Earnings call transcript Q4 2022

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Operator

Good afternoon, and thank you for joining the Fourth 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 open for questions. [Operator Instructions] The company has 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's financial future financial and operating results, outlook, business strategy and plans as well as other opportunities and potential risks that management foresees.

of management's unknown beliefs may implied risks results the reflect to are cause in statements materially or and differ known and timing such forward-looking forward-looking current expressed and or subject actual from statements. Such those to or events uncertainties that

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

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

at For measures to investor.lpl.com. to a please financial release, refer such the figures, reconciliation non-GAAP the company's comparable found which of GAAP earnings be can

over turn Arnold. With Mr. call that, I'll to the

Dan Arnold

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

Over and the of the care play against volatility. source our as the they advisers for of their dedication remain backdrop reinforce clients. continued their our and their our In of the XXXX, client. they their clients guidance can for increased advice market and for so, the We and past them focus they support throughout take doing their taking quarter so thank care commitment advisers on mission, of of we role important value

our results. the of our fourth quarter time, execution we our fourth respect a make these plan. quarter at on areas, our outlook, both performance, of the while same with With solid continue to business I'll business results financial starting drove progress review to strategic

the complemented This were continued of X% net by $XX growth, also as an organic $XX $X.X respect fourth assets for growth. representing was growth. quarter billion, year new contributed total higher growth X% billion, to the assets With quarter, net assets In to organic organic trillion representing to increased equity new annualized markets. solid

the driven These were bringing year $XX ongoing our QX, billion. for were the addressable $XX our markets. our model assets results and enhancements to by expanded full Recruited to billion total

the Looking at delivering same-store sales, differentiated a our serving advisers experience. focused clients and on remain

both result, As solid a a clients winning in quarter. fourth combination wallet share new existing our advisers and clients, which the drove are same-store with sales expanding

enhance the new retention, technology ongoing experience to modernization we delivery well adviser our operations. the of as through as capabilities continue respect to of and service and With the

full As asset approximately XX%. and a the quarter year result, fourth for retention was

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

our Now progress to made let's the we on turn strategic plan.

As to be enterprises across a to vision at center become being adviser clients deliver and to leader empowering business. of great operators great advisers has the us reminder, market, long-term which our advice means for their the the best the and

to bring in time, our advisers expertise, deliver this are to business. we advice and same the human-driven personalized and solutions the the Now their vision capabilities advisers extraordinary we're experience efforts And to at providing and clients. solutions their supporting life, to technology-enabled through help planning

sustainable share. a across experience, and the growth organic industry path us well Doing market to gives this leadership adviser

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

and of the the improvement led and depth and business efficacy lower platform breadth an expansion our despite continued development to the remaining expand enhancements also leveraging evolution our adviser strategic movement to at our our markets, affiliation are meeting first traditional institutions the of ongoing involves win markets, traditional by our our in which our they and winning In Our rates addressable team industry of to play where the levels. market. advisers in in of new business, models,

expect billion to billion affiliation As XXXX models, recruiting in With with $XX ahead, recruiting traditional into new our this approximately in in of quarter carry markets we strongest strategic momentum our QX a result, respect demand assets. QX. was QX. organic for over our contributions employee to looking which offering, recruited we expanding assets growth. in position to RIA in growing and see our enhanced In increased and pipeline, models, for each our them wealth, $X we of continue these

With additions respect to CUNA large XXXX, remained meaningful People's and enterprises, source of in United. recruiting they including a the of

continue Looking grows. this build success pipeline our to ahead, continue And channel, in our middle traditional recruiting time, Bank we for enterprise of for at South including around see and in the QX. expect the to the [indiscernible] model of demand our onboard Commerce as year same to we addition bank have

with are also play, needs strategic succession and are succession offer momentum meet we of the to where recent Within innovation seeing early differentiated most providing positive we our advisers. this capability of liquidity a

it Over will retired address decade, practices. next advisers estimated up be that the of will likely to is of X/X needs succession and their

advisory. our was M&A facilitate To from to innovation to solve for providing the first practices need, this adviser support transition of service help

to learnings there require like large size due many an will solution. are of that experience, factors lack successor Our that different identified key instances from or a practice

differentiated purchase and this succession a bridge as serve LPL adviser's created will offering, the to an principles the of independent. which liquidity all of entrepreneurial preserving step business our without we And while next need, and successor, in to

plan forward product. has already our will of This look received offering having on our our encouraged early and take we capability external with been to handful executed providers on transactions sharing momentum, and year, marketplace progress. to to the also well the The a are we

new our our play solutions key second drive capability development XXXX, across help is in In play capabilities within differentiate efficiency the provide strategic Our and areas. will four the back. and to marketplace this of to advisers we focus

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

additional and to increase advisers will continue our core we fun. Second, efficiently help to serve advance scalability operating platform, with ClientWorks, operate their more to digitized more workflows

their role expand broader as deepen our thus we spectrum an to services help of address essential needs Third, lending financial partner. advisers clients' and and will the banking a

help additional is advisers area capabilities the And productivity enable personalization drive end believe and adviser experience growth, will retention. with that increase We solutions and for increased their self-service experiences create client customized final these to to the digital enrich and evolving business.

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

a model, reminder, of past couple and support. the As into over transform on years, voice, been omnichannel to model care we've digital chat service our journey client a an including

of journey, of our our part we the always- and also And voice capabilities. on as meaningful traditional technology enhancements instrumentation making support evolved while channel digital have this to

phone don't XX% digital approximately our to engagements As fully service necessitate resolve the task. call complete with a a channel the result, request of and

efficient experience. to digital that channel, will our leverage continue refine for and flexible we service advisers share we As of expand more support believe support an and increasing digital-first

continue we the interface, service also to takes place As transforming processing operational our interface. we're behind evolve that that

our movement, example, began process. of including the For account for opening processing core year, our money drive clearing, much automating operational transfer, of and which collectively account we last the majority

as from both and and number the and And we efficacy review including as with the areas operations, robotics overall workloads, of other that improved the a our reengineering Out we've capabilities these and learnings are compliance applied has reviews service transformation well end, of of AI compliance risk through of our business, the of efficiency the risk management. which our management.

reviews transactions. the front client this automating materials communications, and of marketing on Efforts include

continue while our we enhancing automating good. increase more of plan also to by workflows, the platform Now scalability is

Our strategic services on fourth that and institutions to focused deliver driving play advisers from advice a developing comprehensive helps portfolio and is client. businesses their

and the this business discussed are by the encouraged last evolving quarter, we our of of seasoning we As value proposition. appeal

utilizing advisers run year-over-year As of $XX up rate number to revenue generating services solid year continued a ended X,XXX XX% than result the of QX, demand, million. of We over our active users, the increase. at and group in more

group, for when on the services we some most our often complex with advisers more practices. addressing We we facing Now larger of started acute our advisers. were challenges focused

the from we're service initial broader of base. this address portfolio now to With and adviser needs learnings expanding a our client the insights segment,

opportunities building we for additional enterprises; solutions several XXXX, our the our in leveraging of services solve innovation evolve focused group: needs we offering approach continue on are addressing to to specifically channels, structured As first, key and second, develop of and well growth existing as and to expanding models, order high net Wealth Strategic ability new to Linsco, the portfolio; as to contributing our affiliation continue to new serve in services worth. third, our our for evolve

and year, continued So, the proposition the we clients quarter fourth their throughout our driving invest in market value in for growth and while summary, in to advisers and increasing leadership.

further the advisers value. we focused to our ahead, as in marketplace. we a win executing long-term shareholder look result, differentiate help we As and our on have strategy remain And

turn With call that, to I'll Matt. over the

Matthew Audette

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

on maintained we highlight to XXXX. and fourth while our market their results, strategic during our backdrop, supporting our evolving quarter like review Against priorities. I our focus Before clients executing our advisers an progress on I'd

assets We record new in continue value and per piloted our to capability successfully all continuing and acquisitions. onboarded invest and to and our accomplished announced while organically earnings succession liquidity grow enterprise markets, industry-leading and both strategic traditional two in new We clients, our this proposition new delivering developed share.

organic X% to brokerage QX quarter continued our or turn growth results. net annualized fourth was by let's new $X.X markets. were Total X% and growth trillion, as assets were complemented billion equity Now from higher rate. an assets up $XX business advisory Total

quarter traditional would billion $XX year. the of note, our which QX $XX highest I Our recruited independent assets billion. were the model, this was included from

ahead within strongest continue we first traditional of one remain of into to and would to overall momentum year. slowest our has typically QX pace quarters what the pipelines on are is models, in that continued Looking quarter In strong. I QX, in we our our our to the highlight particular, deliver saw QX,

led our rising and QX in acquisition to history. costs interest $X.XX, for the highest of combination prior to rates growth, financial of EPS the expense results, our and organic intangibles discipline As

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

QX, net the components, commission million, for increase million payout $XX fees advisory from down $XXX primarily mode. in were of by driven production the seasonal As

about model. was in due rate the seasonal XX to payout production build from up our QX, In points QX basis XX.X%, the

to we rate bonus decline will anticipate the at year. reset ahead Looking to beginning QX, as the payout production each XX% approximately of our

it to $XXX rates With client cash more offset was higher sequential impact short- in decline revenue, as term interest of respect balances. the million, up from million $XXX a than QX

down billion, buying cash net $XX quarter our $X client they $XX billion the overall at Looking at billion. of record ICA by Within driven ended balances,

[Technical Difficulty]

to points, which As of basis point beta ICA yield QX, basis our an XX%. deposit assumed we at XXX XX hike yesterday's to for expect increase include approximately

our $X As in primarily conference for it revenue, conference lower driven from down This million year by adviser revenue, million $XXX following QX. QX. service QX, in of was and largest decline fee was the

to revenue expect QX, by to roughly QX. increases service fee in to seasonal IRA flat comp anticipate to ahead charge, typical offset we lower we be Looking so and be

Regarding flat transaction we million QX to volume $XX sequentially transaction as to what Based $X would up it we trading with revenue increased. be in expect roughly have was seen million, date, revenue, QX. on QX

Turning to expenses.

Our for outlook range in QX, G&A year represents $XXX billion. core the XX% of This middle core our full $X.XXX to was bringing our growth. in full million G&A approximately was and, the year,

our growth XXXX, organic drive As continue incremental to for unchanged. for in that leverage outlook We cost to plan long-term core strategy operating and business. remains create our our prioritize investments

plans. As current environment we our opportunities at investment the Analyst Investor to our is Day, and shared accelerate creating

XX%. As pace expect XXXX to a More the in plan core similar G&A specifically, investments year. at we of our to we range grow grow XX% such, our to this

our spans each driving share a to three little are growth core categories, growth X% with broad focused, in X% To where on following approximately color this more the G&A. investments expense

First, scale core to market investments business addressable to second, growth, third, and investments to capabilities. expanded to technology our the our our growth including support strategy. timing our new of that and advance services. and in in support accelerate

as To the to $XXX QX, expect million. we be of G&A sense million core of to timing ahead to give in near-term the we would $XXX spend, you this of a range look

operating. As always, will we remain in the shifts adjust flexible to can and

promotional expect by year expense. down two $XX In by QX, we of largest primarily will have to it approximately of million, sequentially, spend. driven $XX In conference QX, promotional lower the expense million as we during quarter. increase conferences million $XX was our Turning the

up QX, Looking QX. at million million share-based expense, compensation from in it was $XX $X

year sequentially expense we ahead, be tends anticipate we of timing as quarter million look highest stock increase it the awards. QX by of to our $X As this approximately annual the our in given will

in rate million higher As sequentially for $X interest increased up LIBOR expense, $XX was million rates it the QX debt. of cost our and as floating

Regarding capital management.

QX. Our remained corporate sheet million in balance million, $XXX from $XX strong with up cash QX of

QX. which in earnings continued decline from our This Our time, combination in driven was of a leverage interest X.X our environment, power. a both higher have meaningfully ratio of rate down X.X time improved was by growth

focused returns and deployment, capital our M&A, organic As appropriate in growth, for on capital excess generate, framework first returning the aligned with investing allocating we remains and to pursuing shareholders. capital where foremost,

us we across ahead XXXX, the look leaves strength capacity our entire with to framework. capital sheet ample As our to balance allocate of

beginning increase for XXXX plan to growth, regards continued in technology to QX. increase opportunities in XX% On repurchases to succession in in Specific emerging roughly share around organic pilot the are opportunities to in platform. offering see and we see investment we our in QX. With four plan quarterly where lastly, we to million phase and million. capital closed we $XX our recruiting And deals by M&A, $XXX return, from dividend our the we

strong, value quarter are is allocation we delivered In and business strong capital of we sheet framework. our and balance to our through summarize, well another results. financial drive positioned closing, To

look As the forward, investing create business serve advisers, opportunities about long-term value. we to we excited we grow remain and continue to shareholder our see our

operator, With for call open please questions. the that,

Operator

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

Alexander Blostein

for guys. question. thanks the Hi,

we dynamics let the just bank the January given bit a anxiety that little seemed the So, you the a dynamics. December talk in pretty Obviously, cash then, demand about you're little around in start creates peers, the fixed question investors with channel than can saw that it's Maybe an deck Matt, of a maybe that balances for seeing far with so some from importantly, the better lot kind highlighted robust. extensions in still. area being the you of what saw of we the bit and

us of walk So the cash. current maybe environment kind through and

Matthew Audette

Alex. sure, Yes,

forward goes So, back from rebalancing. build the typical and I think into what tax January, see loss the that as marketplace. that in think in that we're harvesting you I December, typically seeing into you we seasonal And saw pull cash

for we that seasonality about for you from the month, I highlight, three the of also highest in So December $X.X so into back January quarter, in first as billion billion that a I'd the of quarter in month advisory typically the well, fees the the build are naturally and went the saw or advisory market. January. is know of month $X fees, months a think those standpoint,

billion, a just So, standpoint, if from of the $X.X month. seasonal decline in look billion you a have you'd around $X.X

that reengagement And seen just the broad and then addition to on commenting activity, overall the market in in we just have adviser investor and marketplace.

that The good we've I metrics, highest monthly billion of think our customer month. to ever buying had at our in the look summarize $XX -- was the at net back a month way highest August you XXXX is metric. for month if

so money things into equity just securities that For as January, longer-dated income north billion, the back we've you And that. what and the like is of markets may that strongest expect, had. seeing $XX really going and, we're fixed engagement is

to with balances we -- investment those January combined cash be the when you So billion. $XX $XX that's around down the sweep engagement, seasonal billion factors, drive pull and in to naturally expect going

question, I improve on the to ICA is I floating think the demand the rate you're of specific to The headline -- to and it we that up improvement. to of think contracts. market well continued your the that see last continues in be excess the starting XXXX, price market into question, balances, break to continues in the for two The I'd to lead for maybe have, part throughout buckets. improve and give the deposits it QX you third

a or plus as we're at XX last were pandemic, the could to fed more they So, flat to then we funds for to and funds the down. now, fed quarter, from XX heart standpoint them was floating if rate XX in opposed plus they're back it all, that five putting contracts the place of

market the So, quite good. there is

high starting ranging six progress now quarter combine in On to XX%. that to with think in the few to you $X the fixed a that years. two close And at from at when percent we've of to able had we're balances billion the add our side, past the but rate we're high not I get quarters, this the portfolio from

demand. portfolio look able ahead seeing And overall coming I about the place think grow up. $X those into we we good of to we've when maturities agreements that, to overall, feel quite And to be QX, got rate fixed beyond billion being even new to the starting to and, continue just able

headline, side, So, my pretty say Alex, from good. is I'd

Alexander Blostein

target, nice guidance you recently Great. And to second come think below that. the guys I leverage maybe down see just the balance a lower your which It's around sheet. question now revisited to

think inorganic the accelerating some building between out opportunities you about of think that? repurchases, and share how priorities perhaps as practice, you about the So, lending would maybe

Matthew Audette

the think, Alex, sheet. key side point is I not use lending it's Well, on of Yes. the balance big a the

clients really more so connecting it's So, capabilities about can the that. use our

I the our focused back think third. growth M&A we're returns framework, overall investing capital just capital I first, think in to think on and buyback, allocation on I going organic second

And I think pace we the all of the upon would opportunities depend see. buyback, just a it from that

expect, slow there. strong So, M&A weren't a also or invest in the And scenario opportunities it opposite growth then organic if we the buyback. could we down where wasn't think true. opportunities to accelerate as I as if We that's can would would is there lead

gravity for I'd flexible. that key million. of our is is really that us maybe just the be really reiterate to And So, $XXX center

Alexander Blostein

Matthew. you, Thank Great.

Operator

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

Steven Chubak

Matt. good Dan, afternoon Good Hi. afternoon

of appreciated expense in granularity terms additional the I guidance. So, really the

that that range tighter a of of anything bit a interpret expense what was last or algorithm, expense right 'XX And This XX% least about say, update your than you're longer-term infer 'XX. as in offered plans? to latest growth up where a offered prior those better growth, Your in time? from what's to guidance, XX% and looking Is you investment XX%. period thinking way is growth a at the we just guide pace beyond the better to that can appears buckets expense there normal accelerating not you

Matthew Audette

Yes, Steve.

I think they on really Day. plans, didn't Investor our all at I change they mean from --

I there finalize our where gave process to And went typical comes plans. preliminary those think that's I and our is XX% the really XX% think thinking to year-end key the we from. through

environment investments plane this a the land our the of So, pencil. that advance you're just to strategy us with I just and the think seeing now using have we really sharper same, is

three think question is, to I think specific it to the the your informative. categories, I is answer yes,

you level think I to look our at is assuming think right, investments support that of X% growth supports continuing, business when that X% to the growth. core that growth, I

advancing you and not, market on flexibility. definition, otherwise whether that can based those When that in areas it's where things in done we category going there's about adjust may and especially second or and in those all beyond that to by we're that's 'XX. categories, third look And we where at 'XX third now the the we do have to have opportunity spend

Steven Chubak

environmental, in driving markets, much to motion advisers NNA of that factors the gauge the And encouraging certainly growth, strength you momentum? to momentum just NNA hear Just in in the is was continued versus some trying hoping year. organic increasing to could the that just to that's follow-up I better maybe for speak on so idiosyncratic. my more start has the XQ how

much strength were strength your as pipeline you is coming well larger institutional in of how And from NNA institutions? remarks, that the about talking in

Dan Arnold

me there, So, you that give I one, something, after missed I a take if There's let lot me Steven. finish. guidance so

think if against I XX% pretty as a macro outcome in rate, year, backdrop. start which is $XX growth NNA, a organic point, we billion last a jump-off challenging So, Look, solid

that any that continue just our environment. evolve irrespective both in backdrop, And of think I through capabilities, or working operating advisers, progress making I in of skills and teams terms the of think environment, sort you to and potential

contribute the forward, it sustains it look we and or improved think of about if we we ultimately as can I feel and upper the macro, good better So, growth. execute better itself, sort that we think acclamation an going to that forward in

think that's growth the about term So around It influence may progress I what call might would how of environmental. I sort short- ethics. our

demand a all I strategy, big strategically, versus of those professional, our financial importantly, of think, drivers more It's durable other of in those receiving that probably we the structural, right, opportunity advice model that the growing place. trends appeal for advice. remain as continue. attractiveness models all independent significant The think through about

do, positioned And those I and the and market opportunity. commitment use to at to think uniquely differentiate and and through we we our that's on of was differentiate to even leadership, intersection speaking of invest, and which of that on or focus all robust platform to to it. singular platform evolve sit what whether And of the but leverage continue that capacity just believe capitalize we're

about So, about to growth demonstrated up I macro within environments, last a sort and comes I that macro think still we think that about still forward, think it. year still going to the different is range. how ability think X% that rates persevere reside as XX% of across through talked that relevant, tougher to think, we highly we I And

the So we think and run. how shorter run longer the that's about

contributor. our more and that, better replicate capability working wins that and think the being without click create down that evolve a to of from certainly I that set to on the success your durable channel growth with a IP within advocacy itself. insight IP look, is about years with continued those our with and we've that's on talked it's hard We've a enterprises relationships, to from court is good for couple those experience clients enterprises on large

of model, going And in solution. at appealing of that around a convicted that we're it's model we look and pretty finding pretty that a forward, is so, our marketplace is need type that when

large believe So, to bookends XX%, contribution of enterprise. we within from get some X% that, again, those do we do

that hope color. a gives little I So, you

Steven Chubak

for taking my question. Thanks,

Operator

from question line Bill Katz the next our And of Suisse. comes from Credit

Your question please.

William Katz

that I forward what's in you're as little Okay. market question talking ICA Unfortunately, up and ratio about you out float? very informing the you opportunity happening how little a my while thinking rate opportunity? guess should is dynamics. think fixing been connection is, Matt, is the demand to here about expectations to the cut we bit, potentially accelerate a softening the about be broader little out that my bit a How of relative mentioned bit, the healthy. And reinvestment then

Matthew Audette

Yes.

right? our really fixed into range if rates cut I not I we that continues into perfect, where of demand while to we the to improve. trends is in target at out to But -- improve, It's it right? the we I We on already to look the perspective can't move you I I comment XXXX want. seeing as think get the commenting, have what XX%. on if throughout XX% look and QX, you And exactly continues market ahead think Bill, we're think, was think

about feel fixed the that we rate think maturities we I So, knew good agreements.

overall, market when did see will can go And what and six-year out bear. based it to the feel from the look what grow in got we addition those zone amount the targeting on then some even, think we that cases, there. a I we've to in QX demand to you we're like You in opportunity some five in maturities, the in at

us market is is, curve we And with think I it so, makes where getting do to sense if target marketplace strong. is think the that so. will allow into the range the headline to still the

William Katz

be your kind opportunity of this it you should out to the sort forward being of rate growth expenses, Or have refined this growth, XX% trade-off sort then of my variability now really and apologize about growth? more And going sort that you you where XX% we decelerate? business? organic margin situation the would that is as just between interpreting And of to that, be again, 'XX, back level cut connection I the the and bringing the equal, absolute out. else here of into might all think to Terrific. advance as look we to would of point just same growth in a organic Of

Matthew Audette

at principle that we'll you I strategy, get the would third that so investments. rate I standpoint, about is make our year. to may X%, cost fourth to to allow us long-term where that Yes. category as when market, I our XXXX we you optionality the when especially closer have, we The as mean interest is to judgments I think you But to adjusting really expect, look that with an of think, get XXXX make benefits opportunistic. market, emphasize Bill, X% for cost from that right, those

op And ability with look in be a continuing margins tailwind do strong, not adjust. place quite of we're do rates our we've the at market that, allow margins you can If interest does op got to to to us the the or that. good to

closer So, I got to think get that start as away time look you judgments flexibility. to I we'll would those definitely when the And we take that XXXX, period. we've beyond make

Operator

line our And next question Securities. JMP comes from the of Devin Ryan from

please. question Your

Devin Ryan

improving? move here, higher really you of accelerate what you that other in to just need guess over kind larger we about coming opportunity growth and net do upstream Do time to be with the and are and have that capabilities incorporated that think you as I some are add advisers the Matt. to that first everything Dan, to thanks. help able question, Hi, need push? could that of capabilities types Or that? maybe are investing there are expense that of worth

Dan Arnold

Yes. it's Dan. Devin,

the overall high as net of our and overall look, we in set client about to serve that's inside worth, the our opportunity or spot. have clients services that an have they clients inside they may as demand And refer advisers' worth space, when a I segment sweet high of have the function category, evolving speak net So, that now opportunity that's end practices. really for I think not sat and driven the more to capabilities traditionally that

that's think I our driver real out been certain so, the of contemplation capabilities. of And building catalyst for the

that around us own And our complex out so, right? examples of building case design, are service

be reference example, that question. that Matt G&A in an making, was to would shows that as core an the investment so And up your

I an think it, support. services not you sit it's technology, It's also Paraplanning see that the that the just example. in but extended around financial as planning

that we're capabilities that building things or are organic those we're ourselves. So building ourselves

So, as we build will we continue we've certain built have that in-house. the and to on we'll things gone journey, are --

There's traditionally we sell clients, or done insurance to that types worth we midsized are things haven't like also net of to important other a that helping inside services offerings maybe think that's insurance serve small or business. agency own tailored high our

developing where offering integrated and than that's strategic we inside which solutions are partnerships to those -- services we'll building. overall of provide our And rather

their how set of putting what think so is And that and advisers to a we support our that's high serve we're solutions together compelling clients. net position worth

think today, in or challenges even I target progress those we're deploy will. operate those capabilities better us how if to advisers could leverage realized who those, capability what I of, we that have the say, to the And we or call to with then clients. Now we out well, only you we set specifically it marketplace as where the built do worth utilize net high that with that's might we also

with a And but that of of capabilities, some significant to that capabilities. we're But continue something of be better way, go I explore think and about we're how example we've in to made market think we these journey, is there, this it progress. terms an some not on we We've completely been we capability. would leverage how these that's building

attract doing that, a And and the to I'm our outside capital-light new. support compelling look And us proposition, is partnerships. use model it advisers strategic think we then the potentially value can help what we'll existing market to to take I

Devin Ryan

Great thanks context, Dan. Okay.

here a Just and of quick the market conditions. kind M&A on follow-up

or seeing deal reasonably wealth now. sounded a announced big around the manager you're management was in space today. There what optimistic You wealth

it's sure reasonable market maybe that not like the for across guess making it's just channels, the is are the market you're same around of themes what some of right now. context any activity? in I'm kind but what's you I that if feel the catalyst seeing M&A a

Dan Arnold

Yes.

I see continue think to trend we'll that consolidation. ongoing around

a deploy think to certain I so see or capability to set transactions continuing around way. to leads utilize want capabilities around and that you're may or type firms as IP that in innovation different of well, a

individual then level the and/or level. activity solving for planning adviser And around more at we're smaller robust seeing practices succession

the amount across And of think ecosystem. so, you're healthy seeing I activity a

all exploring as Boenning example, in And Scattergood those with active We did the FRGIS. & you and an closings of us right? we continue possibilities, to see yesterday deploying stay capital,

I you know opportunity you traditional of and that, of growth purposes example markets where call sort framework & growth in that a what I would these, opportunities would would what it's potentially those see we to example first, acquire a that. side a practice, for in exploring of just be great would our great for Boenning remind of be possibilities, and Scattergood

got to open where look We and category believe nimble agile them we than framework. add faster through ourselves. that in an can that acquisition stay we've capabilities around also and second building We

putting third that then of is that work the And the and succession, one, being aligned to bridge is newer through which one, this future and liquidity with capital new successors. capability these final a and little one is practices acquiring

think that's where And in where going consumer we're exploring activity see market. on So, I potential good the possibilities. we're active, that's pretty we

Devin Ryan

Great. Thank so you much.

Operator

JPMorgan. line And our Michael next of comes from Cho from question the

please. question Your

Michael Cho

taking actually mean, my environment trends either where you to areas I that in operating all you're business. pricing on or take given seeing for afternoon price look dealing as and all you're the your with Dan I different guess -- zoom in Matt. on business? and touch little there the a price we're the touch kind Thanks to to question. just looking Hi. I out just Good the out ahead in, there bit are just given of initiatives you're invest some wanted

Dan Arnold

capability, shared to at one, part about reoccurring marketplace. I'll at of if And Matt, end. specifically look the we past, offering. certainly, theme above the want into created take help Look, investing of as our look you Michael, you we've in the investment platform, at our a pricing overall Yes, in that as you we advisers overall such services, back trying use win We as and Think technology. strategy, anything add differentiate think I the and will. to price our pricing

to sure has five cash of them. I to -- that XX%, yes, types appeal assets for the new right, around is years been typically the new think the sorry, of places And of so focused we that XX% to past, enriching make it, and that we're four those going want on been platform, solutions, advisory we've call historically

those, middle them, versus way you'll at a continue to to to we more And centrally to managed them type of around set enriched and lower as that we're see capability with us more adding platforms refined of look pricing all applications leveraging so using as XXXX, the our the create for was advisers more that purchase.

You're being also around charges in seeing that. certain areas very us tactical look we're at transaction where

make to help we're advisers this we where those adjustments the they the such Although about most ultimately where that our make changes, transaction, actually on we trying lowering for very that be of sense them. holistic make tactical sort of

I a this we'll to And couple are that continue those examples of think so pursue year.

most can our helps. we win them trying couple. to places is for. whatever Those do what that help I advisers that and we in of we're optimal differentiate that is matters are hope solve the a to So think

Michael Cho

follow-up. Yes, Dan, referenced And think one you of expenses. I this color. the I does. the it just kind just then appreciate on quick

third are about Just accelerated call portion. you'd of accelerated those there expenses out receive I that's bucket talking guess, areas looking the the investments? at going where we're to

Matthew Audette

that this Matt. take I'll Yes, is one.

think about think more -- that investments. the you when bucket, it's of I the third about timing there's

specific no there's category. So

the improve go when capabilities think making expanded that plans about in, that you about, we're given bucket important. those some our on third that back got are we we've investments plans. think I and And markets. of our think technology accelerating up in value you And and plans, support or the help environment is things multiyear that help quite proposition we're open those to really the that

want Dan, the there's that's if headline I add. you to anything there. know, So don't

Dan Arnold

an frame give additional to I that. would just way you

framework and remember the we vertical that are around and that of you back integration at we Day opportunities If of the showing shared spectrum Analyst those lot a Investor did, off investments have. that we

as you'll that coming to more our So way more enhance back all ecosystem level, it solutions local the also really advisory it that at things into a in lower we helps operate adviser find the the but where drive and of sort platform.

And play. across entire that specific so any I opposed to think you're seeing one as an investment spectrum accelerated

that's I of how framework So helps keep been your [indiscernible]. how to and investments think the about think we perhaps about to hope that spectrum

Michael Cho

Great. guys. all so Appreciate the much, Thanks color.

Operator

the Voigt KBW. from Kyle question our of from And line comes next

question, please. Your

Kyle Voigt

Hi, platforms. good centrally on managed just evening. Maybe another question

organic net still new it's past in that, mentioned but the growth been over there strong You couple is decelerating response a asset of pricing, on the quarters.

trends Just managed for the business? wondering kind if you could color time see you provide recent a over more little Thank penetration and opportunity you. rate the where to of to centrally then take that the on bit

Dan Arnold

Yes.

our managed advisory of think available, So we've we overall UMA we advisers more that SMAs and inside obviously, ability centrally fits And value spectrum of to think use really offering. the entire that that with that on the to And and platforms, for solutions. that's respect the the are investment about is one places enriching as focused We ways, different about in available continue capabilities platform, into that turning on add there. expanding more content to that it. been a

There's cases. scenarios that one really and more would is how in appeal the and cool enhancements and it improving materially functionality apply

even to smaller to that to it it would is overall because spectrum that but of feel and move lot of share, to about and excited plan if the that business, even we to tend sort will, that accounts, the full at where with this mix advisory think continue served in of centrally respect brokerage over make more about movement across people from of both solution. a grow brokerage, potential of a appealing the for managed we're we better So opportunity to you it's appropriate, advisory,

one you in think good the we trend was appealing be to so, utilization. about it. that drive And continuing add the certainly year and So rightfully we to that's invest more down. how think and still upside demand to pricing demand can about way the make think for appeal believe significant, last helps And I capability but also it as drive think about, to

that. Historically by speaking, trend a is more and challenging equity see or had more a sort wheel downward volatility, the will, impacted, last and tough drive markets, of combination more managed want adviser to and we fixed more an of centrally times markets many usually the you that's sort their year, reacts where macro of The if income fact, the put in on we'll environment. hands more in

some noise of So you're sort in trend. marketplace, volatility seeing the in of occurring that macro that marketplace the

we drive hope in utilization more structurally to think basis. it. on speaking, it, we more appealing up I should the make appeal the continue And helps. a of the invest it relevant I that

Kyle Voigt

just just here flow and update program maybe came an Matt. question has above a could follow-up, of our maybe a bit the you into or if number modeling that really. on that's wondering number that DCA for in then know I provide that a And you. The how But for grown recently? yield expectation. formulaic Thank Good. currently accounts

Matthew Audette

on think it Yes. I of I I a have account. mean is you're update point don't number I emphasize, an accounts. the would the making, though, per fee

it's -- move predictive, given down. so to for hard the up little basis quote it a balances be So just in we to but points, it and

when that quarter, But this would So to it's it's not forward not expect you be like you changed would may haven't in because materially. see fee driven, that just account, emphasize really a it's seen account I they the driven. get you've per something pop perhaps going rate

Kyle Voigt

you. thank Yes,

Operator

Blair. from William the question from line And comes Schmitt Jeff our of next

Your question, please.

Jeff Schmitt

Thank you. organic for the for curious On industry, on right aggressive But just maybe to environment just for seeing pretty recruiting competitors now. looks trying the more is I'm recruited you how get assets, know you. down look strong I you advisers they're it are growth? for pricing any growth mentioned with

Dan Arnold

Yes.

driven industry XXXX slowed, XXXX, right, last then last I of think years, recruiting sorry, I it's documented look, impacts. on year, the over extreme the in pretty the to volatility the churn think the has the three to which backs So and primarily from XXXX the environment, pandemic are well macro --

will the respond that about transition less sort batter's that some more in ways systems. to have talking box, in to gotten of more think have we're you the competitors so That's on certainly, tend aggressive. about, swings aggressive what being and of with And I different

in and more those so aggressive monetized, seen And -- systems think logic add would get then around underwriting see that's it types transition you that the interest be that's over certainly, deals, what environments. can of that would thus rates And rising and years. last it, occur, you'll more we've have to I when what three in robustly

set. the opportunity changes we look, us, I for think, see don't any in

as I marketplace. rates existing advocacy it, advisers of opportunity regardless market the services of introduction think ongoing with in -- expansion opportunity set expanded our churn we our think of of drivers about group, from and our the good key to affiliation experiences, the of set capabilities, set really opportunity models, our our win the that the of drive what are is the ability or evolution

more trend the the did extent more in I think to their exploring that sorry, we and and getting reengaging to and occurring. We see stabilizing fourth quarter -- the past strategic that in that options. and And volatility now shift continue third advisers market macro, not see the the there's expect some big to

And you'll employee-based an explore continue from movement see that to model folks independent to model.

opportunities. them creates better for looking succession own and catalyst can of finally, continue taking capabilities, something more with their with the independent to being with planning their We another able that and more see model, in clients. care to folks And help support even serve of and

extreme think bigger the term, the pretty the year the think movement, or much some important since are sort given markets first macro, ultimate of short things there's and in been the more those scenarios, and but size right, XXXX. pandemic the of run, last in I we certainly immediate equity of of drivers noise So

at that helps you recruiting on the least over some what give color hope I we're seeing landscape.

Jeff Schmitt

you. question growth guess, bank specifically, deals helpful. quarter. that rate any the was Thank How like the driven then much of by organic that what And And be breakdown of a absolutely. brokerage on would X% I outsourcing? Yes, up in assets

Matthew Audette

Yes.

that's assets? financial the you're about, asking brokerage large the what on So institutions,

Jeff Schmitt

right. Yes,

Matthew Audette

quarter. mean X.X%. the Prior growth I to for be it'd minor. X% was the relatively it's that, Yes, rate

minor of relatively it the part quarter. a So in

Dan Arnold

better higher rate income fixed trend to three that past the brokerage-oriented or of solutions over or be clients that, to that solutions, more that annuities brokerage or in think which if growth why Maybe whether curious the and yield seeking quarters, whether be add that's be I to interest environment you're four to rates. using help evolving may around advisers the higher

growth year. to where seeing the of And some wasn't trend prior that last you're that so come that's necessarily from

Jeff Schmitt

you. Okay, looking Thank have I that’s what for.

Operator

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

question Your please.

Gerry O'Hara

kind leverage public for get number. grow long-term leverage I Maybe I just to of do feel might down up a And best said a kind be continue sort how think of some coming What long-term rate to and higher in one Matt. interest sort is think you it think of maybe X.X ratio? in Thanks. X.X, think, a of you bit optimal ratio sort The of both of higher color to private, from environment. want this an tend to bit run of set at Thank to optimize a a little you. as the you environment? more I peers, business,

Matthew Audette

Yes.

environments. we economic our balance of have a of really to sense I And part X.X the the environments, the capacity different a in X.X to strong maintain think of range in I think, think a think to key range I invest growth sheet proposition. think, makes that ratio value a and for leverage is is the different times, I ability

an that host the on of moves and back us, support ratio, if at leverage to not I that being part the we immediately our pull on being and advisers and able investments have, we're against key immediately to macro pull we're clients for it's example. them back a knowing think a and going succession have or to recruiting serve and capabilities

on prop of And X.X mentioned. view think the a some So certainly landed key of from of differentiates with it part range I in the the right environments. firms a to a X.X that's ratio we that that think leverage value times, that that you I the

our where point that a we're macro think, anything that's, we think of at I capital low of certain well being this today, acquisitions think are QX, or the where a closed, that low like as I coming end we being sitting. point, I fair below but with at at the way end bit as we the including just that, And deployment in positioned in

Gerry O'Hara

evening. Thanks, me Great. this That’s for it guys.

Operator

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

Dan Arnold

everyone with afternoon, look their again taking and and us time forward just to Thanks you thank we I want much, this join out to valuable speaking quarter. John, to for next

Operator

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

You now disconnect. day. may Good

LPL Financial (LPLA) 2 Feb 232022 Q4 Earnings call transcript