LPL Continues Recruitment Strength in Q3
Without commenting on any specific firms, Steinmeier added that consolidation among custodians is also driving inbound interest to LPL’s RIA business.
“It slowed down a bit towards the end of the summer as folks prepared for transitions that they were going to go through,” he said. “Over the last month or so, those conversations have started to tick up again.”
LPL’s total assets remained steady at $1.2 trillion from the previous quarter, with $33 billion in organic net new assets helping to offset losses in equity markets, Dan Arnold, the firm’s president and CEO, said on a conference call to discuss the quarterly earnings.
The company has added $97 billion in organic net new assets over the past 12 months, a gain of 9%.
“This quarter we continued to see the appeal of our model grow due to the combination of our robust and feature-rich platform, the stability and scale of our industry-leading model, and our capacity and commitment to invest back into the platform,” Arnold said. “As a result, we continue to make solid progress in helping advisors and enterprises solve challenges, and capitalize on opportunities better than anyone else, and thereby serve as the most appealing player in the industry.”
Cash Holdings
Wealth management businesses at many of the wirehouses posted disappointing quarterly results thanks to interest rates driving clients more into cash, but LPL’s avoided a similar impact. While client cash holdings have fallen to $47.3 billion from a Q2 2022 peak of $69.6 billion, LPL advisors hold a lower percentage of cash than those at other firms, Steinmeier said.
“Our cash balances are largely held not [for] chasing yield but actually for transactional cash capabilities,” he said. “There’s a cash balance that’s going to be held to make sure that you’re not having to penetrate the investments or having to rebalance the portfolio to meet those needs of the individual clients. As such, we don’t see in the cycle cash jump tremendously at this firm or drop precipitously.”
LPL also recorded a $40 million regulatory charge in anticipation of a settlement with the Securities and Exchange Commission over an industry-wide probe into how brokers are preserving electronic communications stored on personal devices or messaging apps that are not firm-approved. A company spokesperson declined to comment.
