,847 advisors, up 3.2% from last year.
Best:
BANK OF AMERICA
Bank of America (BAC) had net income of $2 billion, or $0.15 per share, for the fourth quarter of 2011, giving it the best broker-dealer performance with an earnings jump of 191%. This also moved it up from the second-best BD slot last quarter. Revenue, net of interest expense, grew 11% to $25.1 billion on a fully taxable-equivalent basis, including results at Merrill Lynch.
As of Dec. 31, BofA employed 17,308 financial advisors, an increase of 214 from the previous quarter and 1,697 over the previous year. Much of the growth came from the hiring of Merrill Edge advisors, who serve client households with $250,000 or less in investable assets.
5th Worst:
JPMORGAN CHASE
4th Worst: 
3rd Worst: GOLDMAN SACHS 
2nd Worst: 
Worst: 
