LPLA - Earnings call 4 2023 | LPL Financial Holdings Inc.

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Operator

Good afternoon, and thank you for joining the Fourth Quarter 2023 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 and Head of Business Operations, Matt Audette. Dan and Matt will offer introductory remarks, and then the call will be open for questions. The company would appreciate if analysts will limit themselves to one question and one follow-up each. The company has posted its earnings press release and supplementary information Investor Relations section of the company's website investor.lpl.com. and forward-looking operating statements and results, well other include future LPL plans will management as and that financial outlook, opportunities call statements, about including Financial's as foresees. Today's risks potential business strategies expressed Such forward-looking of and subject forward-looking materially events and that to to beliefs results statements. actual those risks are may unknown differ statements cause current or and or or such management's uncertainties reflect implied estimates in known the from timing

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

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

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

Dan Arnold

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

and Over throughout them advisers their provide achieve to to financial XXXX, life the with the personalized their goals and continue clients guidance help our on quarter past journey dreams.

our the their clients. our we advisers enter we can dedication of care care they take of their new we of and year, taking remain continued commitment As mission for on thank while focused them so

growth due back our capacity stability combination our quarter, fourth the the industry-leading to appeal the continued our to to the commitment invest and we model our the and model During of feature-rich platform. robust see of scale and platform, into and of

respect quarter solve our we and these most the review and progress serve starting in another better on with strategic also we helping capitalize our to With of in result, continue results the to results. while solid than a to anyone advisers and execution player as areas, industry. progress I'll enterprises both business solid quarter on of fourth challenges the continuing of As else, delivered our performance, make appealing thereby plan. opportunities make

In continued was [ by as ] total to growth markets. higher organic the equity assets increased complemented quarter, trillion $X.X solid

This growth, to bringing growth. new net the model million, year the organic XX% to addressable net of were enterprises as our to Prior were $XX assets billion. X% for contributed year the assets quarter In billion increase was enhancements outcome to This ongoing our organic year recruited record. a new by representing assets $XX billion, total large million, year-over-year organic for nearly full our annualized of an the for representing recruited driven X%. Regarding fourth were and annual fourth market. expanded quarter, approximately the new full well $XX $XX $XXX assets as

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

result, our both that As sales new clients. advisers same-store existing a clients expanding in The combination winning drove and are QX. with wallet share solid

adviser of and At time, delivery and enhance the the evolution to capabilities the we new of service operations. the experience technology our same through continue and

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

$X.XX, Our to XX% our fourth EPS adjusted led year quarter full financial business to of year-over-year. an of which results with increase outcomes $XX.XX, solid total brought

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

market in into our with this affiliate of share. sustainable capabilities experience, success help unprecedented us has services deliver businesses. a organic life across become adviser's industry to across the a the growth centered strategy the flexibility our that, To gives as Doing to well their leadership throughout to and adviser and path market. provide adviser maximize how reminder, do to vision cycle and platform, can is advisers Now long-term the leader back the invest us

that all and where the strategy, advisers on operators that Now on we technology and advisers delivering XXX,XXX categories: can integration capabilities, expansion, marketplace, vertical we two and enterprises be business. into that focus our us the great we in the Horizontal our ways differentiate help of such marketplace; win services work where advisers our compete strategic with affiliate in expand organize we execute look to the to

context, with horizontal as that our with let's Now around start efforts expansion.

fund, fourth quarter, the in our traditional we strong recruiting Over saw in approximately assets. $XX billion independent adding

prior pipeline. As expanding wealth the our respect while the a RIA With our our recruiting model delivered the strongest and appeal of we the of and breadth rates in of enhanced nearly total our $XX to double strategic approach, maintained result our and new year-to-date, of also employee win assets, affiliation our offering, roughly the ongoing industry-leading evolution year. depth models, go-to-market of our we billion

the As their ahead, in we look models sustained to will ongoing increase increasing their our growth. marketplace these awareness enhancements the of capabilities in help and we drive expect

Next, the and we QX. space as accreted organic growth $X continues added of to contributor bank to a traditional assets in credit union be consistent billion approximately

of source Bank of West Commerce. recruiting with XXXX meaningful of In the addition, a large in enterprises the and remained addition

continue For wealth onboard of prepare management potential to XXXX, we business the financial. to retail

on Now our with has our orientation process, the and the been platform, as early positive. been part potential a of advisers to meeting a preliminary to road team feedback that has provide them

us match positions are successful broad of needs the our of appeal Looking to ahead, that value execution, spectrum solve we enterprises, proposition track of confident our well with institutions. a help the of for record

within focused efforts, advisers and to run our marketplace integration in services win vertical that and technology capability, investing the are order on in back into the comprehensive and differentiate a help we thriving businesses. Now platform our deliver model

service delivering through a of which our to make continuing As flexible part on this year, our to provides including aspiration make purposes advisers over over offer and of efficient support, on digital have service broad artificial to we including effort, information the capabilities, that form. advisers we of last centralized best hubs, digital an capabilities to model human-centric In that multichannel need approach. work support a we which so the and expand the works services. quarter, more our always includes and The past channel of options is provide them. our spectrum the they This can an industry-leading and continued intelligence continued intuitive that for spirit, digital progress

Our helps XX Hub to X over to investments with newest us [ way. Tax advisers year, which highly the ], this area process tax the last expand streamlined from in our in efficient digital enabled being and hubs business a

ultimately we the capabilities, refine that we last interactions. over our roughly While And of innings adoption XX%. of has year this believe the XX% interactions of the are can from as channels much as digital that advisers set, XX% the service still doubled continue these through in percentage digital early to capability go to we as serve of solutions

evolving of Now our available as of as seasoning and a with a the our services the and service increase, continues strategy, of integration XX% proposition our X,XXX and expand utilizing year an result encouraged nearly And our year XX value ago. of appeal enhance additional our advisers to are part capability. vertical to we and of we active by demand, of portfolio the portfolio the from number solid ended up users, continue

historically set the addressing our size advisers friction in Looking Which are the by ahead, we and given was the of will been broader industry-wide new focused innovations next changing double tackle firm. and to that on remain transition adviser the latest point efforts portfolio our inspired an innovating the the needs complexity our portfolio services of over of a of has pain services years. directionally services X one coins. on And broader

That transition strategic important said, rather the it opportunity. we seeing than view a headwind, as process as an

services transition growth. short-term for use services journey admin, branding includes feedback readiness these well helps simplify on Early the and change make of we suite the and recruiting. for the support, themselves that easier with which can and fully onboarding the for bookkeeping firms, has testing accelerate advisers capabilities to and transition to transition automated our transition positioned new ultimately market the it that XX% To more of services. be we solutions to the to advisers of onboarding who familiarize more solve advisers additional adviser are solutions, opportunity, up leader positive, several in including end are platform been movement catalyst for where a one to benefit As developed board ongoing will help live and other drive our subscriptions proving advisers stages it the they in industry, these of we have process environment as or and subscribing transition,

ourselves continued quarter throughout [indiscernible] help and summary, And maximize will we challenge continue as proposition stage to advisers' year, we business for invest needs value growth systems. the build market. and and their themselves them of to their to at for the in our advisers increasing and while every solve the perfect order for to forward, ultimately move driving in fourth In we practice in the their

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

Matthew Audette

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

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

clients new grow new markets, to succession traditional liquidity our our to enterprise make continue assets in onboarded and We and with both successfully progress and organically solution. continue

our advisers, growth. have enter industry-leading invest our XXXX, while proposition we and as we drive XX,XXX serve organic the opportunities than remain to to about excited support So in and we value more continuing

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

billion, year Our for our billion. to $XX QX total recruited $XX assets were brought the which

and strong pace to quarter another QX, recruiting. continues, Looking of deliver on ahead we to are momentum our

results, profit financial $X led adjusted million growth $X.X As the $X.XX. EPS our was expense of discipline to sequentially. of Gross for combination organic billion, QX and down

XX.X% from up basis build points Our due moves. XX was production payout in seasonal rate the the to QX

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

fixed first ended Within XX% quarter slightly down QX the cash mix Client at XX%, marking since ended our second the of increase billion target XXXX. balances the quarterly cash at client respect the million, million XX%. sequentially, $XXX the With average rate to quarter balances ICA our was the of balances of $X $XX up revenue, quarter. it as to quarter cash within client $X from range million, roughly portfolio, declined during

rate basis during We placed there maturing yielding these yield. approximately $X.X billion higher matured. points than which As roughly a new is contracts, X-year reminder, into that XX of balances points, billion roughly of prior were QX, their fixed basis $X contracts XXX

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

expect we are increase our ICA cash yields where on based interest client as new points. well rate and for balances the on basis QX, As X rates contracts, to our approximately yield today, by fixed as

for million was from QX. and fee $X million it down service As revenue, $XXX in QX

decline well lower year our the ]. of was QX conference seasonally lower by largest higher This as following primarily [indiscernible] in [ adviser as rating driven

service by million ahead expect QX, revenue Looking and to to conference. sequentially approximately we $X lower decrease on fee

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

look a we by increase QX, would million we ahead seen to to As to what expect date, on we sequentially. couple have of based transaction revenue

let's core in the was within starting $X.XXX full year, and was XX% approximately G&A. range million Now to our turn bringing to expenses for QX, with our growth. billion. outlook year represents full This $XXX G&A It

the as an this we capabilities incremental included macro reminder, opportunistic of environment. favorable spend X% a of our on focused took advantage As accelerating

XXXX, Now leverage on organic return investments to of we normalized that to and concentrating plan our growth levels spend, ahead enable operating more in to business. drive as look we

to ongoing business scale our investments efficiencies. addition, are driving our In greater

to X.XX%. intend a in expect core rate we X.XX% growth we specifically, to XXXX of rate to saw our grow core Pulling More range G&A half together, we be XXXX G&A the this roughly XXXX. in

to As of be in to G&A that range for is QX, expenses associated prior $XXX to million Note we $XXX the expect G&A million. spend this core core Prudential. with

only expect move of an these of XXXX would the will just the update small G&A. that spend year, be we'll closer end this provide of on to core XXXX. majority we towards onboarding a emphasize them as amount in incurred XXXX in costs As we I

to on sequentially. QX million promotional It Moving was million, expense. $XXX down $X

by offset onboarding partially was costs. integration spend conference lower related and prudential higher As

as our adviser QX, which one be promotional will roughly have during Looking in quarter, flat conferences ahead seasonal be declines marketing expense by to offset we of expect largest the spend. to we

QX. in expense, regulatory $X for As it million was

regulatory Looking forward, given the increased of to expect size million business, our per expense scale be would and roughly $XX quarter. we

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

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

in remained $XXX notes. X.Xx. our our million range increased is management, Issuing corporate would offer. QX with leverage investment-grade that and million. of note ratio first capital the $XXX leverage balance I that, cash target quarter, completed of to during X.Xx sheet we debt our within of strong senior With to our X.X Regarding

to how deploy Turning capital. we that

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

within we QX, across allocated frame In shareholders capital to million repurchasing continue return deployed solution entire and invest of liquidity to capital shares. to succession $XXX our our we growth, and M&A support our drive as organic capital and to

our $X repurchase our As $XXX authorization million keeping plan on of X execute track over us we look we years. to billion ahead shares, to to QX,

was It QX, $XX in expense. interest million to now $X million sequentially. up Turning

QX, to we business by approximately from QX. balances we to results. and million ahead current financial and interest strong another given quarter increase In closing, debt interest rates, Looking $X expense of expect delivered

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

Operator

our question comes Research. Steven And Wolfe Instructions]. from first Chubak with [Operator

Steven Chubak

years, a by Maybe at double-digit G&A just question and significant growth at well. past organic you've platform, and core the as these also off The with it's investments double-digit least to a core start X has organic part growth. clip bolstered in achieved been grown in really G&A on

certainly 'XX you the a G&A the do Or noted, updated to as for momentum a in drive slower be G&A commensurate should you NNA can guide slowdown the But moderation It growth. positively. imply with does expense G&A in moderation surprised significant spend? core we So feel sustained in a Matt, organic? even expect growth

Matthew Audette

latter. you some answer I'll but going to Steven, is the give here, Yes, the color be

investments and just the is are and around same. our moderated think I continuing to confidence the growth organic conviction drive

that, on driving or just investments as remains most And Now strategy prepared the to shared below environment organic probably as I little the in details this and productivity growth, I well conversation relevant driving adapting what strategy efficiency. cost the think as bit what's evolves. building is remarks, the in prioritizing a investment drive also

So at, to and if growing on you your XX%. XXXX point, look

X% into each. X kind equal that of You -- of break categories that into XX% about

growth. The the and about serving first was supporting really business core

really really back to was guidance value ourselves X% that our in opportunistic was being about The establish prop, when nature. the the And models and category. really new through third our And for our about that that second addressable continuing XXXX, category, third and for really to XXXX, to look in plans you third investments the improve at make market scale of services, investments. just that pulling it's accelerating market think I things

then to may G&A continuing your value core the capacity making But and which it's even to for X.XX% that you X.X%. that, the us top year do invest that every continuing and improve question, lead growth we're two get that would the So investment down those make brings point capabilities in really just the We're each efficiency typically things, productivity we're in to our to this to range. investments core better. X% final put getting the and XX% to are of growth. proposition the to make to of and create And to on investments

point our organic the there, color hopefully, is the in helped this high continuing but remains. to digits think I headline on growth deliver single So conviction

Steven Chubak

just on it's And great for X headwinds, over to some these know month, hoping seasonally stabilizing And level my I just last trends. confidence that January the speak provide hear. lot M&A typically you to cash was have update weaker with and rearview. also a Matt, sorting an in cash. gotten months, a both for could That's largely follow-up, the your which are just of of play trends I their

Matthew Audette

Yes.

to a stabilize I'll really I cash cash. saw July. mean start think I start the we headline is back in on

you pretty where by year, the if of we the year look even similar a of ended second the month, ended July. really, the level we half So at at

that really in seeing continuation we're is what January think I a So of stability.

fees So primarily a January hit seasonal the does factor quarter. reminder, first that the just hit typically advisory in of is in month the

-- cash that Outside though, we've of so do continued stability. It's So those we billion. to see $X.X balances. around reduce

amount actually moving the customer So was activity a balance from of cash increase in January. slight

So put actually increase. is and the for you that but down the driven those by slight it's a $X.X together cash overall balances primarily fees month and are activity billion,

headline So continuing I stability cash sweep is to on see think the side.

organic question, of side, well point -- bit look and maybe QX, driving really as last quarter month your at the little of overall growth high and X given just the of on is usually first organic To bit delivering the on a the X, as quarter perspective a On I'll when your give growth, that nature little the you of single-digit first years context and January. the lower.

So those was X% in zone. years, the in to X% typically it

QX and So about and seeing similar a I X% what actually expect The little is would delivering be be half 'XX, [ of is thing first December as of off. really in sweep the we as factors reason X% in really you to X% high advisory if of the then at February January well is month only normal the have that for seasonal front, X% look time taking single as would the reason actually place, ] at closing X%. normal the as those zone, really, higher lower that hitting really for in we NNA half than than we're X% just meaning to a in March and something advisers that to we that coming quarter gender fees the well to talked typical, of this on first the for highlight a cash on for that's together slowdown January second at the bit in side, the the quarter. digits, to the color And the because

those January. come You factors in through have that normal

highlight, I though, things Two this would can. for

First is recruiting.

strong. continues be to Our recruiting

exceed may to track QX recall, prior $XX We're the we You first year. of around a in year, this billion. in set at recruiting to large on enterprises last record quarter new that

just So towards the shifted is there, and February continued a March. more strength little timing

bit to attrition the and then heavier So a in that weakness versus bit January. attrition little a be little you going and in little got January is of bit the on a side, opposite And March. of February

had to acquired the that we normal. As that's a with It two two time. were practices happens consistently single seen. from to retention time And Outside of we've just We have during month in January. part month. remains our high in that, happen the to levels

going of lots to it that have X% shape the quarter January to in And you're X% with there, but would X% X%. we're different little a of So to bit looking color headline and at a in, just QX I to continuing that in zone.

Steven Chubak

thanks to much Matt. detail, for unpack there, but the so Lots

Operator

our question comes And with Goldman Blostein Alexander Sachs. next from

Alexander Blostein

as of Good question, Dan, It's the over talk an couple could was a significant enterprise you about guys. years. channel afternoon, of been we hoping last well. the for for I the area everyone. Thanks success large bit little

in clients about of on XXXX. insurance company bit of level talk So engagement activity you about the the And the guys Peru deal. back little seeing particular, expectations from are curious maybe a for deal

Dan Arnold

Alex. Thanks, Yes.

up in $XX with a capturing outsourcing targeted assets with back platform. large banks up some our solution. we about respect initially, this and to opened to billion XXXX we seen success enterprise So novel of And to look, market point, larger this our have channel,

now our to that the trillion. wealth move said, compelling personalized which insurance the we and it's And options, in for pipeline catalyst it an our to, helps and at manufacturers that to exploring of said, the interesting with roughly believe management, of companies offer banks outsourcing investments forward. product Prudential represents a continue as took additional an solution the That and that targeted appeal set, growth question. up at $X time, reputation that for trillion $X.X opportunity. us the wealth strengthen the model additional of capabilities market and was wealth that we durable and made solution as management operate market opportunity extend you experience, to and management or same look solutions. we a for We additional enabled capability around you If total banks it's that some and And was announcement, inquiries,

the this they others. believe we we early aren't why outsourcing? of these well. and evolve They're explore discussions the So continue and but in in as pipeline progress to to continue will part stages, still do

forward, set us. really capability we summarize So enterprise believe IT opportunity channel our this a move if we market excited and a growth about. for I creates as real it, unique deep leadership for We're

Alexander Blostein

you, Great. And for a quick follow-up Matt.

some a the faster of shakes lower schedule. course Kind ] billion reinvestments of sort channel accelerate forward additional the moving a opportunity start over kind for And that So wider holding see $X.X to How billion a you $X [ case year. move of moving in of is way reinvestment? little to spreads? how about there the of any nice to with the to is X I ICE mentioned. you guys lock-in maturities, the fixed you rates tranche know year. that in provided up we of that this ICE demand think as that's coming But out out the maturities to

Matthew Audette

the new of contracts. I Alex, the $X Yes, the look billion place place is the strong. able we them you quarter, end in if contracts that demand demand, Like X-year towards on the into to we're at think did

even that I be kind duration time where sometimes offers, and there the And the they're a no now. right discounts. place to spreads So this talked think marketplace, XX we're basis able were is. to about where to And for point really we've that's in of long a above spread the curve typically market prefer the curve them we which at is longest

nature side the a on floating the they a is demand of the there. demand So It's And of It's that very common The question, as well. the on where reason kind part aren't thing. really I standpoint second think your sides fixed accelerate that's is rate data their the opportunity probably similar rate out contract, to strong. right, not empirical side. liquidity it same the both bank of of for on get you equation a from On there see the most

expect accelerate I it. rates. you point to -- be $X.X opportunities we as marketplace at And you there is any got look up. as So them noted, look But year, it you wouldn't now, able have we'll we've right when coming place be the X-year if to billion available, to And we'd if at the higher in excited do even that well.

So good, but market there. opportunity is acceleration probably not is

Operator

KBW. One question. with question Kyle And our from comes moment next Voigt next for our

Kyle Voigt

Maybe the just expenses. a question on prudential

I the of think should expenses promotional onetime of growth percentage to onboarding million either wanted we that off Pru confirm by year-on-year line G&A or size rolling and the $XXX the relative you roll to in on a to frame still XXXX. of the the basis expected promo be just just start off the will size And that the million the incremental are entirely 'XX. can in First, then framing integration and about help in expenses of

Matthew Audette

$XXX to I bringing think I specific on mean they million, board. yes, on onetime definitely are Kyle. Sure, the and Yes. Prudential

be in of I them XXXX. will majority think the

on that primarily they flow But will what 'XX, depending when the at in timing look So 'XX. that million, be $XXX far in come million so the of board, $XX some $XX into it's if million on of in over XXXX. spent you remaining of could that just range. we

amount would still it change. go Now into just the $XXX million. be some XXXX. wouldn't a the could be just It XXXX, -- of but it would could total majority It's in --

think would the relatively I small, I when in of about you it's remarks and front, the all emphasized G&A in give timing that headline prepared on core expect they in is XXXX the come of kind we board. the On the amount

$XX And would should your how when expenses. go to question overall is of ramped, it, margins million. overall dimension I'd to EBITDA of which it's maybe you along fully the just XX%, a I I go look business it. that around That the estimated in back just think sense our think to around give at with

like be end in come you emphasize standpoint, of that cost the just think something from when 'XX. a board did likely just -- I that, you'd it's is to to timing correct. of given be the So primarily it's if on they're directionally XXXX, I'd towards going

Kyle Voigt

you relative just rates, a at And all-time follow-up, the on interest more some sector. be macro if M&A to clarity on I seeing the the at for environment, Understood. we're ask starting now are the just highs. M&A in then backdrop favorable to past or We're on to Markets see that expect least year X.

come narrowing this So last bid-ask of -- year? between now wondering maybe the in and you're you're across time if versus sellers the and you maybe could seeing desk speak opportunities number whether seeing buyers to just your the market, spread of or types deals that

Dan Arnold

hopefully, a stab at there. of all take that inside Dan your I'll It's me Let questions one. and get

M&A grow So in we opportunities. is to growth part I of opportunities. our first organic primary And our complement a think, on question, three as categories market. remains to One of you core our know, your strategy to focus

that we're acquisition Reed [indiscernible], acquisitions and potential our found RIAs. year. broker-dealers XXX then and ], are closing of include Acquisition both might Examples So earlier Capital, [ which this

So of be consolidate, the to marketplace across in as those we expect would industry consolidation. might And continues are those opportunities. we the look how participant good a that examples look, for to

where desire allocate should accelerates capabilities to vertically we The is allocate buy an are like we our would to that look where integrated, these transactions evaluate And or second capital create this and that. will is feature-rich ultimately partner. and we extent capabilities at and, add type build, that to this platform to would of opportunity look to the

trading we be available As transactions delays. platform Spring tool And entire early will that think in advisory in world making a ]. a we're base and in trading turning rebalancing industry-leading to we're the you, delays include what [ really our capability remind and that to would to client

do type what So that we transaction it. and of can about with excited

would capital in helps transaction thresholds both enterprise advisers deploying third of internal be and way our The that liquidity a our newest type of the solve that then part and example a succession to a XX potentially capability us we've this And and also us gives both Certainly those it a external put of lot against disciplined return I to work that category question important or really today. success. internal about capital a meets advisers, of requirements that, think this needs aren't well in solution but again, not do for our over only positions create that years. around and that next doing for talked

you So consider financially, just that part these our with sure benefit strategically, as opportunities, culturally summarize do which we they we'll discipline remain two. all that, I of to make we core helps. them operationally, a each good with around and hope we and if framework discipline will of but it strategy, the assess that of M&A

Operator

Securities. for question. our our moment Ryan next next comes question And JMP from One with Devin

Devin Ryan

question LPL. at innovations look encourage I Okay. recent in of to guess, at to Great. in history. by advisers I I move X% the more the But win and, advisers I I motion. as been industry really about to some for new Dan. move A service interested you to was comments and X% more that if it's churn, took pretty guess anchored And LPL looking made to

about, that rate, the could like the So would and it big you in if deal, seem would innovations just curious, you're be it more that talked X% on X% pretty in seeing to of based broadly portfolio can. or change I'm just really just the industry that services a you some what occurring it's whether

industry And love either those LPL reasons to then can get of reasons? mean? kind innovations or move a what So just of sense rate that actually for

Dan Arnold

question. good Yes,

we adviser continue the to just below remain that around if with we sort other part in X%, movement churn of over is years, of of is think first norms. marketplace. I question the last So flat. you that Think start the And which about or know the X.X% see range couple movement of the in

it's mix in some been shift coming from. has there Now turnover where that

way that, of the wires. where we as In up move notwithstanding seen overall said, been think rate our what movement and the appeal example our said as traditional of from hopefully invest is the we I growing as slowdown models lower in the foremost as as understand market to appeal continue affiliation despite win fact, their you've model. in more all independent or all the absolute advisers. earlier, movement their That at there's last this And look moving into in across first a different an to a we year, platform well

their at the look I the models, back relative the you've And seen market rates, picking with opportunities over higher you years only we model. investment win X our the those increases look, have newer into for as can up there in not a Also, in do share we're think the that set to on past in If there. journey, have will, the marketplace they're a capability catalyst win going the a our investment also higher capabilities enhance you seasoning, be -- just and terms rates they of pressure if credibility for awareness there.

those win, new you it's if even the our will, just right seasoning with to not So models. that It's growing around investment. it's

boy, could and associated effort management much if real that we break change and to begin if from What you to to one solve hurdles to in the you that the help that at imagine down industry. And I move the it advisers that that moving, for what or is could catalyst that, we of to that one another thus of create marketplace. A think to movement then be the to movement the to rubric, of notion do sort finally, contribute will, advisers ways the can't your laser increase things it in of easier given a being the could different point, that we a one different in in this to practice we moving completely control making is big believe concept B look of for

accelerating helping And them the fund that is and which value their them I alluded operate, question so going practices portfolio see someone positioning marketplace, potentially a think we're management. our and add with using tweak my it's some structurally, at and of then conversion, that's offered our our and more strategic could easier and to we're a a bit a at that actually to we've of the you change to you models of trying knock-on but if successful recruit in through that doing certainly, to could them and in us. how ability services the to remarks, for And advisers and go making catalyst the that will, effect, the to that's realize to and through that we thus, I movement explore while ways learned be our opportunity

that together. that hope some little... that's So color I we added pulled how

Devin Ryan

color. guess great That's interrelated I Thanks, follow-up just Yes. is my to Dan. And that. it's

in new And momentum the in in resonating those XXXX assets said models new billion the $XX really are market. you recruited affiliation from terrific in believe and I XXXX. clearly So channels

million that would billion if seem to to So mean correct the imply channels be legacy $XX to would total, there. around I'm $XX get the I

mature the growing the on because of the contribution similar continues legacy channels? like new what so maybe well scale billion where split separately. should more just especially from thoughts to like that call trying that's but has to those of mature, some we're a it, something growth just XX, want or channels, size they like to, maybe at been to maturity Or tremendous there, there get So when affiliation because something I'm just we're you $XX and kind from they're to it look or it's coming going the out look kind on quickly, such where above

Dan Arnold

possibility that each is And a and of in those is the we what great we've employee the think that think I down size we broken question. start about as those market of with longer Yes. base It's think terms And markets. I RIA we billion a out the second. the of will, $XX employee-based that model. model typically of to all then that is coming you And Swiss if or trillion subset, have one -- $XX in sort an and those range then in of largest the

then And so, traditional that what right on you reason we continue would begin the contributions independent market that success win are those, our then to independent What's rates more grow if think start side. if of to markets. as you then -- the that associated believe, rate you half those that the that, the inside to or look those estimating win? down win, the rate if on traditional our -- achieve to independent our ability the win it's with begin think even do you given were markets those our you relative drill on we sizable what's to channel contribution opportunities I make broader do size that to to And of and to like the about with necessary the capabilities

get not into, the I that's is of hope we'll I'm type I what there, what that the these to opportunity am continuing rates port that and suggesting So is suggesting win in markets. on have independent side it we invest work into is an to challenge achieve large ourselves helps.

Operator

for Dan moment And comes our next next question One our with question. from Fannon Jefferies.

Daniel Fannon

biggest driven sales-based the kind saw of increase somewhat in quarter quarter-over-quarter be commissions looks This by annuities. to

curious think of and that your what DOL So going not how forward? about behavior in has change that proposed, or for the outlook context the you might

Dan Arnold

Yes.

take me Thanks one. question. that Let for the

equity interesting also the opportunity since and probably but to annuities. gone have in frankly, up, predictable some interesting move deploy and you've of seen markets the have growth utilization fixed have in when the utilization We annuities volatility variable then and momentum, And them, be can rates the seen growth in capital.

And for of I reinforced annuities you're quarter year just for nice last exactly it's year right. tailwind Fourth better been a so part the and the -- think plus, that.

do we things DOL And protection, can that making and slightly principal go is clients that that to argue from help I and do and choice to advisers' where you in for relative ensure serve that DOL for a between we prepared 'XX advisers where with enable interest best we rule back as then need standpoint, the necessary fines. again, them them go -- through it's those And successfully 'XX [indiscernible]. advisory. And continue sure hard to that they adequately that, one their do think and brokerage sure we where that sense playbook someone markets, helping then in the as I that to make best used if in we with ability that forward, around the the do about there's they think option still to as provide preserve offering people in we interest as for the to think believe business I to will participating BI. to advisers changes the our be annuities sense can brokerage choice good maintaining to making ultimately in upside relative a ultimately advisory and change them. and it's them we're I said, to where to pivot of goes think we rules believe to our use the our we cases, is as interest equity places the question many make the and they That frame about continue or a used time in talked needed, rollover where they're downside the as earlier, and good where in making sure that help Reg choice

I in a may two business. be there to may of see think business still tougher some the the to adviser just We're scenarios utilize probably areas, It's is other adviser do bigger the the of There just better that advisory. accounts, -- spirit other but places, client, in options, ultimately what we be shift will where can than the see brokerage utilization you'll of though in interest be also the given the solution. the making efficiency. best sure small

believe that's well our we [indiscernible]. investments vertical with So advisory structural in hence, a have up our again, the do around integration offering, adviser trend platforms, we lines

DOL make used. to think won't be headwind capstone and the a a we're complete continue of positioned brokerage but we I it sure business would rule it. do some -- that brokers that percentage will be put the enable to on we see. create on So to change. that

turnout You'll helped. still for utilized some see it

Daniel Fannon

a of as XX% you then Dan, I think, you just follow-up, called out mentioned Matt, couple XXXX. a then departures. And And January Understood. retention in

about happens in So broadly? just more environment if around and we slightly the maybe January context given get if might some can as be XXXX you curious different think retention we what think

Dan Arnold

strategy. our our execute got on we daily is a our We've to extraordinary and to attempt of look, make invest on got to got Yes. deliver we we've capabilities, No, an sure deliver to sense basis. in experience it

strengthening We capability. scores, there, trends NPS have evolving solid

we good that to about program two of that practice we We on with to the centering use will, that a was example our go examples, as assets actually have retention We Matt support platform. not outside sells And important point, great this way opportunity us XX% potentially platform to a year we question solve solve to to expect didn't succession. we also a time used, help advisers daily range our that though swing way won't all, us believe you trigger innovative well, not launch think needs the attract for it and succession that we we really enough year rich few launched And in new we a get do to their ours look, for serve and solution only succession at many ago because really the a those. already the them gave got where a those can a be value someone and liquidity will that our to that only the clients our retention to maybe a solution. win proposition them a XX.X% had do what help that rate we've of good range if position serve on

how that's we're So [indiscernible].

Operator

question. from our our of Budish next the And moment Ben One with next for Barclays. line comes question

Benjamin Budish

been most is of impactful about low range year. a what core talk Can the bit or be have the as Matt of to for covered, you a growth. potential this gets for one already of but might just not high kind think G&A I the too little end maybe to you going just on

point drive that what are of start that at the in And shakes factors down? could sense out? of up year to sort that get what you better the So do a or where

Matthew Audette

Yes.

drives with associated costs that the the is within the typically what range year. the think growth I happens during supporting us

cost you look associated compensation came in a of QX variable to the that really costs that where the with the high is we growing, I and of direct ramp of our good at the range, with range, quarter example variable within associated this was up. if think but at growth XX end of it's about whether

that things. typically that's So within range, driver the those

Operator

Our Michael next with next And question. Stanley. question from Morgan Cyprys comes our

Michael Cyprys

can I of that back that industry around that comments to, you across movement advisers change level. at the to for help the I but some your you the come the for Dan, industry in services broader that at just hear innovations on your favor backdrop earlier some it move portfolio of guys, driving macro Curious the you just to. alluded wanted the what's of industry. just

versus of what to further? curious slow you evolving lead sort the up here interest backdrop that pick churn do cut? down might And Just even rates if see are then how

Dan Arnold

of complexity that one. for some Yes, got range the in and brought work that, return you've different headwinds people yes, of it of know, hangover still think kind aggregate And to just I referenced, through from than is created things some is good a These little a down X% movement. at Look, from change headwind think, questions. a on I would historically, don't do bit number we over COVID had that I the a slight period that of expect of movement it a of I create things as time. normalize was and might

and on it making you've I geopolitical be of had advisers something And you couple over -- clients, we've volatile post have or don't transform that's that is mean? strategic and of some do forward. offices just in think with a going up where their what pending I that? created that the think a think sometimes about in their been for years really adjustments partner they've uncertainty a last time And complexity pivoting of to also and want regulations is new may to them in periods one services moves midst surrounds the lot their market advisers think got seen uncertainty. you of growing businesses second that of it see got does a the are the of of What practices and digitalization pivots or of I uncertainty. them how best learned drive also new big The on that what does world the types more change focused to their to put pressure they the that from And whole they What create costs. avoid they what practice. are

world I trying on those to assess in think flipped just what options side. are alternatives that's and a the

to noise lots the throw on productive now short doesn't of and lead And which AI Unfortunately, penny of that, that exuberance. outcomes. also a always in sometimes good it's top shiny creates you run,

further drive little some enables are do that? is It where really its in so of I order And and to thus in do more assimilating pace. think some being solve down flipped I they able we standpoint, where really road cases And get those. on helping house I about, at that that costs can my interesting they're the leverage some side drive tools tougher as growth? faster management those they the that's see think again, risk getting to a to do think I questions associated with How a them wisely how hey, really what of move proposition regulatory outsource informed do I either forward tougher and a way the leverage a to folks need use with do to productivity their to in world from lower and technology them or value

movement if will to skirmishes, a will, back normal go little as think, So time. [indiscernible]. more those return help trying that in you we are some forward I of we're , in the It maybe

Michael Cyprys

for one-timers for the in enterprise it promotional And right large Great. adjust On arguably, Does of organic the that mid- been And expense growth. has the about sound context I couple singles looks to that's high over follow-up like in years, question of promo a teens. the If expense. as you? just high Matt. the to past underlying

of that the forward, we persist expect question another growth the promotional mid- there. pace So high to Should teens If similar we one-timers? a to organic excluding underlying singles. expect expense sort of in high large going

Matthew Audette

And hone in Well, different think three could categories, the trends. drivers the of key to on which have best just growth. I'd it the about in think way I put it the -- probably is

overall. biggest the That's typically is TA organic with board of bringing the growth recruiting first the think driver associated I that. and driver a on is

have recruiting that fairly is stable, really been do amount -- the haven't So driver of rates really changed the recently. not TA there. have we

where go. think goes recruiting would I where So is that

is right? more engage with we of second how overall of conference engage really at conference the They're The have number kind that spend them, important and spend, we advisers part they other. of how with with LPL, trends each

expenses So as spend the scale. enterprises. the expect really with firm highlighted, as large it's associated could you scales, that then onboarding you to lastly, those And

to really depends it the in side great be good on a board. what good depends Credentials is little overall 'XX that insight It bit got on that the spending firms hard into on a We've that it. because example. So and just bring come spending predict of to on on can happens insight other into board.

how It just depends on each. trend play put things differently three into those it really that I'd three categories, So kind out. those of

Operator

And our next question comes with Cho from JPMorgan. Michael

Y. Cho

just a I And to want have here. X-parter just quick I touch enterprise quickly again. on

the a all and onboarding potential set? of mean, deals. opportunity the potential about how I second, leverage within an You LPL's of announcement. about enterprise looking term, prudential scale to of does the benefits longer talked your healthy kind sort beyond the we continue mean to just and conversations since and operating gain terms pipeline in think as you bandwidth ahead, framing But then looking type I potential limit in mass do at Prudential, to And critical should uptick more

Dan Arnold

one, you to more first on the we can and continued and with on be economically and have cost. how think both of at to doing Look, so channel, a existing better see an faster lower and efficient space. is related banks sides every doing right, explore that innovation better and comes opportunity, a before, appeal you a more in programs to said that, on, bring that do the the portfolio drives do you So [indiscernible] that at time and both continue pipeline that to on we're playbook create insurance I more And more the I manufacturer as create advice interesting how one how to automated learn second

of you going and ago And we change first onboarding access as would interesting continue you so when effort front years you are lowering management tell that more enterprises that we on brought we amount better more outcomes the process. that, opportunities. by to rightfully of up do of more we're only you're and said, were able X in create much And larger than to kind I our automate of to to not these investment the economic

You also on them at faster bring a pace. can

faster as then to mine look And what up we so in the these that think challenging foremost, bring being again, And and existing precise that's, I into faster and ourselves that's looks like. get better think to that we're your overly and we exactly that, order and what being on can pace. we you, platform working without to you to. want if do way very better level a first about operate to as our thoughtful bring able how and be we're those right, I how continue get assuring experience you the that and at -- at you or that an would those And

ourselves I and network. opportunities begin onboarding think do you think that change to management challenge with to shorten we how pragmatic

the that's want [indiscernible]. you to... So problem Matt,

Matthew Audette

Yes. Yes.

are scale. resounding to yes I a benefits think there on the answer is

I allowing on bringing with starting things of faster is think platform, platform. when you're our that capabilities attraction on once and where their at access -- value the to big this them channel and clients just building part a channel that look of getting we're they're the on our high grow level overall you the they're to proposition

you get you're growth. your levels of increasing where organic So a place

capabilities or good specific things like. on crew but open building out that channel only channel larger the usually where rest can to cost a for Prudential. platform in you're and the I So I particular building of core really to they're would and a to well, up that. the this that's actually making have you LTL of these that applicable as that capabilities client much to not you're but you're We're instances, others technology And capabilities each only usually think important to question, this support we're is not your bringing on, side, example very more right? you're or that the enterprise, enhancing rest bringing the to on of recruit typically us of serve a ability maybe out sure for those on. now particular that think of

So helpful. examples is those a point benefits at headline scale least hopefully, and are

Operator

to And closing this turn session. today's now remarks. to concludes question-and-answer back for conference I would Dan Mr. Arnold the like

Dan Arnold

afternoon, everyone Hey, next we forward quarter. I speaking taking you for and with to just join want to time Thank us thank again the you. this look to

Operator

this participating. today's call. for And you conference concludes Thank

disconnect. now may You

LPL Financial (LPLA) 1 Feb 242023 Q4 Earnings call transcript