Home News LPL Financial Reports Record-Breaking Quarter, Closes Waddell & Reed Acquisition

LPL Financial Reports Record-Breaking Quarter, Closes Waddell & Reed Acquisition

LPL Financial, the nation’s largest independent broker-dealer, reported that total advisory and brokerage assets increased 43 percent year-over-year to $958 billion.

LPL Financial Holdings Inc. (Nasdaq: LPLA), the parent of LPL Financial LLC – the nation’s largest independent broker-dealer, reported that total advisory and brokerage assets increased 43 percent year-over-year to $958 billion, according to its first quarter 2021 results. This is an increase of 6 percent compared to $903.1 billion in fourth quarter 2020.

The company also announced late Friday that it closed its acquisition of Waddell & Reed Financial’s wealth management business. LPL purchased the business from Macquarie Management Holdings for approximately $300 million.

“As we move into 2021, we remain focused on serving our advisors, growing our business, and delivering shareholder value. This focus led to our highest quarter of organic growth in our history,” said Matt Audette, chief financial officer. “We also looking forward to onboarding three of our largest partners this year – BMO, M&T and Waddell & Reed – which collectively represent over $100 billion of assets to our platform.”

Advisory assets increased 54 percent year-over-year to $497 billion. As a percentage of total assets, advisory assets increased to 51.8 percent, up from 48.1 percent a year ago.

Advisor count was 17,672, up 385 compared to last quarter, and 909 year-over-year.

Total organic net new assets were $29 billion in first quarter 2021, translating to 12.8 percent annualized growth, and $71 billion over the past 12 months, translating to 10.6 percent annualized growth.

Prior to assets onboarded from BMO Harris Financial Advisors, first quarter total organic net new assets were $17 billion, translating to 7.6 percent annualized growth.

Organic net new advisory assets were $23 billion, translating to 19.7 percent annualized growth. Organic net new brokerage assets were $6 billion, translating to 5.6 percent annualized growth.

Recruited assets were $24 billion, contributing to a trailing 12-month total of $56 billion, up 56 percent year-over-year.

BMO Harris Financial Advisors recruited assets were $15.2 billion, of which $11.8 billion transitioned onto LPL’s platform in the first quarter 2021. The remaining $3.4 billion of assets are directly held with sponsors and expected to onboard over the next few months.

Total client cash balances were $48.3 billion, down $0.6 billion, or 1 percent sequentially. Client cash balances as a percentage of total assets were 5.0 percent.

Regarding its acquisition of Waddell & Reed’s wealth management business, advisors serving roughly 95 percent of client assets have committed to join LPL. Estimated run-rate EBITDA has increased from $50+ million at signing to $80+ million.

Net income totaled $130 million, or $1.59 per share in the first quarter of 2021. This compares with $156 million, or $1.92 per share, in the first quarter of 2020, and $112 million, or $1.38 per share, in the prior quarter.

Gross profit was $579.4 million during the first quarter of 2021, compared to $575.6 million for the same period last year, and $533.8 million during the fourth quarter of 2020.

Core general and administrative expenses totaled $236.3 million, compared to $223.2 million for the same period last year, and $252.4 million the previous quarter.

EBITDA was $267.5 million, while EBITDA as a percentage of gross profit was 46 percent. During the same period last year, EBITDA totaled nearly $280.2 million, and in the previous quarter totaled $216.7 million.

On Friday, LPL announced that closed the acquisition of Waddell & Reed’s wealth management business, and more than 900 Waddell & Reed advisors have committed to join its platform. Collectively, the advisors serve approximately 95 percent of the $71 billion of client assets comprising Waddell & Reed’s wealth management business, reported as of March 31, 2021. LPL expects to onboard the advisors in the next few months.

LPL supports more than 17,000 financial advisors, 800 institution-based investment programs and 450 independent RIA firms nationwide.

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