LPL Financial said on its fourth quarter conference call that, so far, $34 billion in assets and close to 1,000 advisors have transferred over from National Planning Holdings, the independent broker/dealer it acquired last year.
At the end of 2017, 953 NPH advisors had joined LPL, out of a total of 3,200. When its transition plan is complete at the end of February, LPL expects to have retained some 70 percent of those advisors, or $70 to $75 billion of NPH’s $105 billion in reportable assets.
LPL agreed to pay an initial purchase price of $325 million for NPH, and a contingent payment ranging from zero to $123 million, based on the percentage of NPH production transferred.
LPL’s transition plan is to bring reps over in two waves. The first, which includes National Planning Corporation and Investment Centers of America, happened in December. The second, which includes SII Investments and INVEST Financial Corporation, will be transferred in mid-February.
“This acquisition has been a catalyst to drive innovation in how we bring advisors onto our platforms. And the greater scale from NPH increases our capacity to invest in technology and new capabilities, which is a benefit to all of our advisors,” said LPL CEO Dan Arnold.
So far, the firm has spent $20 million on onboarding expenses, including $17 million in the fourth quarter. The firm estimates onboarding costs to total $40 to $60 million. The second wave will drive higher promotional expenses, and the firm expects a $10 to $20 million increase depending on the second wave’s mix of cash and loan assistance.
In the fourth quarter, the firm put up $44 million in financial assistance, $32 million of which was forgivable loans and $12 million in cash assistance. The firm has said it expects to pay a total of $100 million to try to retain NPH advisors.
The firm added a total of 957 advisors during the quarter, most of which were from NPH, bringing LPL’s total headcount to 15,210. That compares to a loss of three advisors in the third quarter. Average annual advisor production was at $218,000, up 2 percent from the third quarter.
LPL posted fourth quarter earnings per share of 69 cents, up 50 percent over a year ago and 10 percent sequentially, beating analysts’ expectations by 13 cents, according to SeekingAlpha.com. Revenues were $1.12 billion during the quarter, up 11 percent year-over-year, beating analysts’ expectations by $20 million.
Net new assets during the quarter, not including NPH, were an inflow of $3.3 billion, up 2.4 percent on an annualized basis.