Page 37 - Investment Advisor - December 2023

Conclusions

brOKer-DeAler beAT

By Ryan W. Neal

lPl keeps Up strong recruitment

business development head richard Steinmeier pointed to the firm’s new

affiliation models for advisors.

PL Financial just had one of its best rich platform, the stability and scale
quarters for bringing new assets to of our industry-leading model, and our
Lits brokerage business. The inde- capacity and commitment to invest back
pendent broker-dealer recruited $31.2 bil- into the platform,” according to Arnold.
lion in assets during the third quarter of “As a result, we continue to make solid
2023, LPL disclosed when it reported progress in helping advisors and enter-
earnings in late October. This includes $12 prises solve challenges, and capitalize on
billion in assets coming from the addition opportunities better than anyone else,
of Bank of the West and Commerce. and thereby serve as the most appealing
It’s the best quarter for recruitment player in the industry.”
since Q2 2022, when LPL attracted dation in the marketplace that we can
$43.5 billion thanks to the addition of serve all advisors in the marketplace,” CAsH HoldInGs
TruStage (formerly known as CUNA Steinmeier explained. Without com- Wealth management businesses at many
Mutual Group), a credit union-focused menting on any specific firms, he added of the wirehouses posted disappointing
firm that added $36 billion to LPL. that consolidation among custodians is quarterly results thanks to interest rates
Excluding those large enterprise deals also driving inbound interest to LPL’s driving clients more into cash, but LPL’s
makes Q3 2023 the best in LPL his- RIA business. avoided a similar impact. While client
tory, said Richard Steinmeier, managing “It slowed down a bit towards the cash holdings have fallen to $47.3 billion
director of business development. end of the summer as folks prepared for from a Q2 2022 peak of $69.6 billion, LPL
“We are strengthening in the way that transitions that they were going to go advisors hold a lower percentage of cash
individual advisors and groups of advisors through,” the LPL executive said. “Over than those at other firms, Steinmeier said.
are choosing to come to [LPL] in a much the last month or so, those conversations “Our cash balances are largely held not
more material way even than Q2 2022,” have started to tick up again.” [for] chasing yield but actually for transac-
Steinmeier said in an interview. “This was LPL’s total assets remained steady tional cash capabilities,” he said. “There’s
a much more balanced quarter.” at $1.2 trillion from the previous quar- a cash balance that’s going to be held to
Advisor headcount at LPL rose to ter, with $33 billion in organic net new make sure that you’re not having to pen-
22,404, an increase of 462 from the pre- assets helping to offset losses in equity etrate the investments or having to rebal-
vious quarter and 1,360 from the year- markets, Dan Arnold, the firm’s presi- ance the portfolio to meet those needs of
ago period. Steinmeier attributed the dent and CEO, said on a conference call the individual clients. As such, we don’t
successful recruitment to its new affilia- with analysts about its latest quarterly see in the cycle cash jump tremendously
tion models, which accounted for $5 bil- earnings. The company has added $97 at this firm or drop precipitously.”
lion in recruiting during Q3. These are billion in organic net new assets over the LPL also recorded a $40 million regu-
advisors who wouldn’t have considered past 12 months, a gain of 9%. latory charge in anticipation of a settle-
Adobe Stock support their practice, he said. the appeal of our model grow due to the Commission over an industry-wide
“This quarter we continued to see
ment with the Securities and Exchange
LPL five years ago because it couldn’t
probe into how brokers are preserving
combination of our robust and feature-
“We’re starting to see some real vali-
December 2023 Investment AdvIsor 35