LPL Financial (LPLA) 1 May 212021 Q1 Earnings call transcript

Good afternoon, and thank you for joining the First Quarter 2021 Earnings Conference Call for LPL Financial Holdings Inc.

Joining the call today are our President and Chief Executive Officer, Dan Arnold; and Chief Financial Officer, Matt Audette. Dan and Matt will offer introductory remarks and then the call will be open for questions. The company would appreciate if analysts would limit themselves to one question and one follow-up each. The company has posted its earnings press release and supplementary information on the Investor Relations section of the company's website, investor.lpl.com. and forward-looking operating statements and results, well other include future LPL plans will management as opening that financial outlook, opportunities call statements, about including Financial's as foresees. Today's risks potential business strategies those Such such timing and subject forward-looking differ of and as events to beliefs actual forward-looking cause from risks are that unknown to statements may current expressed and results or in management's uncertainties, reflect statements. or estimates implied known or materially the forth set well disclosures the the factors uncertainties. to with listeners refers Exchange for earnings in as company Statements Securities Forward-Looking release and contained Commission and the filings more as under in company's disclosures The caption risk recent information the and risks the about press other the such

will certain discuss call, During non-GAAP company the the measures. financial also

to reconciliation the financial I of please Mr. the investor.lpl.com. non-GAAP GAAP With figures, the be over at will the turn such earnings a found measures company's that, comparable call For to now release, Arnold. can which to refer

you, our call everyone today. for Kirby, joining to and Thank thanks

of areas, us ago. $XXX continued from care our plan. billion, they reached strategic I'd primarily a solid assets Over positions of advisors XX% their high time, be and extraordinary This with organic up of year market continuing we first of organic source equity billion, With same-store clients. and growth quarter first across progress This increase the both to than by our for more by $XX results. store on our retention. continue like focused these appreciation. respect was to of $XX of And growth, sales, and the can quarter, over of to Financial driven This of Harris Advisors. a the guidance another deliver total starting combination to quarter remain results In annualized assets from included sales take review on double-digit make new while driven business continued result our a net new support strength translated their also care to billion BMO same so were growth to taking clients. quarter, our past advisors which at quarter new mission XX%,

quarter assets from billion $XX BMO. includes First past result high recruited billion. the which our billion, to total over were recruited a assets $XX of brought This year $XX new

and At continued and operations the our progress recruiting of on Our primarily technology ongoing delivery appeal of by through our the model, as time, continued future of new advisor driven ongoing the experience the of well capabilities enhanced our further flexibility platform. is innovation for we modernization and service our same expanded the the functions. as

the asset As a at quarter year-over-year. and Net increased XX% first Scores retention Promoter remained solid result, in

$X.XX intangibles outcomes solid first with led business financial and Our results to cost. EPS quarter to acquisition prior of

Let's strategic to have progress now turn the plan. we made executing our

leader we our model to by the across redefine long-term advisor evolved our aspire the beyond leadership the and extending reminder, a over our old the As have so, doing of marketplace. expand vision space independent centered and in time, independent entire vision. become We

segments a our perfect the shareholder approach to platform to and flexibility their creation. down clients. focuses practice and market levels for is and with use approach and This that increased of long-term walls and this our thrive to to Now heart instead is the simple the build advisors for Doing sustainable path empowerment well leadership gives creating total construct advisors organic mission. traditional between to themselves market straightforward value us of that on the higher is growth, a for LPL breaks

have we review turn. which into with you strategic like to I'd execute our our in four on work strategy, to Now organized plays,

only practice. their where this combination advisors meeting evolution believe not addressable leveraging of our traditional we winning new Strategically, In movement deliver we at By affiliation positions the organic Our also involves first traditional to sustainable and overall our to to while strategic pipeline. repeatable time. our grow continue rate markets. growth, models in play advisor remained are share industry while expand lower markets, in us levels growth but first our they also markets, the and increase to our in quarter, gain over

regional in channel, institution the our Harris late at Advisors March. specifically financial more of Financial onboarded BMO Looking bank we segment

affiliation next advanced see prepare of prospects. momentum we expansion We conversations to additional we continue we continue few addressable a to added in new on our Strategic Wealth we earlier the months to week, another to this advisor to building the onboarded Earlier Services, new with employee-based the join two our this M&T And total for of With our seven in us respect to model. to practices and models. month, markets, bringing platform.

of Looking both for ahead, good we feel models. our these pipeline about

to management assets. Another wealth Reed's commitments key XX% of M&A growth. now advisors our component approximately respect of a & this is strategic business, & organic Waddell complement With play as client from of have Waddell acquisition to serve Reed using who we

advisors are and platform their clients serve our to businesses. help We to grow and these prepare leveraging with to them begin closely engaging their LPL transition to

in focused second efficiency in Our practices. play that help the providing our marketplace strategic and is existing capabilities their differentiate on advisors drive

increasingly enriching platforms experience the across end-client continues as advisory the are industry. the end of at business of center trend this client components of is and play secular the experience. the in the key toward our Advisory One

platform, on number we advisory providing enhancements. this, advisors recent a industry-leading our of Given with an focused remain including

platforms. Within the simplified lowered our and we account managed quarter, introduced pricing minimums on centrally

differentiated serves product offering, advisory are introducing We At the we ETF in time, a also single advisors' in combines serve same centrally that our our multiple win portfolios of supports about and advisory offering offering, clients increase in to new XX% platform and accessibility marketplace. spirit of flexibility UMA capabilities which the expanded creating enhancements a within managed turn ETF which the accounts. of assets account. the now our efforts their These in no-transaction-fee appeal,

an of with this strategic to Advisors strategic QX, voice who to our In creating advisors into complement involves to third have rollout connect retention. in our their model experience a professional question. omnichannel transforming choice delight certified component move key their to we turn, advisor now play, with specific industry-leading model and drive channel. a which live differentiated either client the and play or to clients is an helps as A and provides completed our service service. that care efficiently service that, answer Let's a of chat service advisors next chat is trained of our voice

rollout industry-leading time service self-service to best and them. for a and manner position access at advisors completing digital that will Our the experience, in with voice is a next of our step which, chat works together

into service service and focused are of streamlining improvement our we In and Enhancements Promoter the areas our service on operations. administrative helping continue care grows. We operations, also model strengthen to to experience, account key in and and transformation making enhancing the of are the client the a elements our area forms of the business included our continuous around model focus of streamline we of Scores. Net these the advisor advisor as remaining scalability contributions and retention our support our believe automating positive tax experience transfers. season, automate service QX, and By through digitizing automation platform

the successful fourth marketplace. independent most businesses in Our the play strategic advisors helping is run focused on

of solutions, of help can clients components on play of the businesses operate so portfolio advisors their which serving and this focus their key is their growing business One they our practices.

base introducing In our As several advisors, outside evolution of X,XXX with with quarter, of solutions the $XX new ongoing LPL. last subscription pathways solutions expansion portfolio more primarily and monthly to partnering the of first our of growth, value annualized million. the our we quarter, including generated proposition by scale approximately growth existing and that experimenting advisors This we to discussed see driven business for was continued continued to our about portfolio. subscriptions, revenue serving

we product leveraging QX, to In our demand, is solid advisors enhance solution, our M&A while solutions, Client are solutions, including portfolio Looking existing over plan at we which who our of expanding generating this introduce offerings. new business offering In continue today. map, launched we to XX into Engage. seventh QX, road

existing to Now approach and this their a stay with connected our with on evolved advisors from providing efficiently this marketing and digital is offering focused effectively clients. -- is

outside learn LPL from efficiently to year. begin this plan experimenting investments later M&A we to As while solutions outside solution, delivering to we By we solutions advisors, can marketing technology-driven serving continuing on LPL, with advisors. resources look business this and our scalable focus

our while highlight Now of business I clients, XXXX invest leadership. our into sustainability performance. driving we value our We and want a also summary, increasing for We proposition before week. quarter, for and helpful to provides and released first all practices last in report believe sustainable report hope this advisors good our their insight the in the we is that stakeholders. operating growth market continued closing, to In

remain on a over call Matt. drive ahead, focused executing and look help turn in the strategy to long-term As With I'll as we our and our differentiate marketplace, shareholder advisors further result, value. the that, win we to

All glad with today's right. Thank you, everyone speak on Dan, I'm and to call.

the our M&T value. move growing focus remain to As the XXXX, highest in on And onboarding Waddell we of quarter organic into in and and our we become history. of advisors, what delivering led addition, BMO, partners business of Reed. & in in we This three growth will midst our shareholder are focused our serving largest

add collectively to $XXX of bringing our our approximately to AUM partners platform, over three billion these expect trillion. total $X We to AUM

X% quarter advisory higher and new high equity up billion, increased let's by growth to our from of organic results. and business first turn continued $XXX QX, driven to a Total assets Now brokerage markets.

assets annualized bank Prior growth, organic was total a at Looking to to which X.X%. XX.X% growth $XX organic were onboarding, rate. large translates net billion, growth new

on to and recruiting Moving retention.

the These billion, assets from brought to the total high in our in large billion. results a bank new included $XX quarter. strong results at our of which QX Recruited onboarding. produce were history strongest recruiting $XX XX-month to continue We $XX first in billion

asset business this new old Metrics we I previous believe in retention, of so our than We presentation, our at reflect at you Looking have change also in retention Key XX.X%. updated remained note that historical metric evaluating will production both to our provided it rather would helpful and be the retention. strong our can and method more data see retention we results, metric.

to Moving on business mix. our

annualized trend advisory growth differentiated to trends growth, we capabilities continue With the were QX. secular in We continue are benefit rate. as this a assets total advisory of our from assets or XX% Advisory now advisory. to assets $XX positive and toward XX% new billion net deliver see

QX turn costs let's EPS organic of combined to our intangibles $X.XX. to Now financial to led with prior growth expense discipline Strong and results. acquisition

of a sequentially. or our line $XXX at X% million, up growth. profit top Looking reached new Gross $XX million high

seasonally and and were fees growth of commission from million primarily lower advisory $XX expense. components, the net production by up at driven payout Looking million, $XXX QX, organic

asset-based Moving revenues. million average were to on markets. $XX by increased QX, $XXX growth million and sequentially as higher organic up assets in Sponsor revenues driven equity

revenues. down Turning client to lower million, QX, cash from by They million $X driven $XX client cash were yields.

client elevated at roughly balances, flat Looking quarter. last cash at $XX remained million, they with

nine ICA down client decrease QX. cash driven yield for XX was basis yields, matured fixed As the lower points, LIBOR-based points rates. basis quarter that primarily from was contracts by interest rate our QX during and and short-term The

we fixed quarter have billion in rate QX, another to of QX QX. as of that impact matured contracts ahead rate $X.X Looking of the maturing well full billion the as in contracts fixed will $X

mid-XX would where second rates no the this year. I expect basis our ICA yield fixed contracts cash balances of and factors these Given we would be are in we client point have additional rate range. the maturing note, to today, also half QX and rates, in interest

revenues. Moving throughout sequentially, on to the million increased $XX by up fee QX $XXX were They driven transaction trading and volume quarter. that million,

to about trading in we if has in we transaction to Looking $XX revenue elevated And expect this QX, trend through by ahead the would the million. activity from QX. levels continues declined April saw quarter, decline

generate advisors free year up of to to and And Solutions. subscriptions revenue, These annual up than from help serving scale now time continue last the is last double with QX. They at $XX offerings for importantly, roughly Business $XX to ago. activities, practices. their from valuable additional including up Turning quarter a XXX end This spend more of more their X,XXX on more quarter. million million growing they clients and

turn G&A. was let's with QX. to expenses, $XXX in starting Now core million It

to year be G&A to continue $XXX full in we core ahead, million a XXXX of Looking to range $X billion. anticipate

associated this is As with reminder, and support & M&T, BMO cost but Reed. to includes expenses a to prior Waddell

were million, QX sequentially, higher on expenses. Moving $X million increased up and transition driven large to promotional primarily expenses. $XX assistance by bank They onboarding recruiting from

& increase prior primarily transition will Reed, to approximately anticipate assistance onboarding expense by expenses. Waddell large Turning promotional to $X QX, and million driven we by increased bank

from $XX it $X compensation QX, million Looking QX. up at million in expense, in share-based was

be similar share-based level we expense QX, to at to expect to QX. compensation ahead Looking a

up to and It $XX million rolled experience to end-client Turning $X our out as amortization. were depreciation anticipated. platform in than advisory QX, sooner sequentially was million and several improvements

with Looking ahead, we in be to QX expect depreciation levels. line in QX

let's is we Now transaction The progressing move Waddell better to across & multiple originally Reed. estimated fronts. than

Waddell of join platform. client in our original approximately at run As to Factoring million current benefit $XX our XX% mentioned, least Reed & be to estimate. rate up of & is committed have Reed million, level EBITDA this serving expect advisor asset levels, from we $XX the higher retention from Waddell and assets

multiple $XX purchase million. expect to acquisition $XXX times result of updates million up our As EBITDA, original our of our improvement of original an five bring from times a estimate of we estimated X.X EBITDA. estimate These from higher costs, retention, the now

to provide on expected our an want close I update timing. Now

we the with several months, the and have Waddell collaboration required approvals. & and Over strong have past Macquarie, received had we regulatory Reed

business we early a pleased the to As continue after as acquisition advisors we result, tomorrow. few to wealth & to management anticipate as months onboard closing a that of expect the closing. we share Waddell Reed's And are

will primary are we financial we focused the categories. transaction. mind, With the in transparency Looking are share ahead, on results on we on providing two this in Reed & Waddell progress making

provide more acquisition item cost have our First, to management our added around P&L. to an line we results, clarity

during roughly the costs be expect we quarter. acquisition QX, to of at incurred total our Looking one-third

Reed. toward by to keep updated support will you benefit to $XX on rate resources EBITDA each the we quarter to run expect run rate expect how negative of QX, prepare In of as progress EBITDA & annualized build we we as middle approximately hitting we full Second, Waddell the add million XXXX. we

our refinancing. Moving on to with capital starting debt management,

to the combined annual the $XXX interest billion. the increase to our by from continued $XX Given cost expense interest were with we environment, our our X%, were of highest business, also debt low to million from to X.XX% size our strength able of rate revolver refinance We $X million. reducing able

completed the to organic of M&A deployment, aligned in capital As we the shareholders. and focused generate, In the near framework anticipate what as to M&A, at we that strong financial we excited Instructions] see delivered we line call like The first And the investing allocating for growth remains returns returning pursuing we with expect capital appropriate options and to to please capital on capital where open excess Bill we first capital Bill, share majority With our M&T as our now foremost, opportunities. comes focused results. our the continue business value. term, That about and M&A deployment Reed. Once remain on and plan transitions, investing operator, Citigroup. to line we and be repurchases. organic restarting at have open. forward, continue deploy questions. closing, and these see growth reassess time, quarter look Waddell of & we another long-term to from have for capital onboard Katz to In from is said, have our your and we beyond our we we question organic opportunities excess would that grow BMO, create shareholder look to serve growth that, our deployment the And will advisors, of time. if business we [Operator

you and very Thank much good everybody. evening, Okay.

time and you. I'm Wealth off on sort the building seeing start maybe, of Strategic sort changing what's sense of been the or back in better? your that's the So it in What's change comments the like both headlines been Dan, from resonating incremental of marketplace a maybe the acceleration so in Is layer peel just independent there's with -- to margin a the side. It maybe play that seems at here? Services

having And of question. seasoning, of And Yes, we April then a second employee last proposition in experience clients Bill, it We've SWS being and continued the and use you value model good a feedback, them enhance invest for last prospects reference just the year, and as bit your half in to positioning get launched development on the team. the in year. thanks business talent on also considerations. able know, iterating then as and takes as in and learn and a reminder, you future our a on bringing the marketplace, as these you to to

good on help So a marketplace driving a a existing are execute. combination having positioning out then experience of those quality are and pipeline, talent competitive to standpoint, things ultimately who bigger building finally the better using go that a from in clients

of is a a model similar see earlier, only that Services, So similar months a them Wealth started but both. hope independent or I SWS, several it ahead bit helps. can concept Strategic trajectory. the employee because you that's for on

guess of maybe that's in Matt. of the I Yes. the Thanks. And this one out for liquidity coming been just themes then sort one is system overall. excess

the quarter track to you your to to you think maybe float the I sort on Can say, I ability drive fixed third-party in as thinking to sort so sweep should of opportunity? of us through update mentioned sort of how and fix, float or well. the last

Yes. Bill. Sure,

portfolio on are starting to goals I and our where -- get really just maybe to think with XX% unchanged, here, deposit which to place fixed side, is a that which is the fixed. XX% really specifically of rate the strategy

a things is like amount invest the these banks just on you're up, to spread up, -- demand are them checking side the really I So for I moving point right? that think Consumer and that to to and demand some There's the right? trillions economics said, XX-year where it. see steepen, quarter think spending changing in starting the of of picking there's indicators deposits, when yield early there's could early those The for But curve in of the back look but built That deposits. lead really the to And as that the there's you a for system one savings I that's question that think little starting picks some to up, that to where now, spending maybe things indicators, very of the is long-term headed. liquidity market and in dollars similar perspective, accounts of your going into at that's pandemic. demand. that from right we're of up last over the

long-term the to pick of today. that seeing start trends are if I could But with, into XX% to and that it continue, just we're up end I'd those I'd we good really demand. improve there XX% then. So emphasize I think, not some those think our things But that demand, change is moving of being strategy to zone. that execute fixed able feel When about

Okay, you. thank

from of Next Steven your question now open. Chubak comes Steven, Research. the Wolfe line of is line

good Hey. Dan, Matt, afternoon.

transaction. a to and 'XX, transformational the announced M&A I on In So off wanted start the for with NPH appetite question August more deals. you

XX% digital more about of part the lot as fast assets then, it's XX%. a investments the enhancements, retained you've deal. made forward and or broadly of to and to You of just now the retained platform whether Waddell you've Since in

significantly favorable much future more the that whether with increases retention you Waddell, given I'm deals much just stronger math? retention do experience that So have the in to and just appetite a the given as of curious some all transformational deal higher your impact metrics cited.

Yes.

So Dan. Steven, it's

or as look we So complement of the to from I growth a think we and see standpoint of acceleration capabilities. growth a you continue strategy organic across look, our know, as opportunities to M&A lens

an becomes differentiator so that then terms for opportunity we of might believe our that on at good these transactions, in deal, we're changed that deal, hasn't a overall do a in and executing strategy. if value interesting us how an structure And etc. We

such learned apply are every we learnings those we we next disciplined with insights making sure staying better and from acquisition we those that the And on execute that so can and time.

being as maybe drivers it place XXXX, we at moving and Things and back do difference that like automate drive, in of If them didn't did you transactions, the to next. 'XX of able one look to in where the these transition them well activities the think most of control two the we streamline from better much or advisors we and today. I asset were

friction and take on their You scenario. continue them out the pretty to appealing help focus that's clients, a

quickly like it and transaction and outcomes. right the it what strategy to Our be economics their like, to take ability to at that to clear, that create simple side advisors good deliver would go that what articulate on do help what of structure, a the will in understand other pace you their lead very and experience begin a manner be dialogues

are our those that examples so and terms get execute. in and that ability continue to evolve better And we as to of things learn

the the an some your as might So of approaching I will go would how we that continue opening think at on think transactions the entire I spectrum, call advantage yes. Yes. absolute continued Would strategy, think what our and better be perspective smaller potentially about do we get point, we use both we we the these, across consolidation? participating to consider that forward, exploring consolidation, answer to to that there's extent in to the insight executing transactions? and based on in have them. larger And better we and and

rate. ask grew very It bulk Thanks for XX% I hoping should ROA tied BMO color, centrally a the managed? managed my centrally the to speak looks was onboarding. just platform. impressive on for I was of Dan. to wanted more advisors. quarter what in a the organically the given from attractive could higher the those the economics I drove like we strong mean on product for such of expect And at to managed just assets centrally that demand follow-up, And the assets the you those increase

large invest managed you're price, to platform. didn't of content, change that utilization we first strong as lower And Yes. did right? entire growth the investment and our or more complement opportunity add and centrally and with underlying BMO's with expand to, managed think baseline the of interesting that matched all managed is centrally that helpful this managed way Steven, in And centrally formula that across continuing that see finally that the growth appealing. to for to utilization platform clients, models-based centrally that that that of aligned platforms. with case, Today, our then inside platform great managed we needs not advisors one-third solutions of in it's serve observation platform, higher supportive solutions increase, you have have both quarter we see solid add way support a in robust and And a only and large much advisory, or unique MWP really this pretty of that to become the in the platforms. and advisory managed leverage their and So are capabilities, but talent certainly may momentum that put them the solution with well growing in centrally those to they even institutions. about then interesting business institutions our And we think and two-third users only capabilities, us you creates how clients. those that they their grow it brokerage. about do utilization then drives centrally really their enables approach space, their BMO's a they and more is of is the ROA great serve And

to think business evolve a forward, in them nice we point as their they the their our So order in leverage possible. way platform tool we clients to best a is go help and serve as

great much Dan. That's taking color, Thanks for questions. my so

you. Thank

of Blostein line of Alex the Goldman question comes Sachs. from Next

historically. for on reasons why a above about of but where just you the stats been the everybody. It overall book retention being might not maybe albeit it's sort obviously Hey. retention about Waddell, provided, like you Dan, guys like looks I the to assets. temporarily. zone talked the you of guys was from I running bit we've retention afternoon, around. It's as on Good for It quite think, a hoping whole. strong, And sticking one be XX% feels at pandemic are in the

retention the wanted I a get updated with of new it's of as on not of just bit paradigm thoughts assets or entering being So the as we been whether a sort recently. to your high

Yes, absolutely.

more years, XX you XX% back of last if As if -- say, look the the the months, look you retention historically, range. rate retention a three in you saw saw XX.X% We level. you over range in a

as range you the call seen the good return staying might stability So indicate in the in part to to what movement which as better the would good XX% normal said, for three I quarters, power beyond of some that last you've we've pandemic advisors XX% of marketplace. there's

so we're And by that. encouraged

We continue effective practice, and to invest that rates and would capabilities and an to the to those them practice efficient in experience, their such the deliver expand be their support and advisors improve expect helps our pretty retention service it to that operate model clients grow serve business, sticky. you

investing in think in we're a right in trying XX% of it's and for doing to ensuring model, For operate our job the if to us, clients. range solid a our pretty that delivering XX% to manage that's we're our good outcome value and good place sustainable

that. a I Matt, to you little Thanks bit. unpack around Got expenses, you. for And that just was follow-up hoping for a

coming kind hearing I'm not of facilitate to for on that So include if it's or you guess, Waddell it that highlighting sounds is your not guess, the inclusive full slide, confirm So us through kind that. you million G&A year core rate below in full expense any in of like the guidance to, anticipate you're like instance, to can second think And in transition, of And guide. expenses does guide. expenses their & that first drag, kind G&A EBITDA the expense as run Reed, quarter. you whether Waddell. I the I help I expenses obviously I correctly? expenses, the year annualized $XX guys secondarily, of is out guess, the want That also, pointed core maybe just quarter related

a So ramp. you bit of a anticipate

of ramp. us of So sources the maybe just kind through walk that

answer. question. I was I'll Alex, think three-part a that

so I correct. you're think --

give the to I the think billion of both that ramp well EBITDA as to that run and the acquisition $X we the was really the Knowing I side $XXX that the over think on as most you a $XX core Waddell. to costs, excluding between million And expenses, keep our on roughly G&A, the rate. up is for gross them that to that's we're and both as guidance going million way Waddell perspective period to separate. year revenues ramping that profit just clarity reason is be

think think to about I the So way it. that's

a when together the be get from obviously, side, and put we think standpoint. a will I everything other to dialogue guidance

well think will on we most I be clear the path or will, to if business, understand think Waddell as -- comes and as you core board. existing that the when, how way and

the questions three, the the of range. well. is your think or that you've that seen of year, you on run rate, And to question and two. pretty how ramp And our is where rate is of as I that ramping. genesis right So steadily end year. which throughout years, your what it's now the question premise covers during QX kind you think is just kind really in natural probably the think of prior And year run last existing that meaning one that below it's similar low ramping of the business I Question saw I

year. be expectation would So our this that

for that. Thanks Great.

Yes.

Siegenthaler of Next of from line Craig Credit Suisse. question comes the

are on accretive, on follow-up Steve's know through your ROCA Thanks, the guys. I to this assets you gross profit relative question that managed We platform. managed a is had centrally and us not the advisory can earlier business the ROA on platform? math highly centrally but walk

really changed. I the dynamics Craig, haven't think Yes,

managed points. XX centrally adds about usually think I basis

investor got on that. in think our good deck I we've disclosures

similar are So dynamics what think have pretty there. there the to really I we

that with percentage one-third start XX that for overall. driver would Dan just at typically the that that large to and I are advisory what contracts institutions, they the brokerage large specific those on right, look When quarter. institutions, point are highlighted, think to you brokerage, lot to then earlier of a assets build Dan's to of at overall add negotiated mixes given positive managed. because in a are And big in and which was financial comments managed specific into those just BMO, XX note a assets high the of centrally in going range. that centrally I BMO financial basis And

that would higher M&A, about BMO incentives, The The of years ramping, we're on for contracts, the assume of to just Waddell ramp some thing from add is at talking there's those first will usually, to usually couple & dissimilar reasonable pretty Reed. not it's think right? end be that I range. some similar I what have only the

So got that of a ramp really point occurs, versus overall managed, that high margin from on our as an centrally just really the you've BMO on as concentration in coming margin and business. standpoint advisory a current out accretive

helps. that hopefully So

the cash How Matt. the Thanks, should just we $X to term near of circling opportunity overflow think And reinvest billion back on sweep. balances? about

Yes.

and you there's the pretty fixed I demand. side a the contract the of on not that new sweep think of to when kind floating dynamic, at going in the just look side similar lot what's it's really of

funds Fed funds see funds. a contracts kind environment, spread versus about think normalized this environment, of to Fed XX you in them really flat of basis if So to in seeing X%. them you those And a typically minus at Fed you're points XX

rates to as right? I usually And So I one- a of investment periods those maybe contracts, typically bit those think that little of the are how rate mature, of When of marginal give think a that's think color those roll new on kind into things two-year about floating you contracts pretty you just nature this often. the there.

-- contracts to the gave QX And year. the past context if by of the that points the your them, year. current rest of end down year, look bring couple of that overall the basis of second in ICA a of ICA on the looking in the rates, the reinvest question yield the we just half Craig, -- if kind would by for you just for in guidance they so you So overall, to if of that period, mature all give if I invest us

So a I of of a second that with downside of to the lot There's small risk, the year. risk year, second it fixed current you, a kind half it's half not there. overall at And the in in relatively on then additional maturities environment of perspective think, ICA no least good in the add rates. the reinvestment gives

is to mid-XXs way XXs to talking the low think You're it. just about

Thank you, Matt. Great.

Stanley. Next question Michael of the Cyprys from comes Morgan of line

that. annualized. profit taking have contribution existing appreciate bit to wanted was elaborate place had I circle you base? profit on just revenue I initiatives Thank gross the out the little you I Business some also can that, you you in the help on And and the good just within then us the maybe a could that Solutions, of of $XX advisor margin expanding on the growing penetration Hey, back the to afternoon. question. million about think hoping you quoted on just maybe for

want economics and the get take first You the second. the on half, I'll to

think to it. two got that that I Solutions, at look you I ways it. Mike, Business you there's through when think think Yes,

about like right, wealth really and I on is business do that it practices frees are their It's on is the position with one side, way to First interesting I to management efficient addition small And a advisors them think think that's M&A in effective revenue to acquisitions would run that And utilizing to of that deliver their that, of us be positions do, our of parts them generating really grow fee capability or to then right? probably a the up focused more Solutions product and solution. a the them discussed. we same-store and economics. helping in Business new what really sales as them

that, view drive. for really of Solutions really types I So benefits the the can that way financial would holistic firm Business entire a given of different dynamics in that the

services this, your these premise on advisors options is based portfolio additional question, local level. at product services, and/or build thus the different the and alternatives in a many of to that look to advisors map maybe And again, on sell as reach more and either expand at engaging they Yes. we our are existing LPL road

them a we is pretty and a can at higher perhaps concept a our cost, quality cheaper So offer at combination. appealing

solution. And so and offerings, a admin got if original which three solution map today, think our were a you road the solution, marketing CFO about you've

each have problem of might specific offerings, So a address an variations which new with of of weekly, challenge reoccurring those and can or price one basis. a is lower exploring, what create those has we we're monthly we're point on advisor doing to a that a narrower solve proposition, value

CFO to we across you'll about that was solution, of with iterations up our begin new offerings come to inside that to a the so solutions. that a spectrum portfolio on that. QX product go see earlier, are in to pilot And one our we're working marketing derivative that And couple entire and under of mentioned I

of so And map. the area that's one number of road kind innovation

to the one professional of be capabilities a we're iterating solutions. new become great to continue is now respect would that experimenting solution, the new potentially experiment you will, The new one if offering with marketplace, if but and learning, services right or you with example A will testing we paraplanning, that whole second portfolio, out whole to that A with will. in new portfolio.

So that fit solution offerings. into solution. would that of category be M&A an new would example new of a

those to spend places services. close we are tend that And that map they we so road product that $X.X a two leverage expand thus more to local estimate and that can that explore, our the value spend the is level primary year create do advisors how replace we and on billion to more

that So what's that driving I helps. road that's hope map.

would color maybe the like It grow or in of that Should year-on-year something I these both and over up AUM here And line were next growth quick a guess, meaningfully the on know some side. the to multiplier Thanks. But you comp on and any it. this follow-up expense just else on the just guidance just some share-based driving expect trend gave of or to basis. with lines I couple quarter. into you looked sort D&A what's curious, a years? and how sequential Got that? second

kind Yes. the grants see the really year. down typically the On then dynamic drops of And of of it in second it's share-based QX that close of is the the kind that and comp, half drives and timing QX you about those highest dynamic. quarter,

changes is few that spend. organic prepared So spending a but our we're highlight that's we depreciation, I and driven of context anyways, remarks. QX, key little bit depreciation focused Dan we know, the on on And comp. are On of the to where dynamic probably when that deploy I'll and look a expense of the just deployed really covered the when capabilities money. the growth. out. them projects when P&L share-based there. had in some you largely that's that technology at you're you amortization area I note key rolled is larger not developing you obviously, that technology, And his by drivers think The think And

depreciation expense started that. really associated that and So with the

in quarter, So few relatively next leading or if depreciation, dynamic expect increases this at you you the in would few up look low to we small the saw similar and quarters a quarters.

our really that just expectations. been have concentrated unchanged The kind pretty overall deployment. it's spend consistent So trends of tech from and overall

hope I that helps. So

of Next comes question the from Harris Fargo. line Chris of Wells

Great, thanks.

So the to to right is be the to you incremental expected all just from are mean guys capacity you fast the maybe In now. bit other see. feeling LPL are about growth support a about place Can I talk in guys incredibly you able perspective? in seeing have a how the and you're words, platform -- capacity you growing services so place,

which service great to their pivot back the business, day in advisors, person. got the got do got so question. we've utilize leverage make where in-person businesses tools And that our to experience goes start And mission, we've their we're in them to their in, we workflows take stability give of efficient and combined multichannel and them longer right? a to our capabilities I care and into means to Yes, with just that to to differentiate way. from of can it it's clients, out of digital we're no for care it's We has take then a to it they and necessary service make our continue sure to clients help them win. to the the ultimately there that a them capabilities got a standpoint, They day it platform providing necessary it think create sure and

So every and there's for foremost day, them platform for up show support and to single them. a help and tremendous add that opportunity first comes and this value and

to utilization plan making that around necessary diligent the build scale we've the to be stability, that with we well, etc., got got got technology So we've that understand respect platform AI and capabilities our fine-tuning, that privacy, are associated of testing, to us to growth, of risk the it. and of overall we've the the and engineering sure -- help our the that platform. got sure We've tools for make which with and the to management

our we're execute on So I'd and operating that tell us. at love strong perfect you to plan really to it. foremost comes muscle to be for first

addressing We iterating if we're also on And have and to listen ultimately feedback. constantly have then the to because of something not getting better getting and focus right it. to it humility quickly to

expectations. operate a principle execute. to together right And size make think and to and we've Then and execute got attracting the our right we're the how and people, we of talent that's right the so foundation well aligned that got the on talent that is I positioned deliver we investing in sure to that collaborate

do we but on how number weekly not we a daily basis. measure, So how operating what are comes two, a that operate a our metrics, basis, on observe, monthly or

to make from that then sure take best can can be day. the fine-tune, we got revise, learn us in that and it, to can scale. we we data, iterate, be finally, that And every be it's we investing that automation So that technology etc, helps

to that. and because you mention or get to growth ecosystem, can growth by not of are your you're from that you a constantly bursts with automate able the into enhancing digitize from scale doing an it end and sustainable can that you improving benefits scalability standpoint consistent end you the economic constantly to So performance throughout from

our So throughout we learning that. machine in deploying continue and robotics, on to work order do to AI Introducing that. ecosystem

helps. of We've firm. ourselves doing and scores. perfect. We're hold NPS it's priority it. uber improve, room that the our to for accountable not got lot we've got to for a so We I one hope And passion

from your Gerry, Jefferies. open. from O'Hara line of comes Gerry Next is now question line the

Maybe circling back Solutions. Business to

or almost Just different have solutions. you could if to solution CFO among the data additional, adoption it the overlap though sure various one kind admin not curious relates strikes or have seen tracked if gateway track advisors of that me or get solution if of as develop? to as It any kept but sort work that could of as the you around points you such metric that as a

a good they're and service, higher seeing premise trend there's good that's think once that propensity success a to great And having if a think strategic are leverage we that utility. a engaged and a point, hypothesis I is someone is good another in I it's use one.

as I and different portfolio elements CFO's offerings what of work, you're example, an of but offering, can FP&A an the able expand create on and out like products just iterate things think and as take example, create, discrete you a or we role might the CFO a not be, that. you holistic as to bookkeeping

I think your premise even of sense. sort of strategy more makes a land-and-expand

so product of how are and this on improve our be offering, to to a we data -- them us, use first a It's evolve clients service to that portfolio. to more road we can deliver are and But we that better good across as there's play map. digital experience both also which so out our understand trying engaging better our learn And with question.

what versus the remind advisory to you be us commission-based Fair that's mix on the as fee-based more Okay. traditional it billion Waddell and to of going banks And can across $XXX enough. perhaps onboarded two assets then relates the business.

kind you if us of would helpful. But earlier, of is think sort mix. the that I just you highlighted BMO split could remind be aggregate that what just

directional think, Yes. be we well, can Gerry, here. I

large to focused And as be point the near I onboarding, M&T and in the we're they're side. then the on on a you more we'll I more would give future. the meaning think little your on Waddell, BMO, advisory think institution, think right, then financial brokerage than side closing that near specifics bit typical on I higher

this questions Okay, evening. fair enough. Thanks for taking my

Next your question comes UBS. from from the line Brennan, Hawken now line of is open. Brennan

-- more these Waddell profile or ramp hold how my Are last think answered maybe we it be on coming. to and on year? about for time what to when wanted your Alex's look basically our Or and over you we one, it board, whether taking there really fact that -- should is last revenues we Or more question. like? to the to the But -- question will over say by for and granularity of going might up Thanks the -- the that will say not FAs modeling that in some details could horses been are both it? on that position to follow have the comment questions? a come not see we get was on to I got expenses question assume Great. you're might This earlier some

a little points. I I think two between Yes, it those bit liked

mix Pages updated if think the think XX% have I back we least eight. speak is you advisory, the But time So looked little bit seven key you we disclosures some -- which at you metric in our I'll materials of I to announced deal, brokerage. handy, got a then. on if over Waddell XX% what and the so look XX% them At it at did like you've brokerage, see can those

build and three our ramp, run to that closing, to the after bit that expenses, we think on that just added rate there's to Slide why really we that's resources little about few happening company just foremost this think are a I adding Dan are that. could make just onboard to giving sure EBITDA things. eight, receive was little color of the at where drive technology be I as And was bit highlight early maybe the Waddell answering hitting and I'd is on of I a some tomorrow a months think, that first And And a detail $XX question in and from would It's to earlier. path which is as broad on million. on to really, the steps advisors a it. closing the position and few

start expenses the first. So

happen to from then we And full the get I the few that few we after profit it M&A months following work months right? classic closing, now. take think really start, think And your so gross call a assets and then the a where advisors will that's synergies close. onboarding, will it Once are synergies. think year it's from integration their about our expense a and on that, really platform,

EBITDA So together. good using kind I that end a I year and XXXX. that's, next of map rate of you put of think, time that that pretty road till And hitting just by through walked line kind run here the of from all that of QX

Yes. -- Arnold profit Chief an comment. because different maybe Executive point this President Relative helpful H. Dan is that In scenario. Officer to your than acquisition, advisors gross recruiting one of ramp and the is a normal the

over come So will advisors assets in the mass. the and all

let's just three So later, advisors weekend. tomorrow, close over say, and assets a months the come weekend come say, over the we a let's

our they on so will be And all platform.

your little from that different ramp ramping point ability time. begin where to So a is in from solid recruiting over and you

little you gives that a color. hopefully, So more

that perspectives from -- a one, can have How reopening world much Zoom impact bit keep the and some of a and the what advisors back about. Or kick you going effort fact that or are they as expect to that's you think ramp that. have do maybe Also about book amount It more you. more that people lot do now that, impacted And then an they successfully of face-to-face in new that think out into assets about could been. in have? vaccines seminars does. a Thanks. with recruiting for Zoom, is you And have that there's -- an that that multi-parter. -- couple put Thanks of the advisor's to of what curious much to how impact restaurants will more of than the curious those before? thinking should more It comfortable that expense to are as kind angle, recruiting has angle. whatnot? a about thinking the the sort versus suggests economy coming year, so normally that Number the learned like recruiting of with past the prospecting, people recruiting back one of idea efforts business the getting it's for you'll start going I'm back about Sorry almost can't existing over from step function do might be from a meetings another be to or we and the net you And to of rolling degree. dinners of the start kind by perspective, comes efficient been a the a different

a lot there's No, there.

in at if and associated recruiting, doing of that, let way, your overly to and in short a sort our right, business have don't you had give just expenses it over paradigms, first in is set that we how broken and to we've that. directional the and some I much it places, think is to know, I give believe that better answer guideposts core to it today. doesn't on new you to technology was try question, creative precise some incurring be of before, some do technology it with But what I exactly part not will, answer relative the something on your me activities, We've do gotten throughout. recruit right? travel it years. more G&A of some expense but And So respect the that not throughout. people a to So to to much, to we and back We've been development does use we've learn go what continued some through with necessarily acceptable used to the you think ways do stay

we for make well absolutely And quite tear. where it's the we an will in actually or need where it's a for business to our So and mix advisors as we'll more and as that. prospect do technology as wear then where see And think a face-to-face, do example. it's appealing resources travel more the frankly, I difference do use efficient, you'll less where we development

and we development both this efforts. business do well, efficiency efficacy should if find So in our we improved

shut about you So couple the on -- goes recruiting. with one. not baselines exactly trying that's the But advisors, bigger -- to country expect living face-to-face has significantly some very local changed down. of what than the was many the across in days ground. And really where it's Again, that how precise the in a pace advisors as of respect be reopening, cities. of when the to country. been I I things. would to first are On hope lot different more might middle helpful would think we dial a that answer you back Their our to. doing at I XX know, very, But a level our

for to that And about you've so think I a seen consequently, our they pivot probably themselves, spirit, advisors, I more think small And entrepreneurial of baseline lot right, to got business their repertoire. have did advisors a being for But in business. of already digital businesses a to have most part innovative added owner. the back and quite they've be way cool capability that this

of with up So and book, their find now their clients, to efficient to a for are provide size it they've doing rather geography mix then that got redefine aperture them again, two by ways in person versus ways opens ultimately of the of that would increase which engage And to the serve the opportunity more clients, over as those meet video. which well. of doing you that good those now

go that time how And to that doing actually dinners will dial growth. a Do I to is run opportunity advisor practice. think a No, uniquely think to used service but get a catalyst the back for their like it that to they're to? catalyst they what as so we to going back -- wants do really think full expand ultimately and becomes use enhance advisors around for this flexibility interesting our I experience, as the

different I'll stop of there. spectrum and clients. probably their see you'll advisor a on depending So themselves outcomes the

Helpful. color. that for Thanks Yes.

turn time. will And there this at Arnold. questions it back are no Mr. further to I

Yes. quarter. the join everyone, next to again Stay for forward you safe. this and Thanks, taking us time look speaking to afternoon, with we

Thank everyone you conference presenters our participated. so call. much This who and concludes for today’s

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