LPL Financial (NASDAQ: LPLA) reported record revenues in the second quarter of $894 million, a 13.1 percent gain from the year-ago quarter, and record asset levels of $341 billion, 23 percent higher than the second quarter of 2010. . Second quarter income was $45.5 million, or 40 cents a share, up 82.4 percent from the year-ago quarter.
The firm also added 594 net new advisors for the 12 months ended June 30, 2011, bringing total FAs to 12,660. Net new advisory assets totaled $3.1 billion for the quarter, a 12 percent increase from the year ago quarter on an annualized basis.
The second quarter revenue increase was driven by strong growth in commissions and advisory and asset-based fees, said Chief Financial Officer Robert Moore, during LPL’s second quarter earnings conference call Wednesday morning. This was offset by a deteriorating interest rate environment, he added.
During the call, LPL chairman and CEO Mark Casady said he was pleased with the results.
“This level of performance is the second consecutive quarter of double digit same-store sales growth,” Casady said. “Our advisors remain focused on providing long-term financial advice to their clients, which transcends short-term market volatility. This behavior reflects improving investor sentiment and a greater sense of personal and professional security as they commit to longer term investments. Our shift in product mix represents this trend, with greater investments in bundled solutions such as variable annuities and alternative investments as well as increased use of our centrally managed advisory platforms.”
While brokerage assets were up 20 percent year over year, the firm’s advisory platform assets, those custodied on its fee-based advisory platforms, were up 31 percent over last year, exceeding the $100 billion mark for the first time. Assets under custody in LPL’s hybrid RIA platform, launched two years ago, rose to $19.6 billion by the end of the quarter with 128 RIA firms. That’s up from $8.7 billion in assets and 96 RIAs at the end of the second quarter last year.
“Our same-store sales growth also benefited from our advisors continuing to attract new clients,” Casady said. “This growth is coming from referrals of existing clients who have been well-served by their advisors.”
LPL added 106 FAs from the first quarter, which Casady attributed to advisor satisfaction, the growth in its independent and RIA advisor base, and the firm’s support of different business models. He also said the firm’s new advisors have come from an array of business models.
“Our success in attracting advisors is further enhanced by extensive investments to build and support a broad array of business models,” Casady said. “This allows advisors to conduct business in any manner they choose, whether they are RIA only, pursuing a hybrid model, securities only or focusing on insurance.”
Casady said the firm is being more aggressive with transition assistance for advisors, but not to the same level as competitors. “We do see it as exaggerated and typically that doesn’t last.”
During the call, Moore said the firm is considering acquisitions but remains selective, “focusing on targets that meet our rigorous financial and strategic requirements.” In the past, LPL has been an aggressive acquirer in the independent space.
The firm reached its goal with its stock repurchase program, announced last quarter, repurchasing 2.3 million shares at an average price of $34.80, Moore added.