LPL Financial(US:LPLA)2021-05-01 20:47Financial Data and Key Metrics Changes - Total assets reached over $950 billion, up more than 40% year-over-year [7] - First quarter net new assets were $29 billion, translating to a 13% annualized growth rate [8] - Earnings per share (EPS) prior to intangibles and acquisition costs was $1.77 [10][26] - Gross profit reached a new high of $579 million, up 9% sequentially [27] Business Line Data and Key Metrics Changes - Advisory net new assets were $23 billion, representing a 20% annualized growth rate [25] - Recruited assets in Q1 were the strongest in history at $24 billion, contributing to a total of $56 billion over the past year [25][26] - Business Solutions subscriptions increased to about 1,700, generating annualized revenue of approximately $19 million [20] Market Data and Key Metrics Changes - Total advisory and brokerage assets increased to $958 billion, up 6% from Q4 [24] - Client cash revenues were $97 million, down $8 million from Q4 due to lower client cash yields [28] Company Strategy and Development Direction - The company aims to redefine the independent model and expand its leadership across the advisor-centered marketplace [10][11] - Four strategic plays include meeting advisors where they are, providing capabilities for differentiation, creating an industry-leading service experience, and helping advisors run successful businesses [11][19] - The company is focused on M&A as a complement to organic growth, with the acquisition of Waddell & Reed expected to enhance capabilities and retention [33][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pipeline for new affiliation models and the onboarding of large partners [12][24] - The company anticipates continued strong organic growth and expects to onboard three large partners, adding approximately $100 billion of AUM [24] - Management remains focused on investing in technology and automation to support growth and improve service delivery [91][94] Other Important Information - The company released its 2021 sustainability report, emphasizing the importance of sustainable business practices [21] - The acquisition of Waddell & Reed is progressing well, with a higher retention rate than initially estimated [33][34] Q&A Session Summary Question: Acceleration in Strategic Wealth Services - Management noted that the acceleration is due to improved positioning in the marketplace and enhanced talent on the business development team [41][43] Question: Fixed to Float Strategy - Management confirmed the long-term goal of having 50% to 75% of the portfolio fixed, while acknowledging current low demand for deposits [44][46] Question: M&A Appetite - Management indicated that strong retention rates from recent acquisitions may increase appetite for more transformational deals [49][50] Question: Centrally Managed Platform Demand - Management highlighted strong demand driven by onboarding large partners and ongoing enhancements to the platform [54][55] Question: Retention Rates - Management expressed optimism about maintaining high retention rates, attributing stability to ongoing investments in service and capabilities [61][62] Question: Expense Guidance - Management clarified that guidance for core G&A does not include Waddell & Reed expenses, which will ramp up over time [66][68] Question: Capacity to Support Growth - Management emphasized the importance of investing in technology and maintaining service quality to support expected growth [90][92]