LPL Financial Reports Monthly Activity for February 2024

Rhea-AI Summary

LPL Financial , a subsidiary of LPL Financial Holdings Inc. (Nasdaq: LPLA), reported total advisory and brokerage assets of $1.40 trillion in February 2024, with $6.8 billion in net new assets. The company saw a 3.0% increase in total assets compared to January 2024, with a 6.0% annualized growth rate. Client cash balances decreased to $46.5 billion, while net buying totaled $13.0 billion.

Financial Analyst

The reported increase in total advisory and brokerage assets for LPL Financial indicates a positive trajectory for the firm's asset management sector. The 3.0% month-over-month growth reflects not only client confidence but also potentially favorable market conditions that have enabled asset appreciation. The distinction between advisory and brokerage assets' growth rates, with advisory assets growing at a higher rate (3.7%) compared to brokerage assets (2.2%), suggests a trend towards advisory services, which may be due to a shift in investor preference for more personalized investment advice and management.

The reported annualized growth rates, particularly the 10.4% for net new advisory assets, are significant as they hint at the firm's ability to attract and retain advisory clients at a rate that exceeds industry benchmarks, which typically hover around 5-7%. This could be indicative of competitive service offerings or effective client acquisition strategies.

However, the decrease in total client cash balances could signal a propensity for clients to invest their cash rather than hold it, possibly due to low interest rates on cash balances as suggested by the static Fed Funds effective rate. The net buying activity remains robust, which may reflect investor optimism or a strategic asset allocation shift towards equities, as evidenced by the growth in the S&P 500 and Russell 2000 indices.

Market Research Analyst

Observing the broader market context, the performance of indices like the S&P 500 and Russell 2000, which have shown considerable growth, is in alignment with the asset growth reported by LPL Financial. This correlation implies that LPL's asset base is, to some extent, riding the wave of the overall market performance. The firm's ability to capitalize on market movements is important for its continued growth and competitiveness.

The reduction in client cash balances and the net buying activity could also suggest a shift in client sentiment towards equities, which might be driven by a bullish outlook on the market or a response to inflationary pressures where clients seek better returns than what cash accounts can offer.

It's important to note that the financial advisory and brokerage industry is highly sensitive to market conditions and while the current report is favorable, it is imperative for stakeholders to consider the potential for market volatility which could impact future asset values and client behaviors.

Economist

The stability of the Fed Funds effective rate, as reported, indicates a steady monetary policy environment which can have mixed implications for financial services firms like LPL Financial. On one hand, it provides a predictable environment for investment strategies; on the other, it may pressure firms to seek higher yields for their clients amid potentially low-interest rates on cash balances.

The year-over-year comparisons show a substantial increase in assets, which is reflective of both the firm's successful asset accumulation strategies and the recovery and growth of the broader economy from any prior downturns. The growth in net new assets, particularly in advisory services, suggests a robust demand for financial advice, which may be driven by the complex financial landscape individuals and businesses are navigating in the current economic climate.

While the current data presents a snapshot of growth, it is essential to consider the cyclical nature of financial markets. The firm's future performance will depend not only on its operational strategies but also on external economic factors such as inflation, interest rates and geopolitical events that could affect market confidence and investment behaviors.

SAN DIEGO, March 21, 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 February 2024.

Total advisory and brokerage assets at the end of February were $1.40 trillion, an increase of $41.5 billion, or 3.0%, compared to the end of January 2024.

Total net new assets for February were $6.8 billion, translating to a 6.0% annualized growth rate. Total net new advisory assets were $6.4 billion, translating to a 10.4% annualized growth rate.

Total client cash balances at the end of February were $46.5 billion, a decrease of $0.8 billion compared to the end of January 2024. Net buying in February was $13.0 billion.

(End of period $ in billions, unless noted)	February	January		Change		February	Change
	2024	2024		M/M		2023	Y/Y
Advisory and Brokerage Assets
Advisory assets	768.4	740.7		3.7%		606.1	26.8%
Brokerage assets	634.9	621.1		2.2%		541.7	17.2%
Total Advisory and Brokerage Assets	1,403.3	1,361.8		3.0%		1,147.8	22.3%
Total Net New Assets
Net new advisory assets	6.4	2.4		n/m		4.3	n/m
Net new brokerage assets	0.4	(0.4)		n/m		1.0	n/m
Total Net New Assets	6.8	2.0		n/m		5.2	n/m
Organic Net New Assets
Net new organic advisory assets	6.4	2.4		n/m		4.3	n/m
Net new organic brokerage assets	0.4	(0.4)		n/m		1.0	n/m
Total Organic Net New Assets	6.8	2.0		n/m		5.2	n/m
Net brokerage to advisory conversions	1.3	1.0		n/m		0.8	n/m
Client Cash Balances
Insured cash account sweep	33.2	33.7		(1.5%)		40.7	(18.4%)
Deposit cash account sweep	9.0	8.9		1.1%		10.3	(12.6%)
Total Bank Sweep	42.2	42.6		(0.9%)		51.0	(17.3%)
Money market sweep	2.3	2.4		(4.2%)		2.8	(17.9%)
Total Client Cash Sweep Held by Third Parties	44.5	45.0		(1.1%)		53.8	(17.3%)
Client cash account	2.0	2.3		(13.0%)		2.4	(16.7%)
Total Client Cash Balances	46.5	47.3		(1.7%)		56.2	(17.3%)
Net buy (sell) activity	13.0	12.0		n/m		12.4	n/m
Market Drivers
S&P 500 Index (end of period)	5,096	4,846		5.2%		3,970	28.4%
Russell 2000 Index (end of period)	2,055	1,947		5.5%		1,897	8.3%
Fed Funds daily effective rate (average bps)	533	533		—%		457	16.6%

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 more than 22,000 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.

What were LPL Financial's total advisory and brokerage assets in February 2024?

LPL Financial reported total advisory and brokerage assets of $1.40 trillion in February 2024.

How much were the net new assets for LPL Financial in February 2024?

LPL Financial had $6.8 billion in net new assets in February 2024.

What was the percentage increase in total assets for LPL Financial compared to January 2024?

LPL Financial experienced a 3.0% increase in total assets compared to January 2024.

What was the annualized growth rate for LPL Financial in February 2024?

LPL Financial achieved a 6.0% annualized growth rate in February 2024.

How much did client cash balances decrease to in February 2024?

Client cash balances decreased to $46.5 billion in February 2024 for LPL Financial.

What was the total net buying amount for LPL Financial in February 2024?

LPL Financial had a total net buying of $13.0 billion in February 2024.