Across Just About Every Metric, LPL Outperformed Last Quarter Hot

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Wirehouses and discount brokers struggled to bolster their books last quarter, but LPL -- leader of the independent broker-dealer channel -- grew just about every aspect of its business.


LPL added 106 new advisors and $10.7 billion in AUM to its book last quarter. 


On average, the network's 12,660 reps now run about $700,000 apiece more in client funds than they did three months ago. 


Part of that is due to LPL's ability to successfully recruit slightly bigger advisors, but unlike other brokerage firms we've seen so far this quarter, the main driver here is being attributed to "strong new business development activity and mix shift toward more advisory business."


In other words, unlike the wirehouses, LPL didn't have to buy new clients last quarter, but prospected for them in the old-fashioned way.


Meanwhile, it was migrating commission-based accounts to fee-based advisory compensation models.


To be fair, advisory business still accounts for less than a third of LPL's total AUM and revenue. But at least in terms of revenue, it is growing faster than the commission side.


Revenue per advisor for the quarter came to $70,615, up a bit from last quarter's $69,608. The reps kept 86.3% of production.


The only soft spot: the company is becoming less efficient.


In terms of overall return on assets, LPL squeezed an annualized 1.04% out of its AUM last quarter, versus 1.05% earlier this year. A year ago, its run rate was 1.14%.


CFO Robert Moore resisted the urge to crow about the results, saying only that the team needs to "remain vigilant and humble."


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