LPL Financial Advances in Acquiring Advisor Practices, Executives Report

LPL Financial has accelerated its acquisition of retiring advisors' practices, with 27 purchases completed, including its first non-LPL practice. CEO Dan Arnold highlighted this expansion during a call discussing LPL's first-quarter results.

LPL Financial (LPL), the nation's largest independent broker-dealer, is aggressively expanding its reach in the wealth management industry by acquiring retiring advisors' practices at an accelerated pace. The company has completed 27 such purchases so far, including its first non-LPL practice, as highlighted by CEO Dan Arnold during a conference call discussing LPL's first-quarter 2024 results (1).

The acquisition strategy is aimed at bolstering LPL's market presence and client base. As of the first quarter, LPL reported a 23% year-over-year increase in total advisory and brokerage assets to $1.44 trillion, with advisory assets growing by 28% to $793 billion (2). The company's acquisition efforts also contributed to a significant increase in organic net new asset growth, with $17 billion in total organic net new assets and $16 billion in organic net new advisory assets (2).

The acquisition spree appears to be bearing fruit for LPL despite the impact of a challenging market environment. The company's net income for the quarter was $289 million, translating to a diluted earnings per share (EPS) of $3.83, a 10% decrease from the previous year (2). However, excluding certain items, LPL's adjusted EPS decreased by only 6% year-over-year to $4.21 (2).

The acquisition of Atria Wealth Solutions, Inc., a wealth management solutions holding company supporting approximately 2,400 advisors and $100 billion of brokerage and advisory assets, is expected to further bolster LPL's growth prospects (1). The transaction is expected to close in the second half of 2024 (1).

Despite the positive impact of acquisitions, LPL faces challenges in maintaining its growth momentum. The company's adjusted EBITDA decreased by 5% year-over-year to $541 million in the first quarter (2), and it continues to face competition from other wealth management firms. However, with its strong acquisition strategy and market presence, LPL is well-positioned to weather these challenges and continue its growth trajectory.

References:

1. https://www.barrons.com/advisor/articles/lpl-financial-stock-earnings-25e20b17
2. https://investor.lpl.com/news-releases/news-release-details/lpl-financial-announces-first-quarter-2024-results