LPL Financial continues to steam along in recruiting

After some weakness in January, LPL expects recruiting to pick up this month and next.

After a 2023 when LPL Financial practically matched the prior year in reeling in financial advisors from its competitors, the firm sees no sign of a slowdown in its methodical recruiting of hundreds of advisors who control tens of billions of dollars in client assets as 2024 kicks off.

LPL Financial Holdings Inc., the publicly traded holding company that controls the broker-dealer, reported late Thursday after the market closed that its total recruited assets in 2023 were $80 billion, which was almost unchanged from 2022, when the firm reported $82 billion in recruited assets.

And LPL is off to a historically decent start in recruiting this year, according to senior executives who discussed fourth-quarter and full-year earnings Thursday on a conference call with analysts.

“Our recruiting continues to be strong,” said chief financial officer Matt Audette. “You may recall, in the first quarter last year, we set a new record in recruiting [without] large enterprises at around $13 billion. We’re on track to exceed that in the first quarter this year.”

And that’s despite a slow January, Audette noted. “So there’s continued strength there, just the timing is a little shifted more toward February and March,” he said. “You got a little bit of weakness in January.”

Along with recruiting, LPL Financial is also remaining focused this year on acquisitions, an area in which the firm has routinely been among the industry leaders.

Mergers and acquisitions “remains a core part of our strategy [as a] complement to our organic growth opportunities,” CEO Dan Arnold said during the conference call.

The industry’s recent highwater mark in financial advisor recruiting occurred 2021, when advisors were ready to move to new employers after the near shutdown of business in 2020 due to the Covid-19 pandemic.

For example, more than 4,000 advisers and brokers switched firms during the first quarter of 2021, up 11 percent from the first quarter of 2020, and registered investment advisors and independent broker-dealers set the pace.

LPL Financial has long been an industry juggernaut in recruiting financial advisors, and for several years has been paying recruiting bonuses to financial advisors that are highly competitive when compared to other firms. As InvestmentNews reported last summer, LPL Financial recruited 47 financial advisors over the first half of the year from Securities America Inc., one of its top competitors and one of the broker-dealers in the Osaic Inc. network.

Meanwhile, LPL Financial reported organic, meaning from current advisors, net new advisory assets during the fourth quarter of $21 billion, or 12 percent annualized growth, and organic net new brokerage assets of $4 billion, for 3 percent annualized growth.

The firm’s financial advisor head count at the end of December was 22,660, up 1,385 year-over-year, or 6.5 percent. Net Income for the year was $1.1 billion, translating to diluted earnings per share of $13.69, up 32 percent from a year ago.