LPL, Raymond James See Strong Recruiting as Profits Weaken

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LPL Financial and Raymond James reported declining profits and revenues in the period ending June 30. On the plus side, though, both broker-dealers announced strong advisor recruiting.

LPL said it ended the second quarter with 16,973 advisors, up 812 — or about 5% — from the year-ago quarter, and up 251 — or about 1% — from the prior period.

"In the second quarter, recruited assets were a new high at $11.1 billion … ," said President and CEO Dan Arnold on a call with analysts Thursday. "Looking at the past year, recruited assets were nearly $39 billion, which is also a new high for the team."

LPL's advisors now have average yearly fees and commissions of $226,000, and average assets of $45 million. The firm's total assets stand at $762 billion, with overall net new assets in Q2 hitting $13 billion.

"These results, against the backdrop in which industry advisor movement was down by over 30% from a year ago, are a testament to the appeal of our model and the performance of our business development team," Arnold explained.

The independent broker-dealer's revenue fell 2% from a year ago to $1.37 billion. Its net income, though, decreased 30% to $102 million as earnings per share dropped 26% to $1.27.

Raymond James' Results

For its part, Raymond James said it ended the most recent quarter with 8,155 independent and employee advisors. That's up 251, or about 3%, from a year ago, and seven advisors from the quarter ending March 31.

"We recruited 113 financial advisors domestically during this quarter alone which represents $71 million of trailing 12 production at their prior firms, all of this … with our offices closed for much of that period," said Chairman and CEO Paul Reilly after the firm released earnings on Wednesday.

Over the past 12 months, advisors with a total of about $290 million of trailing 12-month production and nearly $43 billion of assets have joined the firm, he added, "which is a very strong result."

The independent channel has been the dominant growth area in recruiting, Reilly explained, "and is tracking closely with our fiscal 2019 results as … the pipeline remains solid across all of our affiliation options."

Raymond James' private client business has some $833.1 billion in assets under administration — roughly $102 million per FA. The 113 advisors recruited in the latest period have average yearly fees and commissions of $628,000.

Across the company, total revenue dropped 5% in the most recent quarter from a year ago to $1.83 billion. Its net income weakened 34% to $172 million, while earnings per share fell 32% to $1.23.

Also this week, Ameriprise Financial said it now has 9,894 advisors, a drop of 57 from a year ago. Its total client assets rose 4% to $630 billion as of June 30, and its average level of trailing-12-month fees and commissions per advisor improved 5% to $669,000.

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