LPL Financial (LPLA) 27 Apr 232023 Q1 Earnings call transcript

Good afternoon, and thank you for joining the First Quarter 2023 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 and Head of Business Operations, Matt Audette. Dan and Matt will offer introductory remarks, and then the call will be open for questions. [Operator Instructions]

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 and that financial outlook, opportunities call statements, about including Financial's as foresees. Today's risks potential business strategies expressed Such forward-looking of and subject forward-looking materially events and that to to beliefs results statements. actual those risks are may unknown differ statements cause current or and or or such management's uncertainties reflect implied estimates in known the from timing

risks and the and such well the Exchange company under For caption company's to about more risk in other as uncertainties, refers listeners in and the Commission. press recent disclosures the factors information contained as the release forth filings set disclosures Securities the with forward-looking statements earnings the

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

the non-GAAP reconciliation refer at the company's of For be release, measures investor.lpl.com. to financial found GAAP please can which earnings figures, comparable to

now to With over that, call would turn I the Arnold. Mr.

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

and work continue advisers, our the financial they Over thank their and goals doing the clients. take care Americans helped important advisers can We they to taking for In care of their and help of pursue uncertainty. macroeconomic market them to so, navigate on millions continue through the advice clients and focused volatility value their collectively our quarter, remain aspirations. reinforce mission past of of their our

industry-leading robust to future model marketplace, our commitment the the continue at experience growing and our look we due invest. we and stability capacity scale risk our and as to to appeal the Now combination and of platform, of of model

progress leader the we adviser-mediated across becoming vision result, of our continue toward As to market. make solid a the

the advisers than the else appealing continue to execution in spirit, continuing and player most better results, results. quarter and thereby I'll plan. industry. business of challenges we helping areas, performance, review that on make quarter capitalize our these of first With and anyone both serving In to the on opportunities delivered progress another to our solid enterprises, as on of focus strategic solve we will also our respect with starting

were the $X.X organic net complemented first billion. trillion driven new the past XX $XX organic months representing the $XX margins. our in to by billion, growth higher was With solid were to growth, were growth approximately of bringing total our by trailing QX, contributed These In ongoing X% to assets growth. results $XX net new rate. the enhancements annualized and $XX a to equity over months quarter organic assets billion, addressable total as respect representing organic for assets to our quarter, increased Recruited billion continued XX assets market. This organic expanded X.X% model

delivering Looking their and at advisers serving a our clients in focused differentiated sales, experience. remain same-store

both advisers growth occurred As solid models drove clients that in winning expanding combination increase new all A affiliation with this enterprise a same-store our wallet a team. led improvement our in result, fuel, and funds. sales our in by share are of across existing sequential

well the technology evolution enhance delivery through to adviser and to of continue respect With experience new as service we our capabilities as company. operations retention, the and of the

months. first was approximately and result, over the quarter retention last the As XX% asset XX% a for XX

from which quarter to more is adjusted of first outcomes Our of ago. financial double a EPS, business year results led level $X.XX than solid our

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

great empowering the operators business. our best adviser leader us at -- the a long-term to vision advisers is being market, to of the on center clients reminder, deliver great Now and enterprises to and which as advice for the their is across be

solutions the we business. life, and same personalized expertise, experience help capabilities advice human-driven are and solutions advisers, deliver our this vision providing at planning advisers extraordinary technology-enabled the in and bring their to the efforts to we to and Now are time, supporting that through

Doing this path growth and experience, industry to gives market organic the share. adviser across leadership us sustainable a well

appeal As advice we positions that that look the for financial receiving and well structural through advice us trends. these ahead, we a believe profession, continue capitalize to of the we growing see increasing key on our both and strategy to demand

focus for all in for XX,XXX and vertical the strategy, adviser Now value. the can enterprises broader to a spectrum expansion, durable, solve advisers our to that on we providing we advisers affiliate execute to we primary And integration, on differentiated capabilities where our and compete work we means around look can two organize doing in marketplace. categories, such where of horizontal create that expand so, ways

we while orientation Now agility. see integration horizontal changed, evolution strategic an framework, expansion to This how and strategic strategic is can review structure framework of new within the use vertical our our our will plays this you strategy has of investor plays map not presentation. to and the our

work This the enterprises With advisers flexibility they for themselves the of context, around and business practice efforts so start in our clients. perfect are they our involves that the by as creating and let's design where can in horizontal evolution models, meeting expansion. affiliation with

our solid growth As our a models. new our helps markets, contribute market result, affiliation through addressable in traditional this expanding our to strategy component while of also

reaching to quarter continue in billion significant Our first of a be and $X new source high growth recruiting a traditional approximately assets. markets of

In breadth our these and increased in for demand respect models, With delivered offering, increase affiliation and In employee the to our to continue growing which in we of our win remaining of billion and strongest realize lower $X to expand organic pipeline, position growth. adviser RIA to industry our roughly them expanding to the depth our and we levels. strategic wealth continued despite new date, contribution the quarter enhanced we models, QX. pipeline recruiting our at assets quarter, in movement rates each

onboard that to both to recruiting Enterprise large Wealth models. we Bank for our will markets this traditional of to ahead, carry we BMO affiliation platform. into the momentum expect and today, business with our new the Management Looking QX respect And West of enterprises, our announced

continue in of half Collectively, we onboard to commerce. the billion and will year. deals to add second addition, $XX prepare approximately the these two advisory of brokerage In assets

continue for our we pipeline Looking growth. model to ahead, build as our demand

to Now we change. billion also adding in continue in from credit have banking space, success accreted of this $X approximately our QX, traditional assets

integration to our vertical shifting efforts. Now

focused Here, capabilities, delivering on across the and business. technology differentiate the we services driving purpose them and helping run and business, are for value-added end-to-end marketplace all that adviser's win in extend of an

that their through funds. wrapped their This differentiated continued easily helping highly value accessible insight our and experience to In advice enhance advisers this quarter, strategy proposition personalized in part deliver we of client. adviser's wisdom for spirit, our the an and is

capabilities by clients' their client picture increased customizable for financial account the include enriching our By offerings to aggregation help the delivered to it and capabilities adviser. and works by best digital introducing through consider advisers market commentary, self-service research evolving of new portal where expansion holistic end the how

integration proposition a our of vertical of we expand enhance in the and within this separate to play the Now and evolving business. portfolio our encouraged services appeal strategy, our continue seasoning value are by and

X,XXX our As of increase. a ended result we XX% number year-over-year. group QX, at utilizing quarter the roughly And the solid of users, up active over service demand to continued in advisers

capacity them their a necessarily focus utilization has and managing creating don't business fit our with This advisers to the flexibility smaller to thus services as to that we well, create Now book their accounts us increase demand. as we're service been provide more sales advisers sell their new partial clients with for existing for to solid where also pipeline of on of received more are growing momentum, we such we practice, seeing work robust. services, solution, continuing growing and early the

Now retiring decade. succession program. advisers our solve the industry-wide our our these LPL that facilitated over XXX the outside services X/X in acquisitions interest, the next more we since And we're the both In set leak spirit, time, advisers completed have challenge same advisers of among over good success have of and than LPL M&A and up business. through the XX with QX, year, seeing growing capability deals launching inside of at of solutions and liquidity to with past that we've of approximately help

In our the leadership. to proposition in quarter, and while their value invest clients we summary, market first advisers driving increasing for and in continued the growth

remain a strategy advisers the win help As in And to further and our we result, focused our we as have we on executing ahead, long-term marketplace. differentiate look value. shareholder

With Matt. that, to the call I'll over turn

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

our we we business value. As performed our move delivering remain uncertainty, as advisers, on backdrop strategic serving our into focused XXXX, and growing well we execute market Against priorities. of on to continue the business our shareholder

leverage, low years, with us recognized strong to invested credit is to and us In technology we've advisers environments. with same investment-grade significant the rating support time, by upgraded agencies. their enhance S&P, clients. the as a At of service of enterprises sheet both and establishing rating balance experience liquidity credit we've corporate capabilities, our who month, and maintained recent clients and advisers, range recently in our our macro This earlier an a in this positioning most

proposition our our investments momentum organically succession West while and to year. the per Bank and and invest both in Commerce strength, platform to continuing financial second and our accomplished this our onboard markets. preparing record earnings in all and to with of are the in in value acquisitions, the leveraging continue of industry-leading our the strategic liquidity Closed capability continued assets new By Bank, share. we in of traditional We half grow delivering adjusted our two

to we by marketplace. win opportunities advisers to the differentiate we in as be have we So ahead, and look our excited continue the help

assets or organic trillion, was annualized up higher our first [Indiscernible]. billion brokerage QX by turn new rate. a were let's assets net organic to business Now $X.X continued results. advisory Total X% X.X% were $XX complemented growth Total and from quarter growth as

Our launch QX assets quarter enterprises recruited large the our of a recruited ago. since first of new This to included assets largest contribution $X a which years billion, was few record affiliation, prior from the their billion were year. $XX

across strong continues Looking we ahead traditional are momentum models, quarter another recruiting. our deliver of to to and pace and independent our on QX, new

financial our adjusted led EPS results, history. rising organic the highest expense of combination of QX and our for rates growth, in As the discipline $X.XX, interest to

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

net million, $XX up seasonally driven lower million components, As were fees a and $XXX and production. payout fees QX, from advisory advisory by higher for of commission primarily the

XXX year points due largely nonrecurring about down a XX.X%, approximately as was the production the quarter. basis rate XX beginning payout during of from well our realized of at to the and QX seasonal benefit bonus points of QX, reset as the basis In the

will ahead anticipate to QX, XX.X% seasonal Looking driven payout by builds. our production build in the approximately to typical increase the rate we primarily

to rates sequential revenue, higher by of impact was client the as interest decline cash With respect a to in short-term balance. it offset QX million, $XXX flat was

the quarter $XX contracts, billion, $XX to $XX target buying ended million. they within Looking fixed of billion $X fixed balances, overall at billion, of ICA our XX% XX%. roughly at record rate net added our client ICA cash Within of driven range of our rate XX% balances by to down we portfolio, portfolio bringing the new

XX XXX up due short-term QX, the averaged quarter, points basis basis the yield points rates. ICA from in Our in increases primarily to

for we've ICA on and unchanged basis. seen rates remain in cash with our client approximately at based expect April, what today As XXX QX, where far interest are yield to so we balances

the the QX of the is lower balances. rate As quarter of impact offset rate mix benefit full hikes floating by

in it was increases primarily IRA. by driven $X from lower QX, fee in conference QX, service million million revenue, down revenues, by for offset As seasonal $XXX

and Looking ahead roughly we to fee expect sequentially. service flat revenue to QX, be

$X trading Moving sequentially volume It revenue. increased on to up $XX million was slightly. million, QX transaction as

QX, million a to of expect a couple of decline ahead we Looking dollars. seasonal

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

XXXX, as for to prepare recruiting second in expense million of full to year enterprise promotional Commerce and the the onboarding million large this of to increased to a transition resulting of $XXX and from Bank to Bank continue For due half the range West assistance we us $XXX increase to join strong we year.

majority of up year. QX. in in we level Looking In of the a at as in It QX, $XX million our $XX of QX, quarters grants was expect million occur from expense. first X the the expense compensation share-based similar

$XX to $X was sequentially, million and approximately Turning It next depreciation to QX, amortization. $XX million quarter. we and expect in it up increase million to

capital management. Regarding

QX We balance million during corporate quarter. down the remains million, on from sheet acquisitions closed with Our we strong. $XXX QX $XXX of X cash as ended

growth Our and from X.Xx by combination our interest down rate which QX, have continued of driven in leverage earnings. meaningfully X.Xx, higher ratio improved both of our was a a environment,

we deployment, with As our on for framework capital capital focused remains allocating the aligned generate. returns

shareholders. to pursuing M&A first Investing excess QX, across In our returning in and frame. and where foremost, organic appropriate entire we growth capital capital allocated

traditional acquisitions and to for and We liquidity On we continue approximately repurchases in $XXX our to solid invest succession on closed to and million. million. to we closed increased $XXX repurchases Within a continue we around million we plan million, X organically. to $XXX have to share We pace. offering, increase deals share for QX. X our in capital M&A, $XXX With QX drive support regards to approximately further return,

and To summarize, our financial our is are business through delivered In capital positioned quarter sheet drive well we strong allocation another strong, we balance point. and of to closing, results. value

excited about to shareholder our opportunities continue and create serve the As business see we look our long-term investing forward, advisers, we we remain value. to grow

that, for With operator, call open please questions. the

come will of Steven Chubak from question first Wolfe Research. Our Instructions] [Operator

bolsters hoping strong on within the on was Matt enterprise maybe really channel. in just get things your recruiting say, banks just the of off is seen the quantify partner LPL. Recently, space the enterprise momentum the stress versus, So can kicking to you've I And a today some case you to perspective backlog Enterprise. whether question for where for banking recent with the year? help with the start

you is know Steven, I on this figure. said a chomping bit I up think Yes. for Dan me,

in No, circle challenges some much create the the you back from look, Steve, opportunities displacement the pandemic, with can have significant and/or Yes. failures when to think and out, calling that. as a were more through of in you circumstances that We QX. impact XXXX bank marketplace of

really this of see short-term because this reinforce maybe creating opportunity failures, the and times in the at very said, think the That we necessarily muted. of recent it model. didn't somewhat it impact was I disruption I important this, short-lived think bank the case like some elements does of

And of to as So a our sort proposition be guidance that banks opportunity the an I providing lines, reinforce example, scale and port, question, type creates exploring for center quality. It end are think strength particular and point catalyst the a strategic question your about our advisers the deal or it this reinforce options think need it different management. for even times strategic given we and certainly or it for being alternatives then may of to value folks most as different partner way, us helps uncertainty. enterprises wealth as does up finally, they which capabilities, of in your a and human right robust for in of of of value business disruption advisers

create I think And as that demand certainly would incremental we go forward.

invest light displaced order model to to and in us Finally, our in can't our in allows and capital play perhaps these offense markets and a that others enhance do platform continue differentiate disruptive are reach to the back further month.

necessarily I opportunity see the run. in So we short didn't think

sort of this I marketplace quite of to model kind this turn the growth disruptive market in think into can reinforce in our attributes most unity helpful does of where our change it and the long-term it's across we and the positioning marketplace changes.

helps. hope that So I

the to but It's Dan. is I my Dan here. Matt, be trying for just share to going follow-up was well, color, really really helpful

acceleration traditional trend? NNA the expect And results independent broker-dealer some evidence to that saw that year? in you how increased compared backdrop the an just of And on given consolidation driving market adviser recent is activity traditional March, see the higher Just evidence NNA there do does strong to last is in some recruiting the churn. given adviser channel, we

place place continuously over creates look continues our And look, a with Yes. of $X produce off model sort trying time a they channel appealing continues life for in quite depending Steven, challenges your to alternative billion the a results solid affiliation by gives where as and QX in flexibility of are the Well, them and see in of in as recruiting jumping differentiation for assets. we markets different And you to that to increase just question, these practice traditional real advisers. us perhaps our their I problems to of platform mean, cycle capabilities if glance to models solid the our where different or potentially model. they're solve to evolve frankly, our they're their in moving to that sets

a its to market strengthening think just baseline, certainly continue standpoint. the that as opportunity we So part see and a from we that recruiting of

forward years. As changes the to baseline other would around independent over players your we've may the couple marketplace point space look be considering in lower contemplating you that of last certainly that the and of churn or the take seen

any of consider to bigger how we be practice what a that is we much create sets a set their forward. change obviously the for to And business this going to in appetite or opportunity going should marketplace be new advisers trigger they catalyst and time relative model

And so those the that create occur, in believe if more things we does churn do that marketplace.

take the we development models. out of addressed job of think And opportunity. growing team to it and that business And I our capabilities do affiliation of all great capitalize take We healing our on play a model. we different across these

that's of may both the possibilities So is now see the those things be marketplace, for we as future, if to [Indiscernible]. and occur how traditional in kind ready they we'll

And question come next Alexander Goldman our will Sachs. from of Blostein

Okay.

couple announced I you in win So the pretty channel, guys sizable weeks think, a a of ago. RIA

larger the your of on kind model. affiliation it's size think that of what seen part in from we've I

maybe in you maybe on part that like? just sort does speak I for the on the in of curious the economics terms either the you guys and that gross the ultimately, us sort attributes of remind could if else? RIA or And the So look was business to key of that pipeline LPL, profit what channel and market for

of flip I'll This question. it that part part take is I'll Matt Dan. then to Alex. first that kind for via Thanks, of the and the

ago referenced announced had where that job current which is nice a I that And did win of a you And great this a of that show new look, attracting weeks second up quarter the things. couple in we're Network, of actually large RIA. a So we first team the Advisor CD we think a does of all, will or in. yes, couple apps those quarter win

help of work the access example the strong RIAs of a them reinforces had are A how forward had businesses with differentiated foremost, these we're always team access resources, operate on they services and to differentiated meant give tools once to in the which First and our better is platform. to our part solution availability doing portfolio to, is perhaps and they market. as great this create to go compelling using really to really that

So that's I a can in baseline a a might of think and is more differentiation great marketplace. what this building part example of creating how robust appeal for we're the that of capability call set

for driving solution workflows that our I think them, platform. be with were in one, CGA they may the efficiency network, can more of of finally, practice attributes way technology click advisory-centered in handle to that on our the adviser specifically integrated one in on down create very the integrated I you some of if think attracted all model flexibility and assets coupled and innovative what their

those And probably some a the were high were so of at attracted level, that to. bigger attributes they

so And think momentum really this in building we're opportunity and overall, model. forward, look look, we as about the the I is excited

as this have new have in recruiting that QX. joined a in the We number we us so referenced year of clients far

are pipeline. certainly, in opportunities the And there's progressing more that

to the market as accelerate create attractive invest a see growth. and model here this as contribute to in differentiated very we to and continue So continue we'll capabilities that

then So model gives a that Network. and Advisor color on little you particular hopefully, both with that CG specifically affiliation

from specifically, would enterprise profit are it institutions, not large the the the the gross and have mean, And economics, the side, lower the also on Alexander, a on typically or financial it's costs lower. channel where ROA, acquisition then but cost dissimilar too I RIA

returns. So will underwrite I

you that large rest a you the bottom to the line and you business, So of on margin to similar the are economics have but that and enterprise compelling dynamic get to similar side. have what

Great. Okay.

ask less talk I'll just question. a about cash. maybe we second, Can my For

second but the I quarter, think today cash yield you where just on ICA XXX in guys an composition. update gave for the maybe stands of

putting to nine with you you're the around starting of been ago, in the extensions just of XX% a journey we the have last And now. also years cash six something on kind live guys months. for to of volatility of in couple philosophy Clearly, balances this north has

sort continue finding pretty itself to to So uncertain, environment to or good you you of as be more here? the and a anticipate to balances, do in big place guys are continues extend add

month think Alex, of we're Yes. which I some April things on cash April balances as well. seeing you cash remind as in look usually color taxes know, impact I'm I'll how April, and about that on seasonal annual but And those impact X reminder, pull key growth organic the by right? and factors is hit for and first the $X.X will on as cash first I at NNA a give you as there's I'll when It's -- just think through both and for sure well anyways, billion. foremost our maybe tax clients tax

month given out in advisory the that it's billion. primarily is well, in as X then And fees first $X addition, month around of quarter, which come

moderate. seasonal X declines we've engagement, else of in $X.X continued cash to cash reduce would but everything see that, balance of to pace has strong to continued think those around the equal. So levels investor I by being billion, addition Then factors

those you look beyond April, decline factors, when incremental in million. at So about seasonal the $XXX it's

year, look account, each balance year. the you of this have the take April into smallest declines really January those at is far decline the this you moderated since. so first months seasonal month factors if cash peaked in and the So decline X when And

that we So it's around balances today. you sit together, where put sweep cash billion all just $XX above that

are. on it summarized XX% did we that on of to now the I target And put We've point out We're billion where of XX% I within the I range range the On you ICA your of with XX%. this the I think balances, think quarter. a -- we $X got well. premise think like question fixing that

from I course, monitor positioned. feel we'll think environment well the of we here. And

makes there it to the where sit to we on ability quite good we and about think fixed we this are. our we gotten it I more where constructive, And feel do sense if market, think has sense. we environment feel in positioned makes well where that if things But evolve put today

And from our Blair. William Jeff Schmitt come will next of question

on balances. another the Just cash one

were X.X% think that of client assets I slowed, in driven So of appears the quarter. strong of saying but buy-sell you to kind they're pace the around understand by I sort activity. really a bottomed strong, approaching think Like if won't that we at move good you remain in I XXXX. Are level you a X.X% support think even markets level? below? the it be Is that sort of

Yes.

I think few things. a

headline think I is answer from a level. the yes support

fees, the best account I at, an thing getting the I here we those is it natural a to of not not best history would is referencing do bang think like make at make facilitate a otherwise you they rebalancing, you see look and think that that a so to customer guy that and is withdrawals, trade trade -- the cash in here, amount don't which sits manage advisory forced facilitate really to there things. things all facilitate an were adviser to

when clients happened to our you history, advisers times down a we've the highlighted, see that several marketplace, it deployed place our at to you when where So as which level. has usually X% gotten history, have into in around fully look get their

anything And causes different. not anything in that's us the we're seeing this think us tells that to zone. history environment So

that And pause assumption? back on I to mid- that change, rates? the in Okay. And then kind What How reiterated variable, guided guess, teens half cutting highest does that would view. interest if of organic I low the guess, year. on the the core assume into Fed you I of that growth, is think

throughout on our think remarks, commented I the have year. plans right, prepared spending to build we I Well, prepared as Yes. the

a there that we is or have ability. reason certainly we So to pause if think adjust,

we'd that. be think I very deliberate about

we I investments that value firm. of think drive the the think, we're long-term making,

investments we get sheet We've to we need I making comfortable don't to think sitting sense if results to mean where given think today, year do quite follow. feel we and But able environment XX% or XX% here does will positioned investments pause the think balance we quite got to an the makes make do the that. we're the well but be I still that that sense this it would, we our that that

next from of our And KBW. Voigt Kyle will question come

for A couple follow-ups me. of

question. Ameritrade The I I CG Alex's custody with and first QX. integration is primarily TDA RIA year, on next in for happening think, believe the over previously and was using Schwab the

you RIA viewing that assets wondering, opportunity motion, potential have to more and a that catalyst migration are as that putting continue as in Just are channel. to for in targeting an you success

like transition. a for marketplace. It Much transition, believe And a regard certainly we only that, not markets, the that leave post potential is contributor could in traditional demand to mentioned we to ongoing looking that that our certainly, is change we be as catalyst with options up advisers different and alternatives. a to that but even

efforts, the function desire a expected sometimes and poser of of look have other those, think step would change and management the I side change on significant in what wanted. always terms

I relative And the think potentially to after transition extends both that that and before opportunity set. so the opportunity potential

be think we're the can I an opportunity. what that that differentiated creates trying value the attractive just to on to what at for feeling potentially interesting extent and need opportunities our advisers great build platform. the with that, structurally look trying think we I willingness do And play in. That's do a other and we're will alternative around see capable To and create to to is options

Great. And then the on second is a ICA. follow-up

in on have actually guess, deposit inflows trends very color I a you constructive comes larger demand recent those there. banks terms rate a the and the I But may I seen were you the noted what through that little bit trends more crisis. just of generally banking just can quantifying that? think lot On of side, of constructive think fixed there maybe terms in from that how that demand, you're are provide seeing

able level, that think of we So think deploy to have headline it in is deploy, At what for were demand floating, the our we ICA excess the I to whether balances Sure. when well appetite a balances of sides. both or right? fixed I on overall, be

I to want we're we're to the think rate do be, and quarter. where fixed positioned side, on we now that able during just the

current I see those marketplace is it where of ended. plus -- data about that XX and we're those to think think market, a you That And and points. now compares in if current maybe the to itself at flat are funds in or look XX behind spread to put when placed kind move being the was really deposits, you basis to of quarter quarter starting Fed to some the I XX could the it variable during last probably rate placing we're the side. on negative XX

focus probably to that's these best can really see you maybe demand for show deposits [Indiscernible]. So on that where the place

Michael question will next Morgan from Cyprus Stanley. Our be coming of

could brokerage quite organic M&A to It's meaningfully a so annualized. there, Maybe we year or up ago. from X.X% strength back robust, circle

able you of on persistency strength there the So might hoping I the was be the and brokerage driving elaborate that. think about to side how on you what's

Let me of take maybe that. There's a couple drivers. primary

year-on-year the environment XX be that you One I some As we hadn't you drivers rate of to for say, compared XX, we're think XX, of that in is revision And basis. would see years. growth a seen

have environment an to their that serve is utilization And easier this in than or appropriate in opportunity more leads meet that to some maybe products to as rate a their advisers needs appealing clients cases, structure use advisory. to

thing familiar the some you larger growth cetera; some treasury, bond -- the from enterprise that to mix So also is you that had. think other of that way to the of of see I or might that we've these see wins that type that, say some driving et in be that

certainly mix a higher of different And have XX%, roughly advisory. mix typical than of our XX% brokerage They advisory. than

influence drivers has those appealing pricing in an it's -- they mix we a to them to We ship. towards the advisory. client. But to the that in, So see you're list our the a robust platform, a obviously, the on much folks shorter-term that those shift has advisory platform for interest as see get end mix causing those that transition as are over what's as more that's primary do that opportunity. in that time opportunities their we Once when and more more

nice for question. gross cash, this has follow-up XX at also the ROA year-on-year. a in very showed If we And point a the look helpful. to Great. that profit basis range steady been as Very prior pretty time. some client improvement It XX then to just

to level the potential could So ultimately, opportunities the couple that years, ROA what biggest over gross prior of And cash? time, next do see some the where to as I client might What partial X be see offsets? guess over this some expansion the of you biggest do do profit you think of achieve? to what you ultimately expand X

profit bringing emphasize is Michael. opportunities I gross drives we talked recruiting growth lower but the think which profit Yes, channel, itself, that the and overall I'd things on has I actually that larger gross overall for really organic we've call, this what but in lot growth growth, profit have right, gross enterprise mean, our about ROA. a a advisers,

would gross service the Like and driven, that highlight not all show lower those is enterprise in just group. compelling will as and both and drive had margin. our revenues standpoint that up asset all services supporting firm of I they're adding service in from those key fee I there. a things and revenue revenue side, and large growth though drive we growth we're offerings thing in even more think for larger diversified and serving that channel the become especially ROA fee an way the as profit things a And we've can ROA, Those drivers, clients in all

point a it's key So model drive less that the the profit about over time. it's from growth really gross can standpoint, basis drivers about I think a our of ROA

question our Hawken UBS. of from And Brennan comes next

to as would prior the of as that, of Matt, the a of to the similar other a and line percentage reasons that work management client as percent of for very cash. trough cycle. to advisers firms, few catching cash made this level trough. we've love circle that you I cash other base client have would go We've business assets thinking a a about you that assets prior for out of comments have laid But the back need seen in dividends the models, below need some cycle wealth seen firms

trends confidence we're understanding hire hold that to end a I might I'm is that too? that what gives and than the up that, to fair rather being So you curious just prior for different simple therefore, going here going just bit and longer, trough to guess as a

model, are operational the or think, right? in play best starting they but I Brennan, transactional Well, think which are nature. is point where guy, and I a business scenarios there's know the a small from always you've -- things I history balances you've out heard bunch, us can as our talk from relatively cash through think But Yes. standpoint, differently. our And I

markets to balances of got is that We've and point market's come at -- onset on look those and $X,XXX those factor how your really to typically X% X%. has on when account. based that We've have around when several balances post you and the really average down, in primary or pandemic. moved it's recovered their a the deployed if and times, come the most that recently the that where, advisers when And XXXX history, per long-term up down it seen of clients the down

we're what that's a history of at. size balances So the looking combination the we've seen. I and it's the of think that And

bit about Okay. All was small Yield of right. had sort be on where those that I to as one thinking That's there And thought money fixed. some know we seemed it's about going how I forward? of of causing sort And always a more compress? or just dynamic where follow-up. compress impact. market should has less ticky-tack that's from a sweeps ago, a the something it a to year that's Is mix to happening fair. that

curious. of kind Just

Yes.

periods, recent bit. up I well, it's a think in little come --

ago, at? a you're You're few perhaps years referring that is to looking what

market the yield XX. No. The points money average on sweep, basis was it in

XX This XX, the the prior quarter... and third quarter it then quarter, in was

Yes. -- I okay. just

those all And there. from different see standpoint are I'd as there, really on you a firms in you movement different going more small. put nothing not There's So there a a zone do the about it's is there mix paths. lot. or pricing relatively around a moving similar Whenever said, the balances

usually it's mix. a So

Craig of Our next Bank from come will Siegenthaler America. of question

annuity we sales So up that were lot. a saw

annuities decade. have I were you last compared wide annuities, rates think curious And XX% just surrenders were year-on-year. up given are the gap are in increase older an clients where I'm commissions annuities seen count between the offered to over buying? the where of white

Yes.

I time, for the think that question of answer what that in I an short a said opportunity help haven't to lifetime with seen earlier there's extended your an use desires opportunity and largely annuities to been is environment leads or this we rate fixed yield that to around that muted extended income people way has an time. to yield for of their as period period

annuities set I prior have of so And would come that, out are different think forced to seen focus. being because it's were and a exchanges that variable created for annuities, you or not coming surrenders that from up of

has this and higher so for that retirement. yields new And their the pent-up are, yields positioned well those with income is think, needs I support typically to suited to find opportunity demand money that higher in long-term

So that's that. the driver of primary

AUA with question charge client backing on out And relationships, fees client advisory advisers cash. relationships. AUA after But advisory of LPL versus client your just X on what total percentage net

within hold account someone of that assets money of to they're limits either first that of can work a period put account. or to an that all, Yes. out to the amount advisory of advisory required time move Well, so those for or there's cash

control your is the high as they that at before a we said, of about amounts of fee is cash use part relative that their account inside inside charged. of That that's to cash So appropriate talked advisory levels the accounts.

our of come Cho from next will And JPMorgan. Michael question

lower, wanted got to of leverage again. $X capital follow for you've up just I mentioned the on billion I you allocation continues firepower. to tick and mean

banking just recruiting given kind are or there changes more about continues you to near-term spire nothing of a bacon backdrop think on any that LPL about from might power or the segments inorganic and But be you grow. focused you and you If said organic across as bucket, partnerships. just just channels changing when think the I realize just

deals the succession how there some offering, it can in you And then looks for annually you're remind like capital capacity the there? new there. of you're of just mean a good allocate much just -- just with you success dollar can just a number just I having an growing to if and relatedly, maybe provide amount. pipeline. us or looking just terms update But And the liquidity yes,

start EBITDA thresholds, quarter, We're think look small, is capital a the at with I zone. that multiples liquidity it's return we from to which the to leads a capital, relatively if good and opportunity focus Sure. I in disciplined think mean here to usually guide purchase and Xx standpoint it's I'll the you what I succession. right? here did X deploying in using

deals in of the to million size the relatively small usually The $XX range. million are $XX

it's the and that big So help there a less to built really that it's we're of more to capability capital, use right? transition about we've next the generation, practices

for key the the offering. that's So

when on it be channels, -- far the traditional markets, it's set whether our would into our M&A we channel newer in interest mean your opportunity I did. you think think several that our I think strategy, sure it from in expanding as an where we that across employee really first your example have main accelerate the I as got we is as a on the anything question, so but standpoint. -- I in in just make participated an at company, advancing markets, look

a our it And hurdles. well way that got really if do the matches we and can just that capacity strategy, we've then financial to our do in so operational it disciplined meets

think we'd interested anything M&A from you be to I to an Dan, that's how that? add standpoint. want

with them. returns versus accelerate capabilities, opportunity We renting at better and building also create a capabilities that look strategy interesting will ourselves our them always the interesting or

open for spring We too. that always are

I other of only the might. just that's So M&A that element

projects are the in of the out now then just how about talked a But things call year, in kind again, you'd certain And accelerated G&A. environment investments of I the some may changes shake in you follow-up mean, out throughout pause year? you picture. initiatives or terms later quick any the that that flexibility on there you if just call where the given might big the

a categories that prioritization year. to build growth I support XX%. mean foremost a investing of to mean X% from I X% to And we're to business. the and I about first particularly. is maybe how each the up Not think the construct we standpoint, emphasize those XX% core and in right? just to the

scaling our category is second new markets services. our and The about really expanding

then that strategy. really components of third being the to is environment And category opportunistic the given accelerate

be over some things category, are it pulling and which we that -- would more in that a third XXXX doing waited have in and would would we otherwise until back, have more about specific first we're it beyond. about initiative less if just that be So is

our Bill And last from question Katz Suisse. will Credit come of

the sort versus flow. opportunity to to up of back picks coming Just

about to be. So XX% is want you where it like sounds the

you've the a of look that advocate its bit for you through the job sort earnings the great why pretty And sorting sort production, play try you and coming will. And a just conclusion managing not point rate cash fix to past. balances in to the is But 'XX? to cycle in a 'XX that devil's more reduce think risk stabilize, the if and a sharp and the to some understand you is of done forward curve, to are out of and starting if at moment,

about think the of increasing we're like going the not about positioned think we right if and not the being feel form what in rates like to we'll it of And think changes dynamic I That's we're to our I saying we'd XX%, how to on positioned do. picking I how adjust. would to be that environment. a we're where now. there percentage changes, forever. the and sit be I'm we range stability that mean, XX% when rate earnings. was contemplated range we going It's where in want target exactly we're really today -- of I it's Bill to or clear range that environment when But Yes, And and we range going interest

coming if for leaves your XX%. million corporate on the you Thank consensus looks minus liquidity. that buyback payout sort very new updates moment. take little almost a back today ratio of just that for look then bogey at And And to number it you quarter. from handy But XX%, the dividend, for some cash, helpful. guidance keep I capital $XXX and like or on numbers the quarter, into is your normally like I a That's Okay. the plus incremental when to ex that

other liquidity and you flow use do the think and leverage, as cash interplay deployment sheet balance and So inorganic macro How cash. backdrop? think of free you about succession, the opportunities, particularly about between given

the range key low Yes. of there, manage end we'll below So is liquidity leverage thing target Bill, Well, the think our of to I based our we're ratio, right? X.X. on X.X

growth, So capital we to shareholders. investing think about right, and three across organic for liquidity M&A returning all capacity areas,

range. I we We're that below of think end low the well feel positioned we're at that.

So where we manage that's where are. that we feel we good and

I And now the would I'm questions. remarks. showing like no further to for turn closing back Dan conference to

join speaking certainly look everyone in you I We to forward We just your quarter. thank us next afternoon. to time for the Thanks. this time. investment with to want taking appreciate again And

you this for participating. call. today's Thank And concludes conference

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