LPLA - Earnings call transcript Q3 2024 | LPL Financial Holdings Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and thank you for joining the Third Quarter 2024 Earnings Conference Call for LPL Financial Holdings Inc.

Joining the call today are our Chief Executive Officer, Rich Steinmeier and President and Chief Financial Officer, Matt Audette. Rich and Matt will offer introductory remarks, and then the call will be open for questions. The company would like -- would appreciate if analysts would limit themselves to 1 question and 1 follow-up each.

The company has posted its earnings press release and supplementary information on the Investor Relations section of the company's website, investor.lpl.com.

and forward-looking operating statements and results, well other include future LPL plans will management as and that financial outlook, opportunities call statements, about including Financial's as foresees. Today's risks potential business strategy those Such such timing and subject forward-looking differ of and and events to beliefs actual forward-looking cause from risks are that unknown to statements may current expressed and results or in management's uncertainties reflect statements. or estimates implied known or materially the

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

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

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

Richard Steinmeier

Thank you operator. so much,

a Executive those it roughly everyone LPL's wirehouses wealth Officer. privilege the as XXXX started joined my following And having after Chief serve it at a listener in consulting. my management a call. firm great me, today's on to speak in for working of to is As first-time decade haven't I Rich is management couple Steinmeier career and to I'm and met that caller, longtime in

that vision the growth. of and to strategic execute mandate closely our a And the to and with accelerate have to the LPL plan and team build set our years, rest joined worked achieve on past for I vision. with to Matt leadership our X I

the is institutional and shape our adviser clear leadership our to assert opportunity and forward, markets. Looking both

value creating as indispensable long-term focus the sustainable institutions shareholders. by capabilities to outperformance strategy serving achieve while partner our an delivering and to culture, is and advisers to on Our

$X.X a assets the trillion organic approximately net growth quarter, $XXX growth representing This turn billion, pace with new brought our net Okay, rate. assets, as the $XX on organic to annualized assets past during introductions results. attracted to increased new on X% of which In rate. of billion record was X% Total complete, let's months, we a nearly we XX representing with

quarter third with of $X.XX. adjusted business results financial strong Our an performance led to EPS

Next, let's turn our recent initiatives. growth organic inorganic to strategic our and plan and across

is our vision of their leader long-term As and the across To to services marketplace. platform into the can affiliate back in reminder, maximize the us, advisers unmatched deliver centered provide success a and strategy to help capabilities the life how become to is do with that, throughout and cycle adviser invest our flexibility adviser businesses. to

leadership, of gives assets In Doing large this recruited trailing for to we've just management. where records XX the months markets in periods $XX were but the institutional wealth sustainable not and us quarter, $XX institutions. independent across of represent a onboarded which path excluding all billion, bringing both third the billion, well, industry total to our

on improving reached market, $XX also assets, of in while In capture advisers a our breadth motion of new the high billion already depth our independent approximately recruiting quarterly in pipeline. our and industry-leading of traditional rates expanding

their increase expect these as another awareness independent new that models capabilities billion our marketplace solid our wealth, a in RIA of to the respect strategic we look offering, recruiting enhancements in ongoing our we employee ahead, And assets. will and models, sustained and in increasing the enhanced With affiliation the growth. $X drive delivered to roughly quarter, we

and Financial Financial. management will advisory onboard of X billion the of approximately XXXX. retail quarter, businesses add we During make preparation Collectively, Prudential we Wintrust and $XX to partnerships early continued institution the progress within advanced our the brokerage where also large marketplace, wealth assets to by these

earlier growth, office closed family. Atria organic our XXX to transaction the staff Solutions, acquisition XX% home The advisers, their the to this complement meet to our on progressing institutions target. Wealth approximately retention is and a of month, X,XXX are and we track LPL welcoming we As well,

aside, the past Atria for them with that and the and perfect an their had over opportunity makes their and with to ever I've months, LPL. is spend as several adviser-centric than relationships And high-quality time the institutions clearer a orientation it team fit advisers

our the broader our the experience to enhance XX% remains operations evolution and XX over of delivery a asset our testament and for and As This new of last at the adviser functions. retention the through service to industry-leading is continued months. capabilities technology business, efforts

would our firm, behind operational the spearheaded out In to be I that Matt. not call improving which adviser is experience, transformation of by force remiss spirit, ongoing a driving the

leadership It hands. been supervision. operations purview, the Matt expanded customer his responsibilities saying we've good that functions our service at has in as CFO, the very of helm all including consolidated Beyond organizations his risk and day-to-day firm goes operations expanded has role under in of and these the President, additional and of his without critical as for are and

want to LPL to shareholders to for honored in for continuing employees the our for am trust my amazing their to way they express our advisers to and place our to institutions I their single and partnership, this reiterate to up support gratitude In closing, I day, show lead how Financial. and firm every and

that, Matt, call I Halloween up image and visualize the all company you turn last that event our I to to deressed who out would like to Cash into results. wanted dives just Johnny Friday, over as he With for I'll is point our

Matthew Audette

serve expanded I, on Well, CFO. exceedingly everyone was that to fortunate capacity great firm Are to and on I'm call. with speak right. this too, you All today's an Friday? President LPL's telling feel event Rich. and thanks, glad me as Halloween a

the built all stakeholders for advantaged Rich market To look and we to opportunity echo forward our the extend serve. Rich's to leadership. and sentiment, adviser-mediated enhance a partnering we have position have an to tremendous in I continuing with value

new advisers, and delivering quarter, traditional our focused wealth preparing serving the markets. to shareholder in and results. businesses we are our and onboard our focus growth business This value. And strong of of quarter third to Turning management Wintrust. another In the both on led Prudential growing we remain to our organic

As growth, organic our month. the strong of this we complement earlier on closed to acquisition Atria a

an acquire we entered XXXX. Center, half The we into the of addition, agreement which Investment onboard to In to plan first in

we look while and value as organic the So we industry-leading to by opportunities base drive growing an adviser and remain support to proposition growth. ahead, we our deliver excited serve continuing have

the growth misaligned large our of prior to mentioned, Rich an separation OSJ. annualized respect it of another as quarter approximately planned rate third for With quarter results, or X% strong to with growth business was X%,

QX was On billion, front, a assets $XX quarterly to recruited high. prior the were which recruiting large new institutions

of Looking the have our institutional ahead we to continue onboarding to of largest expected to strong QX, X partners, Prudential, pipeline. a in addition

in back However, during related shutdown I would note of to adviser to natural FINRA the half holidays. the December movement seasonal the headwinds

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

As and for were commission fees million $XXX QX. components, $XX the advisory million, from net payout up of

points XX XX.X%, to Our from seasonality. typical payout due rate QX basis up was

renewal cash client rates million cash by the $XX was sequentially, driven revenue, quarter to higher QX, respect $XX up by balances client driven from up With organic Overall rate growth. $XXX $X at ended contracts. billion on million, our fixed billion it

rate to our range the was Within balances roughly XX% XX% of portfolio, mix fixed within target our of XX%. ICA

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

impact the As to we look ahead of more on offset year-end. than the to fixed X rate yields the cuts expect by rate contracts we QX, expected our new additional

increase by As points. a result, to approximately yield we X ICA expect our basis

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

large QX, Looking and seasonally fees. to not adviser expect IRA have lower ahead we conferences do any

sequentially. the earlier Prudential this and to quarter, onboarding the be However, revenue we of roughly acquisition expect Atria given and fee month this service later of flat

flat QX. to QX on transaction compared million, revenue. to $XX was Moving

look million on increase we QX, activity transaction to contribution Prudential, ahead we As expected the $X date expect well levels approximately revenue as by to to Atria and sequentially. as from based

we is on Atria with transaction Now in well. the let's continue the Prudential. as onboard progressing expect Starting the and to mentioned, advisers mid-XXXX. Overall, closed and on transaction to move Atria, to

We estimate realized, benefit up roughly the we from be That post-close timing to meet said, EBITDA our run to million, given now expect $XXX original our estimate the in are retention. near rate asset XX% current XX%. in the factoring $XXX of levels, approximately pre-conversion be are But million. to synergies our on term, when EBITDA we track of of anticipate

Prudential. to on Moving

onboard to track QX. on are during them We

now and were our financial contribution, given as of end balances, levels, As well from cash current million QX of approximately expect $XX million for run current the original $XX approximately estimate. $XX up which EBITDA at as Prudential's billion we rate asset

$XXX was It G&A. core the starting in expenses to turn let's Now million QX.

growth, ahead, levels given core with while range billion to supporting variable on to there G&A of are XXXX a our organic our our focus associated ongoing we $X.XXX efficiency, strong Looking outlook billion. costs $X.XXX are tightening of

core Additionally, are that costs we Atria including the our our those end Prudential of we closed now outlook. expect to of year, and acquisition G&A have by the in onboard overall

and add in million XXXX. of G&A such, As we core million Atria expect to Prudential $XX $XX to

our billion new core result, billion. to outlook range $X.XXX is G&A As a $X.XXX

well $XXX as from and on strong QX Moving as our resulting Annual $XX we driven expense. spend our to assistance million, transition promotional hosted by was up as conference Conference It QX from recruiting. primarily million increased Focus

promotional expense expect decrease approximately lower driven Atria. conference to related offset $XX ahead by to by QX, by Looking we assistance spend, transition to million, partially

related for anti-money up we for recorded charge million million $XX SEC expense, to it controls. an as QX was $XX planned a As from settlement regulatory laundering QX, in

given million expect item, this Looking to regulatory nonrecurring quarter. $XX a ahead, expect be the continue expense -- nature of to we roughly

sequentially. QX, $XX to technology Prudential. $X development and up amortization, approximately This it million related $X included to Turning depreciation million of million was in

to Looking sets. and X technology, data ahead, internal went with continue invest new we live recently in

level depreciation to would note $XX a expect don't we of million sequentially. approximately and we As forward. just this increase increase I result, that expect going by sequential amortization

for million full quarter by the QX, million expense, it driven sequentially, issuance. $XX May impact in of As interest $X up the was debt

transaction, given the increase QX, the revolver to expense approximately by following of Atria million ahead interest Looking $XX expect to balances we sequentially. close

Regarding We of with QX. cash $XXX ended from $XX QX corporate up management. capital million, million

of leverage As was end at X.Xx. it the for QX, ratio, our

be near expectations, levels with X.Xx. to approximately anticipate our And of the leverage transaction to expect return the the our range midpoint more ratio target management QX cash consistent following normalized to closing of month, X.X earlier corporate of this near of our million. we we Atria range to leverage target our ahead, Looking $XXX

Moving capital deployment. on to

M&A with Our the supporting where of majority we on returns our excess framework generate, as and allocating in liquidity solution. organic capital and on focused appropriate, capital to foremost, In deployment where growth capital capital pursuing we remains QX, succession growth first our allocated returning the M&A aligned shareholders. focused investing as to organic well was

on of on following And X, paused of share acquisition repurchases, the that October closed Atria the the buybacks announcement Specific a reminder acquisition. we to Atria.

the transaction, back that closed the QX we Now plan quarter. $XXX shares share we to buying on our million of anticipate repurchases and in restart in

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

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

Operator

Alex comes Blostein Sachs. Instructions] question Goldman first Our from [Operator with

Alexander Blostein

any is start Matt, with That's a investor new and kind group good Rich, I on roles. expanded first you in CEO on over of you X you couple both to role, of X to is And spend be? the to business? the speak direction the of areas the of for this could hoping new was minutes a focus are Rich, stuff. obviously, next maybe opportunity key analyst years. change given to the there sort your business likely be in of the for for with of broader going and we key your the firm, congrats are What to priorities strategic

Richard Steinmeier

expanded Thanks really role. Matt it. the I I Alex. and actually Great. appreciate congratulating on for Thank

the there about moving every forward. are as business we're newly thinking in management day. X a as top that So I'd formed into we priorities jump say committee

in The serving we clients that is distinction. to to got first institutions on. end client advisers, built known serve what firm centricity It's that the this that our is with and maintain was for, allowing are, their have our the firm and them

sight that is priorities as us making top us, of for of that so the advance special. don't And lose we sure made X what's we

empower deeply Second, to them those clients in the to This pivot, connected which may this our employees. sit empower however is our it. to and the with define to all achieve who decisions they is are a the employees is firm help slight take take levels who of at success clients ability the

And framework in authority a that a better our our to decision-making clients. us, of allows place so in and make that's framework the of all support to putting for have about employees control decisions

allow nimbler the feel will It serving direct and to in us more clients.

third The operating priority is leverage. driving

of couple over compliance our last levels to had high we to growth of take in service, continue and mentioned as all supervision I leverage years. over of And the operations, the try operating and drive privilege have We Matt value the had to of extended drive and have for shareholders. remarks,

I point going not out actually to would change But is is X thing, that our Alex, that strategy.

for structural receive durable demand And professional, advice, the adviser and as to is leader and attractiveness independent reminder, advice across Our centered a investor our remains in and positive. by X to the a from become the model. that driven The appeal the trends. outlook vision long-term of growing that's marketplace, the that conviction financial

in actually the privileged a sit marketplace. We in position

have in our enabled We our growth platform firms us and change gains capabilities. and that outsized that fuel advisers back investing in strategy has of our to

that the to us longer give opportunity think strategy it term. persist the over will I and should outperform

time weeks X And clients. those thought. I is our place. what firm where allow X been in this spent It's weeks learned special of I've that X final me, maybe with if is just And very hundreds a have you'll meeting

have you? These built decades. its transition relationships the built consultants, the over thing to not on that relationships but with CEO, Rich, them, have and And I been with managers, clients, In how relationships, we can reach our we clients it's me our specialists. relationship help fact, years fact, in are of out say, consultants, advisory with when those actually, as is managers, foundation relationships supervisory branch relationships

are up last those I've weeks a have major stepped in And seen what X in the way. employees

echoing seen. driven I the future, that's it huge to and us. clients that base. are think be firm, ability our to And for you back clients advocates Our will our I've about if our our being loudest the succeed in to what give employee by kudos

Alexander Blostein

talk since Very dressed guess Great. I as helpful. Cash, Johnny cash. up about you Matt, let's

more unpack first nice put really totally growth cash But outlook You of that is industry on assets before, on you have are balance outlook balances in time sort little a while, grow welcome recruited the in guys -- calling based what these sources tried to Maybe of and balances. bottom the starting where time been the obviously, broadly a from cash We've that just do space. see on and you over cash are sort up and hesitation bit hasn't kind levels. of played of for a the much development the understand for to in growth much, guys yet. -- to and starting durable on for of the the the growth out

Matthew Audette

Alex. Yes,

just the that start now we've to think I those in you're a when But about bit operational. I think in cash that I fair think past it's on largely at some relevant are of that cash reiterate just talked the bottom, are as hone point you balances tough. are calling always on your to sweep, looking things

facilitating So you're paying of fees, do to down get rebalancing, things advisory to that the is starting necessary of to nature. things what amount withdrawal, really cash like

a under the of percentage But last I market the We've came as going as -- down. big if down. part the mean zone. up, of right, cash to up look look has AUM, so been couple was quarters denominator, the just that coming leading part that -- at driver where even the you when and the primary that, of that we X% And at a quarters of the percent really is driver stabilized few a

So stabilized cash if per on $X,XXX. have quarters you balances average over as look an at few a at it they just just for account,

are the in at point, you necessary accounts. to with the bottom. cash to look it's really when amount But now, of that's your where there So a tough we think is cash always to manage I call right

and like So and in you that start growth So where got in start we organic -- think right? if to then promise as average what those stabilization, do, like again, can are pivot on $X,XXX, lead plays really to a growing that you with do could couple are strong can you it's see you've new look out. I bring be think you we'll how it's outlook place I balances hard you that that because our to does you accounts, a but cash hard dynamics there, the to that, see would growth

Operator

with Research. comes question Chubak Steven Wolfe next Our from

Steven Chubak

welcome, And Rich.

if new to strategy, roles. growth might just I congrats of starting for with been your the echoing wealth you've still X private those channels remarks, either vision be Alex's low. last the could Just much helpful the it penetration but the is increasing or out you of maybe both and you, specifically thought years, expanded quite you're just Rich, architect the your lay are strategic since on share, you TAMs, growth and larger given these priorities, primary institutional

look does that across X for over channels? just what like And both you the of success next those years

Richard Steinmeier

I those will Steven. in turn. take Thanks, each

channel. let's So the with institutional start

in nice unions always this success community the had little our last credit as has this serve but because So this bit the served maybe while discussion X ago, participation in capabilities earlier and know, recent decades starts we've a channel I'd in had past, to start the an story you years, built institutional some acceleration them. we've banks, in certainly actually firm

Simmons, Webster, serve and the in build in to larger ability committed channel, attract South National the institutions. started firms, sophistication progressive to and to our we capabilities those really as that State, And we we Bank, growth Old grew

real be used the the and investors a growing participate, what end XXXX the business of large made for of And that expectations opportunity because a we a opportunity needs us sit expectations inside wealth probably is bank that, of demand say to the able and were to concerted of to effort did those thresholds to because the channel. which requiring. we there's with to serving changes deliver delivering an around of were platform outstanding lower regulatory As

at a firm. we was M&T with that around And above that to of on And leaders firms dynamic you you earth choose billion to X why the had moment considering the partnering marketplace in probably first aren't times asked, the partner question point, pivotal leader it and would had firm of changed outsource, a wealth and actually When an $XX XXXX. the so outsourced that large us. being from we the starting asking ask a outsourcing chosen with world-class had a in partner. And in why

it's really not that And the the where firm, made. they that vision McAfee, credibility Doris the M&T, a position others decision and trusted the leaders and the trusted Meister the Matt they that's just actually held and at that their but in of marketplace

into from that's world-class way. this capabilities where a as partnership institution. a management beginning the deliver So point, we a program we at And saw in there, built us reminder, trillion with larger the to a a we've leader in material to segment. And bank market the segment $X financial snowball in ability are clearly wealth

in are feeding they is our happen happens table learning pushing roundtable is pushing and a And what where and that from other, each weeks, beyond each our in we'll will from clients. happens each have to that leaders other. And what be round at of us see the industry the the they other, you capabilities, X scenario

that allowed and us then sits the for our allow are to there a insurance that manufacturer integrate a is to And similar distinctive we In opportunity in data wealth marketplace. there dynamics the in that to way, that so with extend have data market. us realized inside firm offering there the of product leadership a us an

insurance those deliver quarter began this found a in that that in we that towards and of in then also in partner as last the different year, willing being We this discussions as of and Prudential as the wealth. we'll well distinctive the realized that we offering progress a of with Prudential. X And built solution discussions integration we now have experiences the marketplace types

folks is Instead having to platform they capabilities. forth, chair none. That having with swivel of investor back to and second end world-class have integrated now a

has aren't taking Again, And taking a big, beginnings what led the of marketplace M&T leaders achieve and Hearn, the is business would Caroline partner that come inside world-class is bold that around, to us. of in wealth I there, drove you pivot with a leader. would the the conversations capabilities Feeney in being and the with with a which the not why step on marketplace, the you the Brad think, fact, that why earth derisking considering but outsource, efficiency, platform to

opportunity that trillion opportunity So segment we not well only that but good pretty And our segment. to as the progress is and our feel about a think market product to as bank we as manufacturer as reminder, $X.X continue segment in insurance momentum, in well.

the So it I think in feels momentum. to days, feels It as to opportunity of we're those requirements we're that great presenting continue grow markets. like increase to still early scale and a building continue an leader

I Steven, we talk years our go high forward wanted management backwards the worth maybe page and private But the really we in the If to market. turn more independents that were expand movement folks have wealth market to to wealth, capabilities identified the needed about of here. a independent. build to the we get was ago, I that marketplace. offering allow bring participation realized couple in again And And around incredibly net go independent fact, But strong. we our and capabilities to we could to to that in regarded to well and

coming more or to wealth of and by that independent Linsco market. to is us realized journey more our model, we've allowed private our built other model. support are we've began that XXXX recently, we strategic built those supported capabilities capabilities the what that out introduced regional, as we introducing into Then wires to large progress services, now employee sophisticated the and advisers which a wealth And our is

offering planners, the introduce in wealth unique that worth capital to independence the a brings it ownership for in expected to secure advanced higher access book capabilities to of while brings payouts the to of offering, market and able principles been providing a partnership it investors. net markets, models advisers, also high because solutions all we've And private

put like a And together, the as that you second-to-none offering feels it in marketplace.

things our capabilities on Now integrated have alts banking of to journey. platforms, around we'll inside more capabilities, and build capabilities further of there's that a and advisory progression couple we're our

But feel momentum progress our married is what really we've we as we those with that capabilities about. learnings, good seen early

And had see trend segment. far, our sustained think since a in so, that like year in we in so billion wirehouse Linsco that's the to that greater wealth and serving market $X to should us this ourselves And we've advisers offering we with a and $X offering beginning we that launched that at offering penetrate over assets. private the November advisers that trillion this the ago, as is joined opportunity a participation wealth teams regional X offering X expand of growth a and strategic allowed goes us distinctive we lead after distinction, and just those that market,

Steven Chubak

helpful Rich. Really insight,

Just for a Matt. follow-up

NNA, market take we've year, decoupling It despite a to share the trading generating meaningful discount you. leaning the steep the just suggests in much that aggressively a between clearly mind is currently flow first. buyback And pretty market to to you not Over wanted underappreciating stronger that a not consider why to at stock what into wealth willing advantage consistent second, just the peers NNA fashion of momentum. today? pretty stronger perspective is get I past more just exists price believe capitalize this and seen your disconnect and valuation organic your on

Matthew Audette

Steven. Yes,

buybacks maybe -- the things as view that having restarting think we balance are there remarks, think reasons. covered I prepared the important we stock of which for I on hitting think leaning strong I as many the into a I the certainly sheet unwavering is are undervalued, we -- really in X first,

environments the contributor think I that, lot at are also that in and to with support less organic them growth, you look of are we is When some if businesses but obvious, the a a maybe go other driver them right? to that investment of rates a like really that a down obvious have partner being of serve they've reduce and important inward from, down, markets and thing. be where firms to go going that's of their not the come interest able equity withstand some to or that levels is look

of at share target So within our then the on continue construct in are when And click focus capital a leverage growth we I all returns it's I better. I on driving within being that to look allocation, organic includes that, think which think range. when repurchases think we you returns, down

but on The are returns on the M&A have been returns better, repurchases share compelling.

So we I think capital areas. those would anticipate all to allocating

that is a value things upfront that are the investments a conviction I Prudential that compelling does why understand bringing part when a the broader for first opens doing certainly like a lot of I return that require and we're you're our standpoint, going market. tough capital, making not your only from investment, long-term of that a It's that is drive up on opportunity to question, to on upfront think certainly I particular disconnect there think think think one. market I to how and other than

that why is and an us, value. by probably perhaps not just long-term the doing things the are got keep not of in example These drive all that Certainly doing. is long-term the are we've which the what to the underappreciated underappreciated. first things markets we're history conviction time opportunity of where

hopefully, that helps. So

Operator

comes with Michael next Stanley. Morgan Our from Cyprys question

Michael Cyprys

and us for and and Maybe this remind you. this roles. over much anticipate to you're XX months well-deserved could say, your see you're on XX first succession Great the deal. Maybe to liquidity how just expanded X next relative the the on capital you traction in seeing [indiscernible] months? just of platform Congratulations deploying last update the into to, on us

next here as broadly, strategically, the over thinking look unfolding more couple you're of years? you the And how opportunity set about out

Richard Steinmeier

the Michael, it's Matt much beginning. kind to deployment. around it you and I'm going start, Rich. the for the hand so Thank words capital at to over going then to I'm

succession. the so start inside And and with liquidity let's momentum of

the with start the opportunity. of background to got you big think I is how

And the see marketplace, fastest-growing which retire next X/X you solutions so over segment advisers the industry. of the advisers look the expect that we really the to in is help we to years, And independent segment, in those as there retire. XX of set think mature a at wasn't

the from in fact, the was to those seller financed moving often the borne is adviser risk adviser were the largely but selling by X who the past, next, business. In solutions

existing in fact, We would came angle away by at provide solution backdrop, lose have because was folks. stay us different clients with to driven business. our don't I it asking started this, a we and to XXXX, from so us, LPL. many And we to that our -- a of want -- than want in had we We don't say, please sell to control want we with

transactions And and clients their at GX so to one, business we of the those identified a in things, already help monetize the stands. market many buying advisers, different it inside we with the fact, that where a And we in relationship the those advisers offering we supports listening we're comprise do those an practitioner fair of build back in finance on that like in that, helps practice. have an or the founder GX from them adviser XX% to of place in those generation call identifies advisers Two, involved rate. those will advisers, next it practice as

for generation changing deliver the a that brand. but they generation, from we planning-based it's office client, that way same same move experience second it's the It's the advice, the the to advice. it's Three, business to orientation the first then same maybe without that

X a actually in And not from firm feel continuity so that to progression disruptive next. the clients the and move

they build -- of They oftentimes or principles the actually see tell business proof it of the their than other next for as the exist marketplace business, maybe not generation. this the mother those firm, them. not I we to protected. the to so father top the in does you, pudding. And built solution, we important continues into that that's see now They're will their at founders so they see which in that And fourth, or in want the for those legacy what then what of maybe important, And most want dollar. built

advisers us long probably Score. We happiest have off conference our agreement into liquidity agreement chart gone the of a teams that Our some And not happy that Promoter hour this had entered us. off are have and and we NPSs got with a the through tangible or succession with that with The the a advisers and at those into number, ago, that who firm. advisers had of is we entered experience Net hosted I a and Focus charts. are of this. XX

-- so spun so like I of I for the the whitewash I to them me to of so because the the change going thank firm much not you my clients much to and top generation. And making business, my it for my Thank felt every way like you you my said, sell next a served, ball. was getting shut is be business. much X that for another couldn't office bell are derisking Thank down.

outspoken most our internally, most we've we advisers and seen are influential with are in and largest advisers partnership of momentum advisers our many And our have already them us. so so that

a continuing liquidity on for internal opportunity think momentum you'll see so that and succession. And I

learned And many to consistency them to into And at a firm. that the I've and them through large was go been influence what their specifically was -- marketplace some not HOVs that's a that liquidity were point have led them because those to they first, necessarily in be but that on to clients. into recruit that we teams consideration their and to with advisers this firm external of optionality attractive began this staff unique program strong it event, succession was, continuity and would advisers in discussions solution over recognizing who of our to, how that coming so provide would to want join are with our

then a we're with of is in conversations Obviously, stages But a and all further, went advisers their of it development progression. lot probably their step trafficking at

succession to to external so join transactions One, generation. they then transitioning And when this they it ways. to firm have want begun firm. X next for marketplace LNS in that which our is attractive primarily with advisers to the having liquidity available from and because to in you've works the quarter, move move the seen as is the them towards we've think unique solution, We direct last into

way think turn years. can't you able that see, have to of I'll X/X we -- do offering, just larger past over not use advisers the it in to at it XX Matt to that be talk also augment today. way about we a And this an addressable think have the market go we in That's that to will two, capital. even about look allow to next to of is will retire than But that going to with firm. us we are market that that our

Matthew Audette

Yes, Mike.

of I capital. of use think

sharp capital quite other I think underscore standpoint the right? on that estimate volume a a side, it's to it's hard of dependent. what on all set opportunity large. where goes the allocation said is Kind Rich than to early, have external there But from

to to is deal, land. metrics back doing so $X.X go deals, and look we that purchase use XX that about far these of $XX been X middle per so Xx of the the we're deals if have zone, you kind we and just the at the zone in internal done the I So $XX typically on we're it, call We've kind key billion. million EBITDA to during those prices that million largely of zone,

because lower to deals getting that's basically that, multiple So here. way to a add things. probably about X just think then would external And good at -- going forward getting you're probably from I only think not a you're on

are X% to economics, to typically is transaction, X Xx, which You're getting which X%. at the at and the you're recruiting doing L&S

there's a a probably bit that's little lower. average, multiple So on

internal. an than So

guide helps hopefully, So that you.

Michael Cyprys

drive like operating leverage magnitude sort might couple in is success see of to achievable the you take and And elaborate drive was what of to just of the to do might back question, you strategic over could hoping the I next Great. operating years on follow-up we there? What priorities think you leverage. look a X steps your there? business, was what some coming might of

Matthew Audette

I think where drive grow, and really our mean we where I costs, more Yes. down serve. when more we you a right, it's cost to to as efficient look at great leverage and areas see get the can insight we just get add

we I the business as our efficiencies, got covered think largely Rich responsible And as to kind we're allows which center So have is you technology, doing combination I'm adding And would grow headcount. what things like at that that it's the you've of call largest our capabilities, to the opportunities for when got improve a areas in you look there we you've areas heads now. of there. improve need reasons more that decline, robotics, the without this service advisers may our as investing

we the So more deeper that will there's in our more just that areas, different in improve more the driving we and technology, deeper our we're invest a where efficiencies, that costs into host of the expertise all these get Mike, down. we the things come areas, that

cost the have started So is well. our and down. that set G&A I range has -- the classic to the is year just And this quite think intent quarter, growth, the year. a within cost serve allowed it's as think coming focus that we you that us, to of if that's serve we'll core of strong just going on this delivering we're opportunity I levels where at the forward look really reason for we're really and but is where guidance And our

Richard Steinmeier

love I operating our the how in construct organizational improve it's of overlook just Mike, X I'd thing leverage to to add wouldn't Rich. thing is alignment. that. actually One we

the the he costs components an the of to sitting the being that leads that wealth CFOs largest now both inside management doing sure who across in with that from to achieve of eye and is President. the he of the efficiencies making guy improvement cost towards business responsibly CFO understands So is firm. sustained also X operating demonstrated best understands how me, together put for how while to He capital of build environment deploy in our has

operating I in against lot us make alignment that evolved allow there's so a organizational And that to think that to of continue progress harmony should leverage.

Matthew Audette

if I that, heard repeating don't anybody you think it. mind

Operator

Craig with America. question of next comes Our Bank from Siegenthaler

Craig Siegenthaler

Rich, Matt.

release. expanded just We XX question out cash sequential of growth the at backing after My to wanted offer both saw subs. and the and excess the in roles. congrats I'm cash First, flow positive Page although on on cash looking balances, at was smaller is you the year-over-year free regulated the corporate growth conversion, growth a

the think holdco? and cash company should Given and of really about what are focused your the buyback, liquidity metrics the And you we objectives return how the at on?

Matthew Audette

you look metrics So X.X is we'll leverage. the big X right? on when overall X.Xx Craig, at Yes, that range. focus target really to think I

flow capital between I that generate that deploy which efficient in think is think the I mix we being than that borrowings of of cash really equity we'll more use, -- and and a range. we use the is

allocating that through. to And that capital the then talked areas we've

share repurchases. So organic growth, M&A,

last we I the quite opportunistically ready close point think to of in good cash the market to itself, did your as on on maybe cash that on quarters were May markets specifically when was Atria. get to the elevated raise couple go to

cash where you'll to when of down it that level around. around is zone, should call -- like that typically XXX-plus keep right in in operate, level So go of the QX, of we -- middle back to that to which is that range expect that amount come into see you of you to which corporate typically see cash in But the kind then we Xx. more leverage cash

to And apply based a So it our and we that leverage that's capital always framework are where on anchor. just then take like from we allocation where like to have. we standpoint, liquidity

Craig Siegenthaler

offering Thank and to follow-up strategies recruiting do you plans looks funds your market like what today enhance And us on have and investment drawdown could My also I vehicles? offering. wondering offering remind both between private you you which your expand Matt. is effort? alternative further, this if semi-liquid could was the

Richard Steinmeier

Rich. it's I'll one. take Craig, that

yes. to some to but success increase, total short let we intentional regionals, need is we this platform to our at which our started really question, So join at as the been And of market firms. may at that that goes is capabilities advisers. on. We into regional to wire is which end of and looking the to firm continue we've other wires the we those advisers. to journey It the absolute and have the demand then expand those do expanded very house began that serve were intend advisers used to me start of at independent have exceptional our by being The answer addressable been further? your

in And so further mentioned, on wealth and our UMA. capabilities. building as specifically And our last platform over of center banking platform. of our that year, would a towards , world-class alts management significant extension the we've the I progress of some made alts, Inside

capabilities. our the operational shelf The the did we thing was material and our second alts of of was custodial themselves. beginning And expand expansion first then

multiyear a is This effort.

alts folks and help inside of well In our to position adviser over through to to understand them as XX time full them working help the position clients. their fact, as to diligence go to base we now have solutions them

gotten capabilities, investment this we in lot a year, set those of deployed a we order addition entry In began of new we've system pilot which feedback launched alternative quarter to have new on. a a advisers specifically and the -- with second

expanded deployment much fourth into quarter. to capabilities only our that is of on stronger. better and broad the quarter what we've a that system the the went build feedback that got support advisers capabilities response intuitive in used call from the have who we their Investment and has of been fact, have at second Alternative as so in enhance it's gotten feedback, in incredibly Entry learned it to more And And The pilot the end launch in Order positive. AIOE, our we they've

wealth build So high to dabblers inside oriented we and worth not to that existing advisers that worth net regionals of finalizing the advisers, or of to sit inside forward support high wires of and that private to are channels the continue would call those as over achieve those expand what of us inside we maybe that our either themselves. attractive the offerings look make you breadth as of mentioned, of the those product opportunity only the next needs year reflective but more advisers net

That was answering. goes little earlier questions bit of X of that I a the to maybe

make a This investments us we have in world-class capability is continue to until a that in to capability investments So that us. we'll you're important spot made for is on. and it becomes

Operator

you. Thank

next comes Mike Wells Fargo Securities. Our question Brown from with

Michael Brown

and background, channel? Rich, institutional is the of Can speed just is the the kind to in What speak I the the on clearly appreciate that in the constraints side very business, tackle strong there. that as annual you momentum when growing all onboard begin there Prudential, And bigger of could pick that onboarding up? of considering that some $X.X you you to opportunity. pace of complex these can you're trillion like clients

Richard Steinmeier

the Thank for you question. Mike. Absolutely,

So let's get into that question...

Michael Brown

congrats can [indiscernible] on time from still I There's both. answer you

Richard Steinmeier

Okay.

Let's talk couple about the a segment. the things. of constraints institutional on There's

is an bit accelerating longer. X adviser is process about segment institutional think segment, in pace the segment engagement of that in institutional the differences sales you If the the between quite a and an

to which capabilities. you If build pretty to think years engagement of those us sizable build about for our led with before we we in got to a then discussions couple Prudential, contracting, actually were a

initiatives them, incremental capabilities have build for long incremental is for because have that we that product the certainly partnerships of cycle news built good inside the the will we many segment. we won't so have or Now manufacturer would

in we're On the the leader side, bank capabilities.

through to it's that's contracting. probably then and you're and a see again, going sales years, that to going so longer not a going like to That's cycle, to like going look look X-month decisioning they're and got And cycle. go sales RFI going RFP have an to an you've

a time for to months that. XX can think we're to between which frame then And X you of anything months onboard preparing as

is specifically inside building because going see and Mike, not to to have as some space, manufacturer and pretty get, transition heads Prudential product then us, you're raise as of firms short of as mentioned going process to successful an through their time. with get engagement start transition they lead prudential a sizable they the as that you're you'll in what I you're see the momentum, so term the And is into

so that's see. things And X you would of the

constraint to to at been X began And then ability to that and couple having years would quarter. time, as we of specifically through a ago, go think transition constraints a I major we asked do about to you think one a Now let's constraint do major we a month. the have the transition, would the capacity back so about would get A think about

can to feel the started in constraint. so, or last a that And I might that, be you, tell year we

so the really a capabilities we've that's large didn't And probably sophistication our built these we've I done of and those to transitions digitizing earlier pretty component themselves. onboarding, automating and many of allude and heavily transition invested that we've capacity in and so the important because the events,

reducing that but event. down over Matt or large part get actually an of talking M&A in driving -- event the leverage when it is of actually cost a large up, was so either And the is event, ongoing, and that driving those operating friction a part firms about partnership

had gone through capacity built had we a handle And that even happen so multiple and of We to did events ago. not as that beat. events have X period. we single a now We the long X-week across we've a month. that, not inside miss

that take around had past. to begun a we've away material a so lot constraint would have the the And the more than we accelerated feels ability at to transition events in pace

many answer, the And things, Mike, I'd see of of there's which to more is due of in us through. offering. towards some lot go firms cases, on. lean attractive a a probably custom X my probably as has But more build diligence part to is first that There's go as the

time in those solutioning forth, especially operating is with team complex and very And our firms. understand there's to larger is lot a environment, so their to that compress. And that back frame hard of that engaged

to You really of cycle firms. so because helps. I of compress that the conversion, sales can hope but the compress many larger harder complexity these of the it's

Michael Brown

as then leverage on the operating helpful. Very for Yes. Yes. And build to you just follow-up, a comments.

on Just get perhaps XXXX for X.X% I'm takes there, what's range that sneak annual just trying G&A through, Atria. right hoping Or core and The is growth consider puts think the XXXX? little Matt? was to a and peek prior to the to X.X% maybe to Pru to XXXX. to for

Matthew Audette

in We're planning process that Mike. Yes, now.

one, and do the we'll Atria like would in year-end keep So full year just Pru in that things maybe I guidance. we But think higher of for and effect XXXX. I have the the normally we'll come in back that mind, that level call hit is give

operating aside, just So I think of talked put drive to on think be this and to that invest call, kind we the organic that growth same you reiterate delivering about if continuing leverage. what at will focus I time our

I of example where this those we 'XX starting good balance outsized think, -- to rates an versus of more think a I And and investment. down year, those is 'XX, had things come growth and X

those by to invest So It to haven't same we'll into landed will be but be that us. have and XXXX, by yet. -- we the guides the perspective we principles opportunities and thing we deliver those leverage but that plans and see going the operating invest growth drive guided opportunities see and

Michael Brown

both to of you. Congrats

Operator

the Thank questions. for like all Steinmeier turn remarks. to have for Rich back you. over closing to That's we call I'd time the

Richard Steinmeier

have night, happy us. for again all Thank you, Halloween. safe and January. operator, with forward thank look and in joining a speaking you We you to Have great and a

Operator

Thank you for your participation.

may now You disconnect.

LPL Financial (LPLA) 30 Oct 242024 Q3 Earnings call transcript