LPLA - Earnings call transcript Q4 2021 | LPL Financial Holdings Inc.

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Operator

Good afternoon, and thank you for joining the Fourth Quarter 2021 Earnings Conference Call for LPL Financial Holdings Inc.

On the call today are our President and Chief Executive Officer, Dan Arnold; and Chief Financial Officer, Matt Audette. Dan will offer introductory remarks, and then the call will be open for questions. [Operator Instructions] The call posted its earnings press release and supplementary information on the Investor Relations section of the company's website, investor.lpl.com. Today's call will include forward-looking statements, including statements about LPL Financial's, future financial and operating results, outlook, business strategies and plans as well as other opportunities and potential risks that management foresees. of management's and or that implied unknown actual or reflect subject and may in statements materially results known differ to risks timing such forward-looking forward-looking current expressed beliefs estimates are cause from statements. Such those to or events and uncertainties

other company risk release the Commission. contained more Statements caption Securities disclosures For the in about factors as measures recent to the the risks such listeners information press well Forward-Looking the as set and uncertainties, earnings company's with the and refers forth in under filings Exchange and

During will financial call, discuss measures. certain the non-GAAP the company also

For a With turn the the measures to company's the reconciliation earnings Mr. call release, over that, comparable I'll to be financial Arnold. investor.lpl.com. to GAAP which figures, at refer such of please can non-GAAP found

Dan Arnold

thanks today. Thank everyone you, Jonathan, and our for joining call to

Waddell year of solid to advisers our care of these organic plan. take increase combination and growth XXXX, quarter results. driven In and of from $XXX $X.X time, and journey clients With positioned focused guidance while quarter continued complemented they mission market by care XX% percentage. taking results us quarter sales growth, I'd was new quarter, our annualized billion continued with personalized past to were financial can X% to make quarter across which of approximately translated retention. another progress and business clients. by the & on assets This review we sales, trillion, achieve driven Reed's both Over life advisers acquisition growth, their them a store throughout their continuing provide the our continue same-store same respect Management with billion, our And by and $XX fourth strength new Wealth deliver at help to their net equity year the to of to business our up so on on high ago. like primarily remain a This of strategic of organic our assets to areas, was dream. goals fourth the total reached starting which new or

or Over new up year which In the double $XX recruited full a is assets growth, $XXX million, X% from the ago. billion past organic billion, ago. organic bringing year than fourth assets $XX XX% totaled total net quarter, year, more a year were to our

Our continued market. expanding with growth model recruited appeal and enhancing addressable in of progress our ongoing reflects our assets our the

strong engagement, Looking focused at the same-store continued investor sales, remain and their our differentiating on a serving advisers their marketplace. with of clients in the backdrop solutions

the existing new both through continued model. ongoing As modernization sales. of At delivery operations a experience share a further and to expanding enhanced the with as we service as capabilities that the wallet our result, advisers adviser drive are technology and solid plans, clients time, new same-store and winning same of well combination continued the

fourth As result, the asset in XX% over approximately past year. retention quarter the a and was

brought $X.XX outlook results our a X% to acquisition increase of full EPS prior and business fourth Our which to total quarter intangibles an financial costs, ago. with led $X.XX, year to solid year of from

turn strategic our on now progress Let's we the plans. to made

and and the to their centered we're great extraordinary long-term marketplace, entire a to operators market deliver advisers leader is to business. human-driven, industry the become supporting their the share. reminder, advisers to their best means leadership across path and vision help planning empowering to vision of sustainable us advice life, at And that this and adviser being we advisers our be to well deliver Doing be are across to and of solutions gives capabilities clients. our client efforts To experience, in this As solutions technology-enabled organic growth bring a for the through same entrepreneurial. personalized the adviser expertise, the providing which experiences time, advice to us great

to execute plays, Now turn. our like strategic to in work we on review strategy, with have organized I'd which our X

advisers lower growth. at expanding affiliation In RIA each respect of them models, efficacy by in $X growth remaining of team these and play employee they growing contributions addition to and be and CUNA. enhanced institutions and business quarter development financial institutions $XX new evolution high a strategic we organic of position the new recruiting movement this quarter. of recruited continue the adviser our meeting continued assets Harris affiliation are first traditional our which fourth Ongoing of wealth, Our billion With our win levels. platform with will where approximately a pipeline forward contribute Large and models, addressable expand and leveraging source of the in markets significant to a to in industry and with the our rates source see XXXX year assets. for their winning onboarding approximately increased and our models In also to offering, BMO in planned in custody market. going continued to in strategic to in new breadth markets, increase despite pipelines, involves the recruiting of billion new to while demand traditional our our of M&T to enhancements we of continue our were expand depth fourth the with business our X

our and last led consequently, demand And to XX to this enhancement over the market months of our have and insights pipeline in continued progress the value proposition. build. Our continue

over large accessible this opportunity new and and work, can us another seasoned more growth and for market distinct that as financial model drive time. sustainable affiliation institutions organic experience more a our from see we Given view

efficiency Our second strategic on XXXX, in we capabilities X their developing maintain areas. in and on play our practices. is the our help providing capabilities in that will differentiate drive focused marketplace and key solutions advisers In focus

digital experiences their create business. expanded experience solutions the with end-client that personalization enable to and first self-service is increase for The customized and to advisers enrich

continue to will clients wealth pricing. differentiated management platform provide their enhance with to we advice, advisers our and products help Second,

operating our with their these their workflows more contributes to of advance core We practice. all Third, which of help capabilities work growth, believe adviser will drive to will scalability increase digitized and client clients, operate platform, we and performance enhanced serve advisers productivity efficiently evolving more increased continue to additional to help to retention.

in thing, delights recruiting move next strategic drive that our Let's and helps clients third service adviser retention. turn, to experience creating an and on is industry-leading which and, advisers their focused

for years, they XXXX, access additional for pure chat advisers model voice, advisers. drive we to continue model, over to and service. X As omnichannel a client fine-tune we experience our into and reminder, when will an how have and In an enhanced our including support the giving flexibility model past service efficiency transformed this digital

Now back-office to of this next also operations. our of phase the advance we will our the transformation, which year, and automation streamlining is

Sigma and We core will future, learning service advisers scalability These us so account and and increase robotics for accuracy and and reengineer will and transformation processes machine money organization functions, of our Doing efficient plan our process to to efficiency Six and their trading compliance. this clearing from increase and movement. new including service that leverage and the create to throughout levels, we to optimization clients. frictionless, platform. enhance positions operations the better the operations advisers delight efforts extend our speed our opening, transfers In

the advisers on the independent Our fourth most businesses run successful strategic is play focused in helping market.

help their working grow, key growing suite a the planning focus a of of new solutions, we help do their way in will doubling advisers more helps across and expertise planning financial this effectively identified practices. innovating on fourth entire serving our solutions, advice advisers comprehensive on clients we businesses to that of subscription And play category than components so and are opportunity continued X,XXX more business year-over-year and solution. and demonstrating is efficiently appeal. can client while of to operate portfolio subscribers, increasing solve leverage for approximately the and our need, demand quarter, of business their One scalable services on that this And which with base to this our provide their effectively deliver more they advisers base. to evolving In

that paraplanning, strategy, and their launched goals and clients other them a advisers is investment in help offering area service marketplace. for plans also this an We're including financial objectives. first in establish to positive the in last utilize Our is engagement service achieve turn builds month planning then This which incubating and and and receiving tax service. early solutions, feedback network is high

year, growth Matt. the their And to strategy as innovating growth expanding continued advice summary, on we the and and With we we win clients turn value portfolio and services businesses that, over invest advisers clients fourth our and our planning executing increasing to over focused advisers quarter remain advisers in and drive and, a In and for remain proposition provide driving our As gross run I'll marketplace shareholder the ahead, in to the have turn, to and market. help result, and and, further help profit value. differentiate in differentiated as long-term the we while our for look extraordinary call in focused throughout their to ahead, organic time. on look we

Matt Audette

speak All I'm you, on right. Thank with glad everyone to Dan, and call. today's

progress our fourth review I our XXXX. to highlight results, during like I'd Before quarter

win industry-leading the advisers grew within entered addition. while to over Waddell in our We long-term are with the and entered momentum. financial we've the onboarded successfully driving provide in our at M&T, in our we the level we as the & serve of for and years, we we resulted last By BMO with in to our both and new and the net marketplace. to Looking positive commitment XXXX value. invest and traditional an assets assets provide Reed, strength built our new organic platform continuing organically clients to advisers our in again new the what we the year, support momentum accomplished proud their proposition leveraging highest of framework shareholder for markets investments several value year This all enhancing

our The of new billion $X.X Total driver rate. annualized this key a and which business was let's from to Now fourth totaled trillion, to X% increased results. quarter growth assets increase growth, advisory or of organic QX. turn X% $XX a up brokerage high

was new year by X organic across billion, the translates $XXX This year, driven channels same-store sales rate, X% strength assets growth all from retention. up annualized recruiting, a and of ago. a were For XX% full which net growth: to

new assets $XX XX-month billion, Looking QX, a at billion. total to our which more in brought closely were recruiting, high of $XX recruited

to Moving on our business mix.

We were billion the to continue we see now deliver trends or growth With new $XX at XX% benefit from QX. assets in advisory capabilities assets this growth, differentiated Advisory positive XX% as trend rate. are to our towards annualized total assets net continue of adviser. secular and

QX with financial of our to up results. Strong turn from brought intangibles acquisition combined and Now led to to organic discipline, to year EPS $X.XX, year which our let's full prior a ago. growth, expense costs X% total $X.XX,

growth, profit or high Looking million, at reached gross X% our a line million top sequentially. $XX of up new $XXX

$X and QX, down to of by primarily Looking volumes. at payout were in fees bonus. million up QX, in commission seasonal seasonal XX million, the ratio from from $XXX increase XX.X%, the production QX, components, production was points the In our build primarily net due advisory payout about the basis driven

that year, will Looking anticipate XX.X%. so the payout the ahead bonus of approximately production reminder at each ratio to our a to beginning reset QX, decline we

assets by up an platform. was driven Waddell related being asset-based market growth to This assets and appreciation well to Sponsor to increase on due synergies QX, sequentially. as million $XXX & Reed as in Moving $X revenue. average was our revenue in million on organic

down Turning million, $XX revenue. was million client cash $X QX. to from It

a rate by quarter. end the maturity at As anticipated, driven this fixed of third primarily contract the was

cash Looking billion $XX billion, balances, at overall last client they $X up were quarter. from

from at was fixed fixed in yield, a XXX our we QX, contract. unchanged points added more basis our in new Looking $XXX rate ICA portfolio, closely Within QX, X-year it million QX.

contract. a QX, highlight renew I a to that new maturity, ahead we have like Looking rate to maturity contract were able fixed rate billion. at fixed would to X-year we that of $X into

client these yield decline ICA QX we given points. today, rates our interest cash and expect where and factors a few balances So rates, are basis by to

and quarter apart transparency predominantly to additional services, Next, want this to more to insight revenues. X lines: see statement additional this service highlight hope our and update fee revenue transactions. from I we We and into our fees you adviser- generated to into We financials. an made transaction the allows clearly from transaction provide of separated our recurring income investor-based

of provided Page have changes XX We presentation. Key summary a of these on our Metric

was was million revenue increase IRA $XXX In in sequentially. at service driven primarily it QX, This fee million, the Solutions So looking in fees. up Business and by $X growth revenue. and seasonal continued

up Solutions, subscriptions; while roughly we services from drive to at ago. revenue recruiting, which year closely annual quarter and organic X,XXX also growth last now double same-store with more over These XXX million more is quarter helping a ended the than Business Looking sales generate of $XX and retention. contributing approximately by

based increase sequentially. QX, service to million by the seasonality Solutions, of to we ahead on Looking Business and expect revenue and fee few growth a typical

QX Moving revenue. was million million, higher on It transaction $XX $X due up to to trading. sequentially

As we in X quarter, days we ahead offset note likely to would there so have January. look that in I are would increase fewer activity That an that QX, said, in seen trading trading increase. the

QX. to expect seen So relatively date, we we based on revenue transaction be to with would flat what have

QX, our core starting was year G&A. expenses, full $XXX billion. in bringing $X.XX to million to turn let's Now It G&A core with

this the variable driven of associated our near was organic end the outlook by with growth. expected, As upper expenses strong range our

for and Reed, grew at the Waddell prior core to we impact Looking full X%. year XXXX of by the approximately & G&A

Turning to outlook our XXXX. for

long-term create operating incremental plan leverage. We to continue is Our to invest to growth unchanged. organic drive and strategy

levels the investments history. investments Those increased highest have growth. last to organic of Over are results, including yielding our drive years, in we positive organic our growth few the

$XXX ahead And plan first, same XXXX, these continue to second, would the a business the ahead services. core focused investments give in our you plan with to our full G&A near-term be in X% technology of expect to approach. we QX, our which spend, support addressable support as and the of More look well we to X timing we to including growth, to the areas: capabilities is $XXX to G&A X.X%, and new million. as look Also, note year specifically, investments in to a a our core & growth so core to of range to as to range primary XXXX. Waddell in expanded increase sense of and in we growth similar be rate to will expenses; that I markets Reed we of as would the million scale

We macro course, excited our remain see dynamic to the the growth changes to what of pace based invest. for we But of about are we today, adjust and opportunities environment. will, on in our

organic million, to costs institutions. to promotional sequentially, It financial expense. assistance million driven growth, and up primarily transition specifically, QX $XX large on $X Moving by was support our

assistance, spend Turning primarily million to we of and anticipate financial will QX. QX, have our the expense X institution we increase the conference to promotional low in $XX largest range, driven of year large as by onboarding transition conferences

to middle now least rate middle by expect XXXX, the going of track levels asset be progress & estimate of million integration, respect Based rate be to from move on year. we our million benefit prior EBITDA of and on Reed. work at million. this is was current let's and the our it the integration $XX the $XX run on to Now to remains continued The QX. run up well EBITDA, completed by roughly With in $XX Waddell

share-based $XX was to QX. at flat in QX, expense. Looking compensation million It relatively

QX year, we of tends be highest of the to As given the annual stockholders. our our look timing quarter ahead,

So we will by anticipate million this few expense sequentially. dollars a increase

depreciation million Turning in amortization. $X million QX, and up It sequentially. $XX to was

platform. million $X primarily support sequentially. depreciation Reed to industry-leading & by ahead of core spend enhance by deployment and integration as driven of the technology increase to as This Looking to expect roughly well technology QX, we Waddell amortization to is our the

integration of the the expect Given XXXX. amortization depreciation more we remainder and a the nonrecurring in of for beyond spend, rise QX, nature gradual

management. to on capital Moving

cash X.XXx and corporate QX, Our in balance the remained $XXX million. leverage ratio sheet of at strong

offset deployment, aligned opportunities quarter focused excess shares another business we shareholders. remaining delivered QX generate, M&A dilution. our growth for allocating both closing, returning capital share and remains as investing framework of where in allocated pursuing level In returns evolve. while strong capital anticipate million the to foremost, on our dynamic As capital of similar deploy growth repurchases, buying roughly our with and flexible financial capital and share capital organic QX, results. in organic we we In and a repurchases first to to $XX back and to of and We appropriate capacity

about and to As we serve excited opportunities remain business we investing grow create open forward, long-term our see look that, the to value. questions. the call for we our With continue advisers, shareholder operator, please

Operator

comes Sachs. Goldman Instructions] [Operator And our question the from Alex of Blostein line first from

AlexBlostein

end from Not super new So asset for you the maybe growth. we'll strong year. wrapping organic recruiting Obviously, surprisingly, guys net start up with good perspective. a and a to year

more changing think equity rising dynamics, of year-to-date sort macro obviously with sort curious volatility landscape. equity and down backdrop rate of recruiting market that markets you both impact but Given how the competitive the and broader will

people FAs down are given values? of we because, to to you Are see reluctant are to So being next again, in out growth profitable sort be that into of hoping likely organic of can asset kind little so your pay how the So more? a maybe sort move can year. into competition you more move afford more more that to flesh sharp outlook there likely the plays

Dan Arnold

Thanks Dan. it's the question. Alex, for

around primary structural remarks, create at you've look forward. store And new that relates look, the the we investment first in again, And relative as opportunities, and to sort out the optionality stated our combination marketplace of And got our and we continued the as So of as at really right, and feel think we sort that using think sort organic retention. same-store our process, the in to our move drives and results got think rate-driven a sales, differentiation end store is activity I and that model, of think that you've structural sales, to sort flexibility capability side growth. sales, it always foremost, then I platform I the new and certainly then the of we underwriting day. differentiation in of continues of in

your you where displacement temporarily in have historically out in advisers to trajectory on in the and conditions overlay what aren't because are point, seen have that certainly, trend could i.e., they're overall There year, significant more volatility supporting cases the I the in short to that couple of could the of to may much overall seeing clients, the disrupt the Up that we've conditions last we're some marketplace, you that that think, serving Now to with that market of occur a market as influence market the moving of those run. could in and the early part past. sort certainly aligned this focused in point, is we've played years. opportunity their

think of again, a overall with And built not economics parts far, do marketplace. of marketplace. our our something seen to And we transition no impact certain That's the macro. again, think movement the the that. But influence to outsized is with And we're overall out there's industry. recruiting, incentives. a overall, continue to does far in to influencing so approach reflection change see across there's always in changing necessarily we slower respect macro the I we've in more the And factor move underwriting factored in, some of seeing, forward. in an certainly, we the And should movement return-based economics characteristics concept. don't think, in dramatic I shift as interest the we that subject use financial disruption rates, and/or the that noted greater thus you're I as how suggesting thus if in into bit remarks, for assistance if

any pricing this we that. of haven't add overall to don't marketplace the want the know to shift in you cost out And in if acquisition. anything I so at again, seen for point

MattAudette

Fair set. No. enough. All

Alex Blostein

again, a for Waddell. plus follow-up expand little to million why the Great. synergies, rates? the increase more little of side? asset see plus just market with previous. and what incremental color are maybe what the on there. don't A Great upside maybe for it's we Matt, is levels bit guide whether potential that side So to start or Or revenue you drive depends maybe from to on the you related Can on, $XX could a seeing the sort expense

Matt Audette

Yes, definitely.

this side. the really work I we think towards of that's synergy the middle expense completing the move integration the really on by year, left is as

more So that is we plus as complete expected. the think if than synergies I end work, we getting up

of the I left, So and work where upside would be. kind small part the think a it's of is that's

Operator

Our next comes of Bill Katz line from from question the Citigroup.

Bill Katz

super is All helpful. the added color and disclosure

So Dan, the momentum seems It you. commentary sort from across like maybe a pipeline. your the is that for accelerating of question

largest of the Was can more one after, marketplace in that been the growth go $XXX you've in you group accelerating? But able your So organic not what's to resonating of talk that the that financial billion? the sort that also size the clarification. group as, obviously, just institution is historically about broadly,

Dan Arnold

Bill. Thanks,

years if about, So results. going that got the continued sales and growth XX% store investing that X% that of that we a we out in in a way about of And stayed differentiate capabilities X% advisers at run I before. we of point and nice last organic overall for new Obviously, influence the perhaps our what to that, in do question, question think continue how and range we framework set. talked to opportunity part specifically and couple part any those continued in growth think that. as very to forward. XXXX in we've talked intentional drives you've the as and traditional continues to are as you is probably conditions or if the second of the yes. XXXX, over that, growth is we've it we growth to retention deliver to And Bill, that strategy, growth time, at range to as about I about as keep drive your look our Look, in help that long we so potential markets, think key win those markets, investing growing forward, of on in is the bookends marketplace go a last talked do believe about think, those look growth get focused our we've those pretty in at and you appeal macro And key a

So that #X. focus as think about

I markets. said see new and the accelerating there. continued think building it, And second is our growth we expanding you momentum in

to Some marketplace. new of that was the a go-to-market. We're

that refine iterate to they seeing new make our flexibility value ultimately models platform to opportunities. we're And they're potentially flexibility continue thinking up open as We marketplace, frankly, who in staying positioned that the those sure it's well of were that be on platform even create for helping model, they transition have segments existing should and appealing and another, because one versatility those about that and can and to the and now. our advisers have and we different

And do a there, see to an the example. strategic in continued so off here good gotten QX wealth start we've we solution to as momentum and relative

being market we to for learn, continued new and couple So had, understand, helped contribution institutions, this us segment sustainable was wins the bring sort I a as come. of that of the and of of growing for a for solution we've I I marketplace. looked that avenue growth markets. of us. resonated, opportunity. referring somewhat to actually different large able And marketplace segment think new solution place contribution see refine more contexted to and as it new financial wasn't was a a to ultimately a it's And the think institutions, that through demonstrated had for that the that always marketplace being what from don't we a for those financial It at

the of for invest and they've advice, last years markets, that's new helping from in institution a see our job that's couple that to the differentiate net their And markets, if new large financial expand solve grow. last great tough over one opportunity certainly is existing about generate to assets So of clients finally, we to advisers way helpful. advice, continue that. the And help problems the think then them and to their done

this drivers XX%. we CUNA that think we're onboarding to of year, And the half is first sort range think the I in large the believe all are of underneath financial as to a primary X% if upper XXXX, growth. of of knowing try institution in that about that you those So to that we the in half apply year,

color. So some hopefully, that gives helpful you

Bill Katz

does. And Dan. follow-up a That just Matt for maybe, or

devil's just moment. advocate for a So

X, being $X.XX If your get is all of rate we the rate equal, hopefully, hikes Page a and rates, would on if X a we your about just incremental power guidance year, of XX guidance get share based this will suggest correct, supplement. and earnings

So recruitment deploying cash? about growth buyback organic M&A to could you at assume margins how your here, your that choices. maybe if remains solid, the do think bookend pipeline is And versus you that incremental that you your speak the for

Matt Audette

Bill. Yes. I'll that take Sure, one.

think the in going driver plans our the to range, I the the well X.X% primary think at look specifically G&A think you I really of level that's where organic and I when year, for I think, you to those is see core land, X% in growth. the

Dan this rates, we I there. just set see that and nice we range gave some opportunity of that that don't you see interest driving think year. outcomes really, But

rate that those cycle, those look margin. and a in line bottom and would benefits the typically fall you when think to early increases improve I

and like we beyond will capabilities It that past approach apply we few as same excess the foremost, right? to things the further the advisers, could to more their our us. like I And a run enhancing first it's back, expanding today. is framework those guide taken examples. really capital that to as be at new growth, opportunities in we've for services have funds service And think that allocation advisers So that business your drive experience, things looking look to organic think and help I question framework, that the to

through as you more, shareholders, capital the acquisitions I to are front, the of also compelling, lastly, done I as then a accelerate key. opportunities compelling can on the small capital. it, which as growth delivery there. M&A. a call it, categories That's see And We've or is capabilities place the few X, call to question acquisitions classic where which of to then And obviously think returning there's deploy way long M&A a think your standard returns there. we

So your that through year point, if at framework remain apply adjust funds I we'll see I we time. and think this makes more what flexible we're that going those as go and time needed. our to think And expected sense and rate to increases at to occurring, with

Operator

of line next question from Our from comes Wolfe Research. the Chubak Steven

Steven Chubak

from fixed was So sheet. your on rate static to X question a rate optionality. with disclosure, gross on it based And balance increase million Matt, $XXX start in wanted a hoping sensitivity the profit money to market since the elevated hikes, is wondering aren't particular, levels, upside And was in I maybe at very with of of that how figure. balances running sources I rate unpack in some that captured XX%? thinking the of agreements, we range about path floating a both back back XX% timing into be back as that be hiking. rate about we of the Fed target ICA to sooner capacity thinking fixed to move And fund bit for we and the expecting, to balances should with begins bank also and were how signs to than should money glide both demands coming getting

Matt Audette

Yes.

Steven. question, great So

folks it money think see you the when rate for into in back even overflow, hard additional overall to be $XX million If market those go that in there. you balances. just those think my a an font I and that think hike but the upside at we I for see, age at the footnote would money balances size are ICA, look balances put market, I

[overall] gives demand come a as benefit. market the allowances sense the sense if to does move back you just a it of gives you and those So

the sit hint I'd do I your I where the it's and hasn't market -- it think to think and to say, today, that in I much. ability improved a the we where think stands, well if that little. therefore, really started market changed at question, you anything,

the system, are provider of when only balance sheet. to to a I think a you tapering, all a signs, I to starting would biggest factor raising about rates liquidity lenders. the the balance that, spending positive that big about lot talking the look their the naturally Fed, drive that then some sheet, their that not lows all, things the if starting then grow interest the off Consumer occurs, right, place and and we're them. right? from of removes really to talking of actually increase. at in see those think, but balances at Loan we're And And things shrinking continuing be

we're then So pre-pandemic. were And seeing you since talked $X.X QX, in able on We basis year. I right? contract fixed had in a pre-COVID feels Fed really able points, like rate, but the the the new add on the when last remarks. about X-year this in the contract things we upcoming to much you that's think that billion rate funds rate maturity prepared haven't in were side, quarter, that the new are blowing some renew think, winds or think to the moved able flat we we're plus direction, right to it to at yet. about And I things side, a I negative the quarter. I XXX into zone, highlight X that more are pricing Like would the floating haven't where in do

I challenging. the But target good out, pulling to think And think is through of a of remains rate lot now. to portfolio, question emphasize that those think, us to I it play We're market, how getting the I things fit the into there's our signs I that just I'd last does that improve. part would remains of sitting think your XX% So target. if the that XX% range at fixed XX%

I we're interest stay of much probably rates closer like and curve, more the there we'd we if just to factor is steep I And itself, periods limiting demand shorter now, we're just want right as are demand XX%. And want rates in which -- now, commented think to in on higher a is with that I closer XX%. there, X. the is low if to think be which to on, why

helps, I that a think I So hopefully, Steven. got I X-parter, it -- was and think

I think I got them all.

Steven Chubak

a with but related But it a still follow-up, to cash Matt. actually be just related, X-parter, will was It I'm on push balance rest growth expectations. assured, going

in as noted Fed to the spoken expect close floor that's my you before signs assets, cash started the some relatively questions. coming a of as to earlier would that You're where typically or cycle has tightening we sorting you previously, cash to see multipart response entering percentage even or the with X% of and question to had

generating as cash, begins all balances, this Fed to need to of growth tighten to equal, liquidity, view year? that organic range single-digit the the being level we the else on and advisers the mid- just as which, given that least high still X% minimum at would you're growth imply sustained floor even maintain cash So in in strong for some should a reasonable

Matt Audette

think right, a at think a we cash, is the trading that I operational and think give anything I Yes, change weighting advice, of that look answer dynamics I investment, yes. how short right, rebalancing different don't cash, mean, the is advisers rebalancing which cause I we've us dynamics seen would in have the view. of this when to for or

to floor. think about think good So I is a X% a way

you that think a I problem a But of. mean think about a Now percent is think X.X good think range, when the as still is doesn't and I X% to possibility. it

Operator

Our of line Cyprys Stanley. next comes from the Morgan Michael from question

Michael Cyprys

are wanted possibility to fund happen? floating? likelihood, timing Just that ICA balances the little those you last I come balances. overflow those an a rates the guess guess, the bit a ICA think, there what rate to and for overflow out? follow back prospects, do just needs really just how rising rising environment, question, to point up to on overflow What the the for and do I impact the money in on play into And

Matt Audette

sure. Yes,

So Michael, it about. were talking was we just what

that spending banks big institutions the return, it that's right? I that's financial when that cash market. so balances you those our cause to really that down into to, And balance are the are and system, up. the off loan with. we the onto at that sheet those demand that I what And on things Fed look excess think factor, large suite you to ultimately, injected and that cash the going would that mechanics -- up. will remove balance That's to the then click sheets consumer the things place it's going demand So makes its and placing the then think returning the be say the we suite way

really as It's simple as connected. all that. it's So

goes As when demand or an capacity ICA, returns, it back. of the overflow mechanics there's in

Michael Cyprys

Great. the front. on just And expense a then follow-up question

How the able latter was that had conferences? as half guys here whether promotional out trending, be see go a in the just You that unpack flagged first but pieces of I we quarter to this you elevated trending? you come do hoping that of what more into expense it's additional of given How the you seasonality, year. some might see T&E,

Matt Audette

conferences of more environment. if entirely second to the going with you a our look When promotional the maybe sure. Yes, and year, up QX be highlight XXXX, just is thing a look recall, at I would expense, QX at that half we And to of schedule. you QX the had really And in conference when in the you QX. typical year our showing COVID the And the hit schedule key again this function given numbers. it's expense conference it's primarily

that just institutions financial support we've related see, CUNA. probably growth, as that right? are comes about the the then that large and The you as a support main, that's So to bit M&T here, and can we maybe, all amortization and well cost connected the typical to drivers TA the the to BMO as from thing intuitively talked remaining begin

to happens. year, and up think really the about the year, typically amortization similar and QX, when recruiting that growth, just year, that about the it's organic you associated The giving driver biggest and just we deeper drivers, get as think right, right? context into full of we that So the the full on when maybe TA pace the is shows

Those quite changed been highlighted for Dan As earlier, stable. really the have that. rates haven't

level going there really have. think key I be the that the we of is So recruiting to driver

On we're conference full the increase 'XX. we'll those year right? 'XX, And around onboarding Similar have $XX CUNA. to associated to with then back in I'd right, events, the million to in for return 'XX full the CUNA, lastly, year our that bring would really so front year likely BMO estimate the conference levels. M&T that for in-person for year, for planning to expenses a spend the and pre-COVID versus expenses 'XX

highlight. So biggest those are really drivers the X I'd

Operator

question line Voigt comes from KBW. Kyle next from the Our of

Kyle Voigt

Maybe balances, you the build first, question in cash saw. just meaningful the December follow-up cash with just a that on

Just whether you're January balances in information wondering have if those those kind flow market. into cash or share been of could seeing back on sticky you any far thus the

Matt Audette

in the to seen this year. and build start the quarter and cash go You months you the right? first year, normal with few this we've actually the each seen build. the But back the all year see balances happen, that those a of we've see get typically would January, market We balances continue Yes. in into to fourth of in volatility

December, that in. come expect a you'd the market. I and billion that planning see go that I lot get $X tax the to in your we I back month of January. positioning, whatever a is, normal another think of start about and cash up when tax they're So interest would It's into think falls lot things would though, volatility back normal, see for to of definition dividends emphasize, of to

for to very is into months. natural the coming that the back get it deployed in So market

Kyle Voigt

second D&A just Okay. the helpful. guidance. is question on And That's then my

quarter the I from first increase on and think million a some commentary gave you gradual $X up being there.

the be that you trying implies of business, think level into the a that side? guess, question maybe likely of for bit and just you medium a are the CapEx the here, I a something And I detail a get on to XX% versus helpful. over sense look go little would over the of the drivers increases the increase comfortable, CapEx just if more you XXXX. if of on I'm with spend could side more out term, it's

Matt Audette

Yes. definitely. Yes,

for that we increasing that to think when been at technology and XXXX. we've while, same you year X% is a increase, driving which in I the look our investments there, per core portfolio plan around do

we going QX. in technology you're & increasing pickup the that integrating that the lead big had quarter Reed, Waddell what area depreciation to to really onboarding think seeing, is I in associated and a big that the and deployment fourth in then with is

materials is We sense the really estimated costs we those make not the can intuitive multiple, think increase that into see in with I the which connected factor you may So X.Xx. acquisition. the overall

growing So think it's that as X%, portfolio the think runway. at the -- core ongoing I about really as

Operator

O'Hara the of from Our Gerry next line Jefferies. from question comes

Gerry O'Hara

business if come me incremental XXX Just one onto evening. as can really but you subscriptions new And it if just or and this looks of part what to the you growth for investment Business Solutions -- kind the little it perhaps give of relates think, or And these you then be color strong number that's I of if of side. the of elsewhere? us into like what resonating together the relates of that as Any apologies G&A kind also, see or shows to help missed would context, as spend relates what core solutions Clearly, can it, about context momentum to it what's maybe I some tie helpful. it us up a sort XXXX? kind

Dan Arnold

Matt, A. part How take part B. about I take

cash only to to just great them we but businesses. private an help do be there entrepreneurial, respect a this that you flow And a that support, thanks running of sort amount local of So And business. context, if anything, of a for all smaller, significant of bit more as to hypothesis with trying midsized the advisers, help question. we bookkeeping analysis advisers, spend remember, the run level how around of things or advisers tech support, look, Solutions, about was are opportunity originally would think that was in a some marketing to knew you’ll Business help accounting to not

was that original hypothesis. so our And

and those And we our more structurally second-generation different give fundamentally our And them product that and CFO. along full in to our services those price with needs though, CFO solution, And and accessible what associated a resonate was support the make resonated. landscape if so types require our we've way, there's solve that more that across more marketing that as with problems don't those sort and that and I and learn to of to been points they expand discrete solution marketing through offering, of able will, also come and continue the learned roles CFO admin products, more up solution, and gotten we've have can the think you we've serve them and advisers.

when so around opportunity overall will I out would and Services look you innovate think -- call to room And a Business what for the advisers. significant there's we continue

of I And so the been in think, in solutions, initial help on up new as we plan. new came for for, those, same solve again, more think products with that's with fundamental of the and advisers we ways learn at things where really more types those are not about multiple working place. time, only are to I And offering, but succession generations that interesting, and from planning and trying their around assurance innovating we've

and in that where obstacles grow expertise business solutions borne were we those M&A business. and typically those going a an execute them with come some we around adviser that make [obstacles] could buying to and how planning leverage our my So And possible. do, realized was of help is don't to or and out think and we that through selling about succession

that think base. in I around areas been solving drive So do specifically in succession subscription again valuable of and help grow to innovation have how planning to about

forward, we've category great opportunity a helping of we new also I go think unlocked as we what be business them where on owners. is focus will

and [indiscernible] the to So go that. strategy entire and my need plans “hey, financial may of associated them opportunity client this this where build as strategy position they of leverage do want to share, hard with do.” financial I that's unlocked base investment concept I them time-consuming for look, to across to consulting broader we've them Now provide a the to that hence, do some than planning base.

the this options so unlocked them more the and new and for has of makes just comprehensive them other And this. expand differentiated this broaden us help hence category marketplace in which appealing helping from further advice, to full and out

we have we initial some And that helped hope as to set and get to So of the that respect forward with business opportunity us helps. where are, I degree, some products that's solutions. move

Matt Audette

included cost is included I the are the costs second for front, core G&A on Gerry, that the in question part XXXX. in your that of guidance G&A, on our mean, the headline core

range X.X% our scale, and cost the Dan new to Solutions, specifically X% as include described. So just Business of would services

Gerry O'Hara

of I maybe out with a one from touched And compare rate down, on this other I a sort page, I you've cash to maybe I guess, it's had the that point. went already of little? if rate of hikes expected questions, it Okay. benefit X kind went way. But can go some you incremental interest perhaps actually, a the amount. I in prior the apologize. have flesh just the like modest of, follow-up, just it balances so quarter-over-quarter, And next up, small would small But perhaps, it looks sensitivity the somewhat but granted

Matt Audette

Yes, it yes. think I I changed little mean, bit. a

growth the saw overflow markets in a and slight in in you is key the decline think those I money actually ICA. balances

mix, So while actually that of ICA, those kind couple based just and when quarter. and are you in those shows look a the on bar it the that if back of center go charts overflows at market the benefit sensitivities money that with we went of front went in footnote down bit, a up little So at and where different right? are a but into we it's those or the end calculate up, associated if places,

Operator

UBS. Brennan Our of comes next question from the Hawken from line

Brennan Hawken

impressive. really have wins SWS been

the at You this got over Board point. XX on

onboarded? that adjustments this are on the been more to which, And in what's you've feedback ways compelling? there the in offering offering based you've order make or from far, it that you're built making So out any feedback, tweaking even advisers as

Dan Arnold

we to yes, creating use of Thanks insights, and think the of which in I have encouraged the workflows feedback and working do went them get appealing. banking by solution to been to I think more fully being that And Continuing obviously learn for that learnings inside us. gotten opportunities think when begin probably some to begin are that we've research on feedback offering people to the -- that you we've we've marketplace. first some we solution, all good a good And the and we But was as market and in the question. we probably offering. solution, with our this with more solid makes additional efficiency help integrate practices, digital for solutions some that another done

of there solutions those. working refine high source -- of net on the help that been worth think have they've a I we're some us to feedback our in development good also been

what those But about solution XX% in to that had we've maybe the improvements you categories they the XX%, from think independent solid good, hoped, the delivering to some I and So transition NPS independent and enhance and where work scores think an reflect we're of practice foundation, are getting to some about to to we're ongoing if core feedback the offering, a successful support, help operate continue group, is think would made a and model. to this it both the business. getting which on

where about apply good and feel are we and So it we that enhanced to feedback take continue to offering.

Brennan Hawken

some from to quarter, this when would -- so you the you to conference then understanding pickup be into the that promotional in just on makes within conference guys my in look XQ you follow-up, promotional would that expense. Matt, so -- -- That it All And the quarter, right. low it's XXs a sense. And the next the think had we a fourth that I a spoke had at be to like-for-like. prior expect degree, But we embedded answer. the one might

the there maybe in was of smaller? be helpful. conferences maybe just delta quarter So is $XX really million in onboarding? part Or is bit the understanding embedded becoming of Just it some the and factors, little the purely a in-person the CUNA the step-up of other that TA a increase would complexion quarter-over-quarter fourth the and larger a

Matt Audette

And question. definitely. you Yes, the ended where it's just

So conferences of largest our QX. we've got -- in large -- a combination of X X it's

in QX expectations. You're correct, more is but have there conferences an well, in-person of as large you now

and all You items increase that then bit have the overall of described. you a conferences little in growth

it's little So both. bit of a

Operator

Our line Young comes the next of Michael from Securities. question from Truist

Michael Young

double to the Business expect would any double? get another And why Is kind of that. Or the up continue there we follow on thoughts of X,XXX again. than there? mean be additions with or doubling to accelerating to I wanted reason of to of up Solutions even business pace good the are just we shouldn't to especially new portion kind year any that product the along subscriptions, you growth, of helpful. more see I

Dan Arnold

Yes.

subscription growth. And then describe again, feels But we And sort products. growth you've if a the over about base I year. doubling that trajectory that the of it refine those we should more seen like momentum the next to approach. And we're investments we consistent to that try I will will. you the last fill create think better existing as make and of think our you see to best way. if we've at products think contribute gaps to in, incremental out, year. along version on certainly we've refined the over these do similar a or think that With new We've about the bigger products. offering we think obviously to opportunity ongoing effect, become I the now to got way how certainly continue the that coming pivot requires But

Michael Young

M&T the sorry, here. you side Okay. institution And on financial this the CUNA apologize I for of just gears got year. a BMO, But business, as follow-up, switching last year,

standpoint, with you following size I from And splashes to given ago made soon more that partnerships kind a you mean, would you've to regarding prepared recently year of that additional announce are of actually partnerships CUNA? capacity the year? execute conversations And how there? this the Just be you market would today able than all maybe deals, the having in a be

Dan Arnold

in serving a possibilities larger of supporting order, go reverse categories. the So or we different if of in institutions, of having set financial larger around institutions are sort we dialogue also more

these, So be got other but development I and and that not more sales typical that. diligent respect about of think we've they're longer to and those that execute thoughtful around thoughtful be got With around sure thinking because dialogue the to making pacing our also complex them. creates well opportunities. winning to about more we and deals, These just are more you've business funnel than efforts your behind And the cycles planning activity.

out perfect institutions a and work execute also so be to with you other well. them think those and with I giving that opportunity our to the worked then to on without ability through have execute factor line, side plan so through and match thoughtful time we we in doing and that. demand that It's these And think

partner if collaborate with And got so will, them. execution up they own also you that and have we've their to limitations,

deal time execute their our with have specific some that way in a to for I we'll come, around in you when giving factor of that those going may frame some well. without active think so broader and ability ability and we execute, And dialogue to then a doing next makes set time on prospects sense

Operator

like hand This I'd to the program Arnold any for back Dan you. conclude Thank does session further to today's of question-and-answer the program. remarks.

Dan Arnold

everyone for you evening. we thank this the taking join look to I Yes. just speaking good afternoon, forward time want a to us to with time. and again next Have

Operator

program. and conclude gentlemen, This ladies participation you, conference. does in today's your the Thank for

disconnect. day. now You Good may

LPL Financial (LPLA) 4 Feb 222021 Q4 Earnings call transcript