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LPL Earnings Down 30% Amid Best Recruiting Quarter

LPL's earnings fell by 30% year over year while the firm posted $11.1 billion in recruited assets during the second quarter.

While LPL Financial had a tough second quarter, with earnings down 30% from a year ago and 34% from last quarter, the firm managed to boost advisor ranks by 210 over the past three months, its highest single quarter for recruiting.

The independent broker/dealer reported $11.1 billion in recruited assets during the second quarter, up 30% over the year-ago period, for a total of $39 billion in AUM recruited over the past 12 months. Total advisor head count is at 16,973, an increase of 812 year over year.

The firm recently announced the addition of M&T Bank to its institutional platform, which has 170 advisors and $20 billion in assets.

Net new asset growth rate was 7.8%, or $13 billion, over the quarter, almost double its organic growth rate a year ago. Company CFO Matt Audette attributed the recruiting and organic growth numbers to “our investments in technology, capabilities, and service over the last several years.”

“Looking forward, our financial strength positions us well to continue investing to drive organic growth while also staying flexible in our capital allocation plans as economic conditions evolve."

Goldman Sachs analyst Alex Blostein said, “The firm’s consistency and strength in organic growth remains key to the bull thesis on the stock, and we are encouraged by LPL’s momentum despite COVID-related disruptions.” Blostein maintained his Buy rating on the firm, predicting that “with LPL pushing ahead into new markets, we see ample room for LPL to sustain its organic growth momentum.”

LPL’s net income fell 30% year over year to $102 million, or $1.27 per share, for the quarter but managed to beat analyst consensus expectations by 8 cents, on higher-than-expected revenues of $1.37 billion, due partly to better-than-expected expense performance, said Blostein.

Shares of LPL were down about 0.3% as of 2:20 p.m. Eastern time Friday.

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