LPL Financial Reports Monthly Activity for April 2024

Rhea-AI Summary

LPL Financial Holdings (Nasdaq: LPLA) announced its April 2024 activity report, revealing a 1.9% decline in total advisory and brokerage assets to $1.41 trillion, a drop of $27.9 billion from March 2024. Despite this, the company added $12 billion in net new assets, including $5 billion from the acquisition of Crown Capital. Organic net new assets grew by $7 billion, with advisory assets increasing by $7.4 billion. Client cash balances fell slightly by $0.6 billion to $45.7 billion, while net buying was $12.3 billion. Advisory assets decreased 2.2%, brokerage assets by 1.6%. The S&P 500 and Russell 2000 indices also saw declines of 4.1% and 7.1%, respectively.

Important metrics include:

• Total advisory and brokerage assets: $1.41 trillion
• Net new assets: $12 billion
• Organic net new assets: $7 billion
• Client cash balances: $45.7 billion

Positive

• Addition of $12 billion in net new assets, including $5 billion from the acquisition of Crown Capital.
• Organic net new assets of $7 billion, indicating a healthy growth rate.
• Net buying activity of $12.3 billion.

Negative

• Total advisory and brokerage assets decreased by 1.9%, or $27.9 billion, compared to March 2024.
• Client cash balances fell by $0.6 billion to $45.7 billion.
• Advisory and brokerage assets saw declines of 2.2% and 1.6% respectively.

Financial Analyst

Assessing LPL Financial's April Activity Report

From a financial perspective, LPL Financial's monthly activity report for April 2024 offers several noteworthy insights. Firstly, the total advisory and brokerage assets observed a slight decline of 1.9%, amounting to a decrease of $27.9 billion. This can be partially attributed to market factors, as evidenced by the 4.1% drop in the S&P 500 index and a 7.1% decline in the Russell 2000 index. Despite this, the company showcases resilience through strong organic net new asset growth, with advisory assets growing at an annualized rate of 11.2%.

Moreover, the acquisition of Crown Capital added $5.0 billion in net new assets, reinforcing the company's expansion strategy. This acquisition is a strategic move that provides LPL Financial with additional market share and potential revenue streams.

Overall, the decrease in client cash balances, dropping by $0.6 billion, suggests either a shift in client preference towards more market exposure or withdrawals. However, net buying activity of $12.3 billion indicates sustained investor confidence in LPL Financial’s advisory and brokerage offerings.

In summary, while there are some areas of concern, the report indicates a resilient and strategic approach to growth. Investors should monitor how market conditions affect asset values and the integration of acquired assets in the coming months.

Market Research Analyst

Interpreting Market Trends and LPL Financial’s Performance

The decline in total advisory and brokerage assets by 1.9% might seem concerning at first glance. However, one must consider broader market conditions. The drop corresponds with notable decreases in key indices such as the S&P 500 and the Russell 2000. This alignment suggests that the reduction in assets is largely market-driven rather than an indication of underlying weaknesses in LPL Financial's operations.

Notably, the organic net new advisory assets showcased a robust annualized growth rate of 11.2%. This is a strong indicator of the firm’s ability to attract new clients and retain existing ones, reflecting positively on its value proposition and customer satisfaction. In contrast, a decline in client cash balances by $0.6 billion and a 9.5% drop in client cash accounts could be interpreted as clients seeking higher returns in the market, especially in a rising interest rate environment.

The acquisition of Crown Capital is particularly significant, adding $5.0 billion in net new assets. This acquisition not only boosts LPL's asset base but could also enhance its market positioning and competitive edge through synergistic gains.

This analysis underscores the importance of contextualizing LPL Financial's monthly metrics within broader market trends. Investors should consider both the external market environment and the strategic maneuvers undertaken by LPL Financial in their assessment.

SAN DIEGO, May 23, 2024 (GLOBE NEWSWIRE) -- LPL Financial LLC (“LPL Financial”), a wholly owned subsidiary of LPL Financial Holdings Inc. (Nasdaq: LPLA) (the “Company”), today released its monthly activity report for April 2024.

Total advisory and brokerage assets at the end of April were $1.41 trillion, a decrease of $27.9 billion, or 1.9%, compared to the end of March 2024.

Total net new assets for April were $12.0 billion, which included $5.0 billion of acquired net new assets resulting from the acquisition of Crown Capital.

Total organic net new assets for April were $7.0 billion, translating to a 5.8% annualized growth rate. Total organic net new advisory assets were $7.4 billion, translating to a 11.2% annualized growth rate.

Total client cash balances at the end of April were $45.7 billion, a decrease of $0.6 billion compared to the end of March 2024. Net buying in April was $12.3 billion.

(End of period $ in billions, unless noted)	April		March	Change		April	Change
	2024		2024	M/M		2023	Y/Y
Advisory and Brokerage Assets
Advisory assets	775.5		793.0	(2.2	%)	628.2	23.4	%
Brokerage assets	637.5		647.9	(1.6	%)	559.5	13.9	%
Total Advisory and Brokerage Assets	1,413.0		1,440.9	(1.9	%)	1,187.7	19.0	%
Total Net New Assets
Net new advisory assets	7.6		7.5	n/m		3.4	n/m
Net new brokerage assets	4.3		0.4	n/m		1.0	n/m
Total Net New Assets	12.0		7.9	n/m		4.4	n/m
Organic Net New Assets
Net new organic advisory assets	7.4		7.5	n/m		3.4	n/m
Net new organic brokerage assets	(0.4	)	0.4	n/m		1.0	n/m
Total Organic Net New Assets	7.0		7.9	n/m		4.4	n/m
Net brokerage to advisory conversions	1.2		1.3	n/m		0.6	n/m
Client Cash Balances
Insured cash account sweep	32.5		32.6	(0.3	%)	37.0	(12.2	%)
Deposit cash account sweep	9.1		9.2	(1.1	%)	9.5	(4.2	%)
Total Bank Sweep	41.6		41.8	(0.5	%)	46.5	(10.5	%)
Money market sweep	2.3		2.4	(4.2	%)	2.5	(8.0	%)
Total Client Cash Sweep Held by Third Parties	43.8		44.2	(0.9	%)	49.0	(10.6	%)
Client cash account(1)	1.9		2.1	(9.5	%)	1.5	26.7	%
Total Client Cash Balances	45.7		46.3	(1.3	%)	50.4	(9.3	%)
Net buy (sell) activity	12.3		12.9	n/m		11.1	n/m
Market Drivers
S&P 500 Index (end of period)	5,036		5,254	(4.1	%)	4,169	20.8	%
Russell 2000 Index (end of period)	1,974		2,125	(7.1	%)	1,769	11.6	%
Fed Funds daily effective rate (average bps)	533		533	—	%	483	10.4	%

____________________
Note: Totals may not foot due to rounding.
(1) During the first quarter of 2024, the Company updated its definition of client cash account balances to exclude other client payables. Prior period disclosures have been updated to reflect this change as applicable.

For additional information regarding these and other LPL Financial business metrics, please refer to the Company’s most recent earnings announcement, which is available in the quarterly results section of investor.lpl.com.

Contacts

Investor Relations
investor.relations@lplfinancial.com

Media Relations
media.relations@lplfinancial.com

About LPL Financial

LPL Financial Holdings Inc. (Nasdaq: LPLA) was founded on the principle that the firm should work for advisors and institutions, and not the other way around. Today, LPL is a leader in the markets we serve, serving nearly 23,000 financial advisors, including advisors at approximately 1,100 institutions and at approximately 570 registered investment advisor (“RIA”) firms nationwide. We are steadfast in our commitment to the advisor-mediated model and the belief that Americans deserve access to personalized guidance from a financial professional. At LPL, independence means that advisors and institution leaders have the freedom they deserve to choose the business model, services and technology resources that allow them to run a thriving business. They have the flexibility to do business their way. And they have the freedom to manage their client relationships because they know their clients best. Simply put, we take care of our advisors and institutions, so they can take care of their clients.

Securities and Advisory services offered through LPL Financial LLC (“LPL Financial”), a registered investment advisor. Member FINRA/SIPC. LPL Financial and its affiliated companies provide financial services only from the United States.

Throughout this communication, the terms “financial advisors” and “advisors” are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial.

We routinely disclose information that may be important to shareholders in the “Investor Relations” or “Press Releases” section of our website.

FAQ

What were LPL Financial's total advisory and brokerage assets at the end of April 2024?

LPL Financial's total advisory and brokerage assets were $1.41 trillion at the end of April 2024.

How much did LPL Financial's advisory assets decrease in April 2024?

LPL Financial's advisory assets decreased by 2.2% in April 2024.

What is the annualized growth rate of LPL Financial's organic net new advisory assets?

The annualized growth rate of LPL Financial's organic net new advisory assets is 11.2%.

How much did LPL Financial's client cash balances decrease in April 2024?

LPL Financial's client cash balances decreased by $0.6 billion, reaching $45.7 billion at the end of April 2024.

How much did LPL Financial acquire in net new assets in April 2024?

LPL Financial acquired $5 billion in net new assets from Crown Capital in April 2024.

What was LPL Financial's net buying activity in April 2024?

LPL Financial's net buying activity was $12.3 billion in April 2024.

How did the S&P 500 and Russell 2000 indices perform in April 2024 according to LPL Financial's report?

The S&P 500 index declined by 4.1% and the Russell 2000 index dropped by 7.1% in April 2024.