LPLA - Earnings call transcript Q1 2022 | LPL Financial Holdings Inc.

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Operator

Good afternoon and thank you for joining the First Quarter 2022 Earnings Conference Call for LPL Financial Holdings Inc.

Joining the call today are our President and Chief Executive Officer, Dan Arnold; and Chief Financial Officer, Matt Audette. Dan and Matt will offer introductory remarks, and then the call will be opened for questions. The company would appreciate if analyst would limit themselves to one question and one follow up each. The company has posted its earnings press release and supplementary information on the Investor Relations section of the company's website, investor.lpl.com. and forward-looking operating statements and results, well other include future LPA plans will we as and that financial outlook, opportunities call statements, about including financials, as management Today's foresees. risks potential business strategies those or such timing reflect known subject differ of risks uncertainties events estimates unknown forward-looking actual cause from and that are to Such forward-looking may current expressed results beliefs in statements and management's statements. or to implied and or materially the

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

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

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

Dan Arnold

Thank mission, today. our We their take you, with of joining our our on XXXX focus to call thanks care a continued care so Howard, they entered of clients. advisers can for taking everyone and

Guided to the work Conditions to importance progressed highlights is We businesses. volatility. business results, both on quarter advisers to of we guidance provide areas, our like market. when LPL's was of quarter lower than day. to with the the In most, employees. continuing They make our continued of first volatility offset solid starting decreased growth need as we these uncertainty helping equity the market to to With them I'd increased. It by strategic of work and organic of take Northstar, worked our perform to financial reinforced through also deliver As first provide personalized business growth, to total geopolitical times millions these trillion American the the pivotal respect of another in this on like despite progress mission. uncertainty. organic every our it more by continued assets care review financial shines of market light and quarter, they value plan. to by the clients while together solid these, $X.XX quarter, advisers well their to navigate

assets driven an First the store to by growth, billion, sales, net past retention. quarter sales adviser to annualized new rate growth and were X% organic solid in translated new XX $XX results same-store These which contributed XX% months.

high onboarding billion model continued at the financial business and the in Looking institutions, large $XX.X were results to was the of feel our of of enhancement prior QX, year. a first assets, they development. quarter by recruited which driven of were the new for These efficacy our the

our continue service new technology first in solutions we marketplace. in ongoing they retention, functions. delivery modernization as their continued experience focus at remained of the enhanced on the the sales, the of solid Looking as same-store the and further as and adviser With to through clients capabilities serving to our advisers quarter operations well differentiating and their respect

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

of first with prior acquisition Our a outcomes EPS to results financial XX% led intangibles an of solid ago. business $X.XX costs, quarter and year increase to from

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

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

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

play advisers expand while strategic their first also in Our models to new are and involves by institutions traditional our evolution they market. where the markets, leveraging winning businesses affiliation of meeting in addressable our

in three breadth adviser which rates a quarter, demand high our to significant in to we and Our the strategic institutions assets and for increased QX. organic the with at source and financial quarterly addition recruiting traditional each assets. continue increase lower markets XXXX these offering M&P. was was new billion models our wealth, our forward. in this these RIA large for in total the continued the models, to recruited growing depth a recruiting and enhanced continue nearly win with In BMO we going increased movement expanding expand of And growth diversification $X approximately our levels. see The and QX, of source of pipeline, growth in and new be our recruiting. of contributions the position a In them billion pipeline to market Harris of reflects we in and new affiliation models, respect remaining $X industry of despite With employee to

$X advisory within and includes advisers brokerage will was year, brokerage assets. For which later track who across to People's assets. serving unions, XXXX, M&T of XX located billion and and on XXX almost advisory this advisers United quarter. join ready this by and And we are approximately of $XX Bank, serve we their credit Also billion to is onboard XXX approximately CUNA onboard prepared acquired

make make appealing future institutions, it new easier contribute in and that to will more turn, will innovations use to to we growth. and, these ultimately our LPL transition even For offering help

at look grows. the model institutions, pipeline large demand continue we opportunity for see for our As ahead market our we as build to

practices. that our capabilities help efficiency and providing on advisors differentiate focused in marketplace the is play strategic second in Our their drive

XXXX secular which the advisory, management continuing our advisory part are continues enrich wealth industry. our in in to that our including towards we allignment As platforms and enhancement business across trend the focus, with of in solutions, of the

expanded efficient centrally easier example, For managed our the separately accounts. platforms. of first makes higher it growth for integrating more can managed utilization and quarter, we advisors to platforms by options accounts the investment so separately drive and available in further managed centrally Doing which in leverage managed

advisory value this a advisors. both enhancement existing prospective As and our result, platforms’ increases to

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

access into have which Model service and and advisors past Client model thus two voice, Care transformed service. giving our flexibility an we omni-channel, As a reminder, how the over includes chat, when support years for they digital

fine tune to to continue experience drive this efficiency an additional enhanced and for our We model advisors.

on specifically for speed, Now, greater our order in digital and accuracy focused of and flexibility, enriching the are support to for next we expanding our transformation phase provide advisors. our

an digital end-to-end clearing movement, which example, money account As in including developing account majority service transfers and experiences are we center collectively opening, functions of the activity. core our drive

going delight scalability believe functions, and core enhance efficiency our forward. by platform that levels, service Now can our and the advisors, we we increase clearing of streamlining

to the to in fourth help marketplace run their Our successful on businesses most services is comprehensive strategic a clients. independent and portfolio play advisors the advice focused developing provide

Business businesses advisors effectively this of of key their play Services their our serving operate the on can growing they portfolio which helps more clients their is One so and practices. components focus

continued doubled increasing year-over-year, base demand the subscription X,XXX demonstrating Our which to grow and at appeal. quarter nearly ending more than

solutions on enhanced as task-management existing this with as work we leveraging Bookkeeping offering, learnings provides pilot which solutions, next-generation advisors our is Examples as our well. currently in which our Solutions of a insights and Now for we as Admin catalyst include well new new tech-enabled system. are as solution, a

also and advisors we the to on We help planning to financial quarter opportunity provide last continue solutions. advice comprehensive progress introduced that

solid first in the Paraplanning, momentum has generated marketplace. Our offering, initial

Our had give client helps the we financial subscribers. QX, them greater and their to advisors scalable XX platform and January, deliver in launched access of this expertise plans end approach deepen We and relationships. is approximately that efficiently more by to effectively offering a

Now, at to high worth expand we tax planning work portfolio and continue the to including same time net the solutions.

ahead, focused and and summary, value us in growth invest leadership. their to and in profit the additional organic In advisors portfolio, look continued first market quarter, in the services we proposition gross on turn innovating drive and remain time. positions we over growth which to driving our expanding for while increasing As we clients our

further the advisors With ahead, focused to our As as in marketplace drive turn a win executing to shareholder value. Matt. we result differentiate help we over look call the that, and our on I’ll long-term strategy remain and

Matt Audette

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

delivering shareholder XXXX, into serving focused our growing advisors, our and move we on we As business remain value.

assets backdrop market delivered volatile, net another and we growth. of the solid While earnings quarter was new

we United Bank. are large to People’s financial onboard institutions preparing and this two with addition, In CUNA year

we as win excited So differentiate our our ahead, to in advisors and we and the to help by the marketplace, business. opportunities look we continue be grow have

advisory turn new from lower as assets were quarter Total business Total $XX by or Now down assets markets. first growth equity billion and than was were QX, results. rate. growth trillion, X% brokerage let’s organic net X% our $X.X to continued more a annualized offset

our quarter $XX institutions, and to closely QX of new XX-month high were was at financial in prior recruiting, a more which to year first $XX large the total assets Looking brought billion. recruited billion, for the

see to total to were in capabilities XX% our new continued of growth positive With we assets advisory. mix, we new growth, billion, deliver high and from this business differentiated the assets our benefit QX. rate. trend trends an towards $XX continue to on net or reached secular XX% a annualized as Moving of assets, Advisory advisory

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

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

and million fees the XXX commission from were the $XXX of higher components, up fees seasonally from by basis In to of QX primarily points the production payout about seasonal was reset QX, at QX, expenses. beginning the Looking bonus driven million, year. production at XX.X%, advisory and the our down $XX net bonus advisory driven rate lower largely payout

following Looking that rate the anticipate range, they when to the [indiscernible], join, the given typical our production I increase expect mainly the driven also will expect seasonal note see QX, ahead QX. increase XX% but in rate build the in we payout of payout the to timing of we onboarding by primarily to to increase would we points. low

quarter revenue $X asset by was sponsor the on in Moving to down QX, revenue, as during average driven lower $XXX sequentially based decreased assets million points. equity million

was than more at offset from which rate client expected, was up primarily to hike, rate driven overall revenue, by pricing, QX. This million million last from Within portfolio as $XX renewed fixed Turning looking it billion $X cash the balances. billion $X a March contract our year four $X quarter. There $XX rate client QX, were new we maturity billion up fixed contract. expected in cash ICA a into

in addition balances. rate were to billion add which floating capacity, we drove March, ICA a in able roughly increase In X

points point from more basis was Looking our QX, QX. yield, closely it X XXX in at ICA up basis

reminder, our Fed As to a are primarily funds. ICA balances indexed

March So quarter. weeks the from benefited the yield last hike the the two of rate ICA for

changes As any interest in on to think floating QX rate our an we yields increase expect we about balances. our rates, ICA would and prior yield in

couple fixed whole the benefit our is of the yield effect in QX rate renewal hike, ICA points. March to our net while on a expect see we for The portfolio basis adjust of will QX. we increase yields As by the

fee and service fees. to services by million, million in was $X our was increase up primarily in turn driven group IRA growth let's This which and seasonal in the continued $XXX revenue, sequentially. QX Now revenue

planning XXX at last and and closely quarter the and ended roughly we a than our ago. year which which includes from advice group, services quarter X,XXX more up business about subscriptions, with Looking more double is services, services

revenue roughly to XX annual while by also same-store contributing Our services organic growth retention. recruiting now generates helping group of drive sales and million

by conferencing. Looking declines and fee expect QX, couple ahead decrease in IRA to and we million revenue seasonal to driven service sequentially, by a

volatility. trading volume to revenue, it transaction million due equity $X market to sequentially million, from on increased $XX Moving was up QX

around As volumes back would of have QX elevated from loans, QX. pulled look ahead on $X April we run rate in revenue which to million decline result a a in in basis QX, transaction

Now to $XXX starting with QX. SG&A, was core in expenses let’s it million turn

of note on invest the continuing now to this planning plan would disciplined to half to we support million while additional XXXX up ahead, also institution. $X drive peoples join we expenses anticipate of I Looking to to growth. that this with in core in new G&A financial year, large second to stay

transition by year $XX was million, QX primarily large and assistance, conference had sequentially, expense the two million our as Moving conferences up of of promotional in QX. on $X largest spend, financial to driven onboarding institution we

by million promotional sequentially. we will Looking a increase ahead to expense expect QX, couple

will we lower As costs anticipate and largely financial assistance offset by transition large onboarding from institution increased expense. conference

to move run by the is With on be to respect rate the roughly Waddell least integration of rate QX. the let's track Now million end now end of is to $XX the EBITDA run And be $XX Reed, at substantially the in & QX. million it to expect EBITDA, quarter. second by benefit we complete

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

to to million we sequentially. increase QX, ahead few amortization by Looking a depreciation expect and

Moving million. leverage and X.XX sheet ratio the at balance cash QX capital on with to remains our management, $XXX in of strong times corporate

Investing M&A organic both back capital shares. generated. framework capital deployment, pursuing to shareholders. on share and focused growth were organic million QX, of our excess our we returning and we allocated for appropriate capital In buying allocating As aligned returns first growth to repurchases foremost, capital and remains XX in with

with ahead will onboarding be we focused the remain transition in organic look deployed paid QX, I priorities. we we that growth of for the capital As on to in an during [indiscernible] capital increase quarter. will assistance expect would related note our allocation

at We purchases anticipate a level also QX. likely continuing we as did in share similar

to As would market rates second have and if of continue apply. ahead deploy. capital to to interest as the increase look expectations additional we week, would We half

with pursuing shareholders. first It were returning for on and capital unchanged. framework focus and deploying Our excess foremost, organic is capital appropriate would growth M&A

course and flexible We our dynamic will, capital as opportunities deploy of to and capacity all. remain of

I to We providing our next for City. point, day we've details. to final and investor November look XX more a share As want New that scheduled analyst Wednesday, York forward in

As another to financial we event. business get closing, quarter we of results. closer the strong delivered and In

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

Operator

first Our Sachs. line from Instructions] Goldman comes from question the or Alex comment [Operator Blostein of

Your line is open.

Alex Blostein

the Maybe here, demand with question. of the Hey, we'll the variable bank good for to everybody. a things. great up Thanks incremental bit dynamics, start obviously side afternoon, see on pick ICA

the are into still quarters. demand feel cycle, through of because the couple ability able what you of guys cash in wasn’t there like the As about market of thinking you form we back to sort the get significant to rise funds when money start cash have especially money overflow, to and think amount yields kind really their bank of is of market sitting transfer higher fund guess for we’ll last I them balances. ICA, already than ICA be clients and would How

Dan Arnold

on you note, balance Fed important put variable consumer place. lendings numbers started there, third-party I pickup spending fixed think point at banks, right, dynamics really opposed will flat maybe in really starting and cycle, really Those think hit where up, time function in in seeking the think over as And as funds with At But fixed like pickup, side. lead few cash we’re out. rates Fed to money of just to sure on the emphasize I’m last I we picking I hit on demand would haven’t put I’ll rates those think or behavior. I add and of Alex, likely were overflow increase up. right? point place I to you quarter rates, one to imbalances the sweep to new Only I first early is see And are the the things this to Yes. were that we’re even variable further You’ve on when so would sheet together And really kind relevant balance I you contracts. asked those are from that think exact come rate tightening saw billion highlighted yet. competitive able able market on your those seen just the demand the demand. just overall $X in where curve put right? the picking point we you’re shrink far all the just to emphasize quarters, a that the

today, demand said. we’re have about more I So that I here been optimistic up while continuing reasons in think I a than just sitting to the for we’ve we – that pick think

illustration a thing to that’s the that a metrics a our point largely one a cash the page as cash nature in the I again available not risk down get I really rising you cash driven, AUM right? the It they’re I sweep driven. that think I we in sentiment is an XX, zone the percent we think market example see it it, I that it XXXX think is the have. right? but key customer And deployed and in your call of in for of in when then our zone or added percent balances volatility when nice the period for really the cash fully or really gives there’s you the are to start you just behavior. money the you withdrawals that end on look that see a those balances elevated X% that saw rate at chart you on market in rebalancing, the not to X% if zone. on in think paying if the the market in sitting balances themselves our other I the You down cash that as in will, key rate that, lowest off the that up overflows, you which Page operation, mode, rate key pandemic. spectrum, know And is question as you if time why can environment, up to industry it’s the don’t saw mode, your fees, of that of in think And is in folks that move see of means X% called of really sentiment seeking cash tends see really risk get

The than that the and are advisory other less you note today, are accounts were right? look brokerage in to those if I at So more cash. have assets to tend thing back our in then cash, assets is our half we have of accounts, tend of where majority XXXX, in back more

if that it’s probably low of X.X%. think X.X%. that at to X%, closer you we’re point was kind for of at So that adjust And sitting

So actually with rising. volatility

those So know of are like think about most it, sensitivity didn’t but I you’ve heard I the folks, beta, drivers. change the anything you pointing deposits. then I from big we see don’t And a in price think to on ask deposit these

cycle, what lot think think overall X.X% to saw I think with cycle, the early good a average XX% the think a cycle, XX%. in as get deeper in around it you So last of we which higher I the betas, part was low way an about

big those well pretty about think dynamics, going we think I we cycle, Alex. up pretty, this as into I set feel are sweep cycle. probably the And three So the think cash on

Alex Blostein

number don’t is into ultimately happy. there. accounts ICA, guess all your though to this expectation are and money I is market bank of up assuming for people words want that I’m going follow-ups but I to the to the move Thanks just to Great. a time demand mouth, and kind different saving your put of in back on sure wrap

Dan Arnold

Yes.

think I where demand you is product, for there. operational a dynamic the way it the think right, wasn’t a the and pandemic cash, about I have bank product

can it’s and it not nature products there. just – those call and seeking folks investing they operations. For That’s separate cash, have have of really we are cash cash rate put that primary this for really those available the money they or people and where

Alex Blostein

Awesome. Great. much. Thanks so

Operator

you. Thank

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

is open. line Your

Bill Katz

bit up of start growth also a Thank did Great pick more very quarter. combination across of strong quarter-to-quarter, with Can to Okay. little much where that just of then sort pick is the success question. let’s business you a you’re of cross XX unpack to being trying I for that solutions. absolute and the you taking within get subscriptions, and to of Maybe on and financial seeing have just that the new advisors cross subscriptions see just sort up PAS in growth already business sort or of sell us? PAS, in penetration front sense those of sell solutions,

Dan Arnold

Dan. Yes. extend we a it’s as And at offering question. opportunity and Bill, a great set to broader It’s across think step our the it’s look I advisors. set, back old of too the

roughly about you X,XXX X,XXX If cover subscriptions advisors. may think the that

if will to so that very our of relationship two, expand that one service. lots services client of that the it’s in And opportunity another got the extension with have would you’ve then offering then And across these success they base, you of to they engage as one. explore logical

And three points so of certain four they if businesses. as could we as have believe that in different many are that as profiles drive two, that truly many performance do relationships, advisors as these leverage of their

in And I you that identified of opportunity set. of terms the dynamic right that’s think sort the so

them of we about most base additional are businesses. leverage challenges have at seen want they strategic a than success example actually that original We’ve helps that ended advisors today, one value up great sometimes acumen provides it advisors – considerations which leverage. and that and the think an just decisions the creating as solution, CFO broad As need across a more to look make that really to set It have financial and with relationship. of best them broad

decision partner their You got great that the – thinking out enriching think make about businesses. get they they value outside and I a making compliments in brings Then that their of perspective.

it, then great clients that gives clients of of we of that’s about their that the example like pragmatic with share around find an solution and It and talk happy experiences other sort So it. one understanding a around that momentum. value growing, continuing

down that’s to so quick one a maybe of just And highlight the solutions.

we that and That’s I holistic hey, to new help do in them advice not advisors this opened all do which XXX me solve long-term value differentiate gives help that add the out grow but category, It around the about in where in helping hit we that and got relationship. et grow. relationship support life a the book for, think that now plan. other order me only up the XXX year a them of how planning executing more in and at much me leverage from only on forward. to I If of to the I And concept. we’re I side, Every to just went is, events. solutions within we for I big right point new clients a much, we time opened challenge I stepped providing client that spent, relationships those help resource whole do relationship them take been to going broader to to that XX and of can I’ve and that on have can do able can orientation also client lot then my if my marketplace, value. complexity creates clients, XX sure book. real got plans client up, I’ve which orientation to a set because up cetera, for Well, make a a creates a me more to

the meant more create will really client transformer, it’s the – much it haul. as a over opportunity into a if it’s orientation time big So of you long relationships,

solutions. tax could net state So think build high why around can residual Paraplanning. see we that’s and that then you worth so planning, we kind talk that important about services planning, we That’s why one’s of the

complimentary really You to that Paraplanning lot add can baseline services. of a just

growth on little categories So of framework a bit well a we me and potential, a I give the have you a of side. let solutions of as for bit the at as example two pragmatic least each little think

Bill Katz

And Fed had you so And just flat in of that and also a sort that migrating you Would mentioned way? of deposits little terms to points little is of I’d sensitivity Matt, the demand shift Thanks coming the then up at as much. Fed appreciate XX sort follow-up Thank fixed point. belly to rates, you can you. given is bit for that about just rate at you the that funds your XX, picked funds re-widen maybe some from of past. curve where along heads rises talk to my contract I the float back Great. a basis compares might plus of a the in think flat, spread that envision bit,

Matt Audette

view think right. I is I our fixed Sure, think unchanged, I on the there really Bill. rate appetite, mean

to I up think to zone us that that XX% it’s much this we’re want that curve early I and cycle a and – on fix and the some be in in there’s be we demand shorter yield duration how if in the the think zone is on And XX% up, when side to there’s starting move to to think to out I want to XX%. in. closer we

think strategy it side. Now before. able to we’re I had the same the that would opportunities aren’t bank But there, be the right? Because the demand execute, from is still articulated if we limited

demand back. we’ll back So as quickly or to see comes comes how look that

you see where demands you’re where deposits, the Once the think flat, I there’s a I this expect this still environment place a where to in full think right variable think I side, think, yes, in if – should while. you what widen. around funds is is think Fed that there is see funds for liquidity, Fed for On I spreads to I of amount would the demand point start

being quickly So That’s to fully demands the until but start is I to widen probably hard know, just does question how your don’t think spreads the there. happen? that

Bill Katz

very you much. Thank

Dan Arnold

Good.

Operator

Thank you.

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

open. is line Your

Brennan Hawken

how Hey, you? are

Dan Arnold

Hey.

Brennan Hawken

Yes. last Glad he name. my said That’s…

Dan Arnold

you go. There

Brennan Hawken

so going curve Fed, be quick XX. a is bps. May we’ve telling what far up based us a June Is just and both question improvement forward are So the live only only here not to few seen on because yield the likely XQ around ICA that Matt, on they’re from expectation the that only

Matt Audette

a think prior are just the That’s of on. of kind I do And to that occur, out math flows sensitivities we that you absolutely. rating. that that, put increases you we can can then see the before but to no, where see Yes, additional baseline on anymore. was you any give a out If those

Brennan Hawken

Perfect.

for you – I that. Okay. some cash what the that be to like? clarifying available because money that you percentage referencing that environments. client then interest different funds also under of products appreciate and time change percentage you of how Slide something The looks looked explore. cash, rate Thank have market And assets other Have platform the going over going at that the of to was you XX, on might I you purchase when all in and was rate and add

Dan Arnold

that XX, go think that chart. purchase money funds back the you that if on on can Slide I market you Brennan, see got a pages Yes, we’ve couple

So see paying emphasize would you right? the but cash. I on not that per rate that is It for look average, operational used QX at and the back it’s data, is cash you If these rate to of sensitive just it’s their is fees, for that themselves, thing rebalancing we where ended balances X,XXX just sensitivity the account. can balances

cash for So those to type it’s just things. really not it facilitate that’s investment, looking there is the of

not. And whether is is you XX by equity or when look really the where primarily rates. think the driver that I not cash we Slide think at So primary fully driven markets deployed are,

Brennan Hawken

Yes.

of greater all really to understanding of hikes, fair. money just could market certainly I it are that, fact quickly, fund guys a all move degree. Okay. It’s It’s you we’ve That’s rapidity sweep the that seen the course, given that. using so the of that

account, over, money the competitor been went it that, transition from And market shifts bigger that disruption in could bank it there’s led to some a so it cycle. be another through last a a And if change. to

for bit So taking my more that’s probably a why there’s Thanks there. attention questions.

Dan Arnold

Sure.

Operator

you. Thank

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

open. is line Your

Steven Chubak

Dan. afternoon, good Good Matt. Hey, afternoon,

Dan Arnold

Good afternoon.

Steven Chubak

So wanted ask a to follow-up.

beat confusion I But gotten questions around of and some to horse cycle to we’ve this last some think up, how the Slide specifically there’s dead to cash Sorry XX. versus wanted clear growth cycle. about

thinking just And this relative lot cash a speak stable. last? organic last seeing what is growth would much essentially the was generally of grow much are folks you’re growth helpful. can balances around I at about you organic would hoping themselves your very didn’t cash profile stronger. slide, support tightening this cycle And cycle really So cash course to the be But the in were algorithm time to better looking that of how

Matt Audette

mean, things to couple a I I Sure. highlight. think there’s

more on when you talked our has continues think side. if the to right? of about up, you organic more slide balance, growth, picked growth left But versus continuing and I earlier think maybe the little a advisory, up hand looking to be bit cash in side where I the growth about on right? higher it, growth has pick right advisory hand that’s at So which you’re heard. organic more this if

course, further of you XXXX, at one movements And driver that’s of up if maybe drops. see then of when to pick factor again, right overall think at can still I XXXX, peak because then moving And end the to sentiment. last XXXX right, equity think the the market rate had cycle, This I pandemic. a market the early it’s the spike the in. of X.X%, is you think when QX you you And key the X.X% equity on but that chart, beginning in over environment. on So hone is look you and in market not second, to thing up I or the

as is this rate So more market And and shows that the grow overall well. your chart moves less bias thing the the side, in so I and point cash slightly that what to that to really question on going more to percentage be continuing is sentiment advisory is sensitivity. meaningfully interest think up to

Steven Chubak

the evolving Dan. your of position follow-up really for to as in whether bit have just should in M&A speak you IVD lower the back your time, peers many your given I the markets That’s rates, landscape appetite great. And little just versus whether was bolster self how this acquisition higher wanted improving maybe financial backdrop private an front. is you that are step current earnings more macro profile, theory is to strength relative could to relative opportune my your of a position as aggressive on to taking increased get sense a M&A get maybe a and And the hoping clearing.

Dan Arnold

Look, to opportunities that place strength organically. Yes, we order enhance a even think growth on in capital, of I looking grow focus when first framework to ability and differentiate and at Steven. at our changed, hasn’t our deploy to organic

a have other invest example to around good at And in platforms. struggling around market, pandemic a so occur flight opportunities example. down And beginning opportunity firms capabilities those or And they be that. an see to may the of a in they was the example less opportunities of we recruiting where an the as stable as have seen quality we’ve those

positioned across may a smaller and landscape. M&A and that opportunities. we’re look you growth to broker obviously, an RAAs agenda. dealers our as growth, we stand to support ready do the so at perspective I think and and looking interesting It’s opportunity overall for constantly then that organic those compliment be And

to opportunities And continue look so we at. are interesting those that

do look You bring landscape challenging I formula, for we it’s we’ll more in the opportunistic sort some relevance – on see accelerated if probably be across to of financially if the market. sure sense, got can emerge the and those we can marketplace, challenging well our we and there broader think as about of of you And and of positioned to a that certainly we more follow operate tend about then execute make it’s it. markets to consolidation. readily And got feel got Then then M&A, finally, be will, how to too. we rather strategic make we prudent think we

and deploying transformation. hope order capital would drive explore the more that’s think to then helps. I a organic So of acquisitions, acquisitions, I smaller finally which larger capability we in growth of that sort

Steven Chubak

Very helpful. Thanks so my for much questions. taking

Operator

Thank you.

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

open. line Your is

Michael Cyprys

the with less little ask Wanted backdrop bit Thanks rates about of wins. rising advisors this curious trends. been Maybe of picture, XXX so for outside recruiting? and more a pipeline about share could more you adding or quarter impacting per I like color mandate to the broadly looks M&A it and question. around and you’ve how afternoon. market equity macro certain recruiting guess, the Good volatile Just

of perspective sort sort curious case or just per on So sustainability your that of XXX of the adding so forward look about quarter. around

Dan Arnold

Yes.

just might sort little about So on quick going then step are, a and a I talk talk it of bit forward. think where as we about we we’ll with about start

which that the over QX, And we’ve reminder, a part you that. included year, being we’ve click quarter past recruited $XX assets. institutions as $XX say a down ever billion if first financial billion in So largest had our on QX in of X large

I financial recruiting to People’s opportunities that closed that, you this will. sort conditions, so kind in XX% caused the to March, think with under good as affiliation of as United And forward. opportunity, then will at, the reinforces quarter start. then And gives models. of it’s of look that strong add – the of a marketplace to recruiting certainly the then you’ve we continued the And from if And success changing that got we a geopolitical original if if solid to institution even momentum it us earlier, talked think so diversity new we across space recruiting well episodic away our that as almost event about a volatility happening you look growing I baseline of you our I think in you got you in move as and some

the a and is all Linsco Our which high $X contributed models for collectively new new billion in strategic wealth quarter, models. first RIA those

believe those up within grow And of move model each solid to the sets appeal that and our forward pipelines to through one invest in of ability and dynamics opportunity, XXXX. for enhance and those you if continue of sort The affiliation as optionality flexibility models. we good continue will, the a and so we to it

stage look, we’re as a and past as that begin get by you and they as up acclimated down a market, initial advisors use market, encouraged that, business strategically. go of how works sort some an even typically kind tailwind if recruiting of that look more to pick opportunity have down opportunity in we of see sort once as that get extended the and forward. to time they’ll So, challenging And equity that of market, strengthen to we around their to

a the year. that of balance end that’s So, we how in do if looking market, some extended the That’s we can those – how I tailwind. we’re be across hope down it up at helps. see

Michael Cyprys

Great. Thanks. question. just And as maybe a follow-up

the your the affiliation that new in part presence assets? and You in to extent in Maybe new And business sense on scale there? what new us advisors you models. on terms be of update could your of progressing model? and make a in an were talk accelerating bit just how little to of marketplace mentioning employee acquisition that’s Just bringing helpful about of the could some terms

Dan Arnold

that, interesting across appeal. the share, kind of in as question. our to is think really just the the really we’re a it. and even geographical win good that we that further leads space the the gives sort value more that doing I in model momentum right a winning. marketplace. a to spectrum areas by have And It’s front model its positioned and in had models has And Yes. marketplace. building certainly good, And is winning of of a to foundation that look, build the variety that And different of builds with we a And strong it market think its different how of exist marketplace, in in we establish in now now hypothesis We credible see opportunity solution as there. differentiated of begets really us credibility country are encouraged ourselves

very use you to encouraging one this wanted So that think I of this strategically particular model. accelerate those you’re trend. And right, or just to is places acquisition if add you an might momentum

this it’s to to gave initial the it remember, as of really insight an kind with foundation model as it us which acquisition try differentiated. Allen we you and started we & appealing learning make build Co, of If of could how as and

think explore. we your hypothesis I around is could certainly So, a would logical with place complemented be M&A

Michael Cyprys

much. so you Thank Great.

Operator

you. Thank

Gerry question from Our next or comes O’Hara of from line the Jefferies. comment

open. is line Your

Gerry O’Hara

Thanks question. for the Great. taking

per I Just institutions, it a financial there aspect operational one bit, achieve just of constraint guess but XX- it there’s either from seems with of as staying cadence the many of or of though Is all? year. capacity sort any in how theme can been period, little perhaps two expect a a or a of staffing deals to you respect to XX-month on kind types realistically to

Dan Arnold

Yes.

them. transition these financial is of insights those them technology capital months, into terms to solutions and to four six new and better effort. as had in lots data second think around it, that not things, only will in the we our improvement a to and with how when we solutions, to help get the think round, new and you in institution deploy acclimate, larger I them help understanding you then in LPL you some had I which we we first order to and turn into better learned think, how I streamline things efficiency overall human at doing deals, for to started support how change admittedly, about originally I’ll them And support room use we it then to presumably, drive the help management that and effort. capabilities, begins And learn also rounds, and both call scalability first to create of new digital you

into part so scalability to to do And how that drive continuing we think on-boarding of is about automate that. them that and

better into we’ll some automate better think and it, that, and But more reasonable to and and we’ll I get would it it always say more. at would cap. I tell So, there is learning you, we’re be

into first for continue I innovate there. think we’ve we’ve that, room to improvement got got and to

the core in but the And mean to in really a ongoing that efficiency mean those model that only higher an in we’re service, the I exploring the I learning I platform, compliance And also think initial gains on the not can, don’t basis. the scalability operate rates digitize growth is rate and of in where you how our we you rates. growth how through sustainable and second all facilitate higher extent just much support and just them being interested to also pull of basis, is investments think on this transition. really able you do operations I to becomes it. how see a higher growth thing operating at think you

we of I clearing growth where more So, and about I where improve see investments our how end-to-end areas are higher invest, great the able rates [indiscernible]. growth rates for both examples of couple function, helping position a bring in the and think being for that core talk these think we hope that's are higher but helps, period. when ourselves in think digital to about long-term longer sustain we those I ourselves we

Gerry O’Hara

that Yes, that's helpful. Thank Great. you. it is for And me afternoon. this

Operator

you. Thank

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

Your line is open.

Kyle Voigt

would Hi, really question not assistance much line we quarter. versus guide I guess If the first good evening. change and imply Give you fourth a that transition promotional would exclude on the expenses. in XQ – not really

back one-time getting about look if to at of Because wondering the those good whether historically XQ excluding expense run to And we Just $XX attributable I is is guide was XX running is, really that when think, on-boarding when can that you new cited? moving promo costs TA quantify XX forward. think what to you around how type I'm pre-pandemic. range much rate that for kind million promo of of a this that ex-TA is kind

helpful? would more just So there getting little a bit be color

Dan Arnold

think And when I the at from to Yes, definitely. I conference couple mean, you is really things standpoint. QX there's first a highlight a trend look spend.

turning reminder, expense up QX. a we're majority conference year those more typical of back show which means and a is So the this to call us, will schedule QX for it in

And really on-boarding which I in you those financial call, institution and I peak but is think quarter lower the associated QA then they [indiscernible] expect show And on reminder your in right? world probed that think expenses in with do promotional, on-boarding have to we QX, So but that the which had. really conference financial institution TA, the expenses expense the joining question a in and up joins. is in addition institution in actual the largest the large offset

look non-recurring. right. continue But their And And are which the do it X increase. of didn't by is X think this $XX particular we'll peoples, that we organic you have we million included they rate, to institutions but look five nature XXXX were the with expenses, and on-boarding more and – billion, if plus last grow put year, billion. are growing the, year. for you QA, call I of it the on-boarding more non-recurring quarter, continues expenses at this overall I of But So BMO, amounts another which if is the we sort looking to probably kind think you growth the just at not we of thing institutions size continues is have to go now two you or highlighted have If in those – dollar those M&T when expenses. you, our in main typical institution, have at quarter TA for about together, more which if is those together

key even on coming from to we've I model more So your a be got side. the think standpoint year – this that and might

Kyle Voigt

digit helpful. into fall growth also from the could guiding business? interest macro year. high-single that that just then the to the rate letting Thank would very and back favorable more And towards the of you of current vary there kind you. bottom G&A core range more kind another I to And kind tailwinds even balance line high-single maybe of how of opportunity digits? versus if discuss question you're an environment growth more guidance significantly any that rate of the revenue between would backdrop, invest range you an It's expenses, why on this be in favorable even in reason guess

Matt Audette

key when or driving definitely when line once early fall So that's benefit right. have would mark. think would going about foremost our when Investments additional capabilities first real, in to experience. let but the improvement list. I to enhancements growth to still resulting up, new Dan the first advisors organic going beyond as think is things then returning capital capital think us the say investing to an is address really so, also an talked example. and the when expect growth, And is services investments expanding about due would service the a for get we rates that right? that for we are I and to the portfolio improve of outside expense and decisions I fully course we we that that focus beyond margin, think with I I And earlier and and cycle. into basis consider drive points allocation our Further about definitely, shareholders. the business, the Yes look think us the on on to consider And deeper really the would while framework making cycle that growth. you all that, things we in the in can these think overall that XXX the for that dample you M&A I course, would I in capital And think I uses cycle, in that that, of other we balance meaning get at that, early in to bottom think drive side, And and

relevant those make flexible and at framework increases we're we're overall, and we So that's I decisions meaning remain think when use, to the think positioned would I time, occur. really those

Kyle Voigt

very Thank Great. you much.

Operator

you. Thank

question Securities. Next Michael comment or from Truist Wong comes the line of from

is open. Your line

Michael Wong

of Hey, of over years. of of that at what you prior And things these to expenses on related Wanted profit some more the question. lapping profitability the other thanks just growth kind little pre-cash the kind expect the for looking kind of turn forward? as level a really level there so here is question maybe and Slide just get could to XX in a thought on-boarding bit a be way. ROA taking gross client to structural higher kind on it that of other wanted going sort back high coming could just higher just a couple been or down past Is benefit that cash that

Dan Arnold

brokerage the service I driving increasing managed key and think think positive been just you maybe those mix that has And advisory into saw, gross The institutions platforms when profit right our financial growth are the that are overall, get larger whether trends nice and shifts, NNA We've to advisory just in recruiting you channel revenue. and right? sure then of that revenues on about to before The highlight growing. some that advisers. up got centrally the be the within ROAs, and going expanding – is Yeah. is And are things I'm well, right? we overall changing I growth, it fee year-after-year, on the nature then there. quite to think

an When get are is noisier. challenge ROA So don't all profit driving it right? example, those assets. are can a The adviser-driven that the move revenues, things nice the all gross along So with asset-driven at it fees, fees, revenues, not from an services growth. standpoint, those you look as they're transaction little

you So little get noise a there. bit of

that Another CUNA BMO, is is ROAs for profit much one transition is I lower. dilutive also our profit much overall gross think really support financial averages the institutions. Their assistance are M&T, because lower. large expenses People's, them and are to the the important and that larger. us institutions are ROA those to But gross

margins of a clients margin the It's now. for like purely the very when you improving. you are gross from ROA, going I like through think us they're op there's decline well economics look walked when like lens really and to actually at just – the So accretive profit it look

thing there positive see looks story. it's that that the So drive We're the when to types I quite of more think and there's relevant those revenues most more in size both we the really and of that's we're have trends, continuing have compression like when just you clients a diversified, that we it from getting standpoint, some my growth.

Michael Wong

than of maybe deals earlier That's of any would economics really models. of deals more and in to the of there sort initiatives? are of some on getting the terms Are I kind done with as sort structuring about hear color. different the you path these anything of helpful as or just you've recruiting learned and down helpful that. of the kind that incremental or a It maybe the of now lessons be move appreciate economics follow-up, of better the

Matt Audette

– I sorry. Yes, think

maybe services think little provided. on economics when building of about was the in different financial models a about I there's the and different just So of right the levels overall talking bit you think what I institutions,

different levels it, only also then them of expenses the not support – to but bring board. assistance levels revenues, to and there's different different of transition on So

then those the support points. service the returns is up. returns those about overall go us provide, think we about But is and as provide similar we different and capabilities can relatively So the think I a service the for in the baseline, that key more more I

Michael Wong

color. the appreciate I thanks. Okay,

Operator

you. Thank

from Research. for is final have That Chubak Steven one We time from call Wolfe call.

Your line is open.

Steven Chubak

Really Hi, accommodating thanks it. for appreciate the follow up.

Dan Arnold

customer. Really a Go crazy. repeat is This ahead.

Steven Chubak

to some to which Well, now half ask really I about and I the heard behalf you of wanted could get a investors, Matt rate your the level we buyback. you're potentially quarter to And very clear is the return And done a myself, higher million the not loud environment second ask, on increasing had was question be contemplating on leverage today, you running bound, algorithm. previously. relative with But just $XXX but you room the of could reasonable you're it I buyback that to guys a transparent know have to speak still generation it given expect capital or I at stronger in what you beyond that accelerating run already is and the – excess ample lower could for buyback. given fact while liquidity support while free the having power, organic flow even still that dividend? support growth and cash earnings rate that be in to hoping above

Matt Audette

Yes.

up combine I goes mind, a to to we're near the at – deploy. maybe on in low how the think the the least QX, in eventually much And expects, paid additional for year, right? to expect think capital, a in I Just your going couple that in the the course, rates going the point go to to in at the of to And and within Organic what back buybacks to growth and buybacks. assistance range manage have right, to point the and we allocate of be and to If that's that of on of at getting all objective obvious, think keep of with line capital cash half CUNA second range, it, goes third. capital use I that that I meaningful right? on M&A deploy similar leverage be and right? think I capital market foremost But our have we with QX. the is the our being opportunities But so depends joining state capital transition to to a returning and near think things, term your first to range. would be to with term to the where range framework, Steve, quarter, second, that shareholders So for end

share time. really cash So going that expect I But primarily decisions go opportunities scenario that the in we'll it all at would repurchases of of what our if, and make time. is up, are generate just where matter the on a those that and we at opportunities front share up, to the opportunities are, think the in depends just I in that us repurchases the are

Steven Chubak

That's to accommodating the follow for so hear. Thanks much up. great

Matt Audette

bet. You

Operator

like the I’m in back for at questions closing to this over remarks. additional showing any conference to turn no the I'd time. management queue

Dan Arnold

We afternoon. to this Thanks, next join care. We you appreciate Take with time everyone to forward again the quarter. really speaking for it. look us taking

Operator

thank This participating conference. in Ladies today's you for gentlemen, concludes and program. the

day. have disconnect. wonderful now Everyone, may You a

LPL Financial (LPLA) 29 Apr 222022 Q1 Earnings call transcript