LPL Financial’s third quarter earnings came in at $4.16 of adjusted earnings per share, beating estimates of $3.71 per share. That $0.45 bump represented an 11% increase year-over-year.

Total advisory and brokerage assets increased to $1.6 trillion, a record, said CEO Rich Steinmeier during the firm’s Q3 earnings call yesterday. That was a 6% increase from last quarter and 29% year-over-year. Advisory assets grew more than brokerage assets, with an 8% increase compared to brokerage’s 5%.

Today, LPL stock was up almost 9%, contributing to a 17% to 18% increase in value since former CEO Dan Arnold was fired at the beginning of October for misconduct. Steinmeier was appointed interim CEO immediately.

On Oct. 21, Steinmeier became CEO, and CFO Matt Audette also became president, with additional responsibilities for the day-to-day operations of customer service and supervision.

Despite the market buoyancy, net new assets dropped slightly, with third-quarter net new assets coming in at $27.5 billion, while the same figure for the second quarter was $34 billion.

The firm grew by 224 net new advisors, a 61% decrease from its big jump of 578 net new advisors in the second quarter. However, the inflow-outflow scenario had been set up last quarter as LPL knew it was divesting two large OSJs and would be losing advisors and client assets. This quarter, LPL closed the acquisition of Atria Wealth Solutions, which brought in 2,200 advisors, offsetting that advisor loss.

“In the third quarter, recruited assets were $26 billion, bringing our total for the trailing 12 months to $87 billion, both of which represent records excluding periods where we've onboarded large institutions,” Steinmeier said. “In our traditional independent market, recruiting reached a new quarterly high of approximately $23 billion in assets, improving on our already industry-leading capture rate of advisors in motion while also expanding the breadth and depth of our pipeline.”

LPL also rolled out new affiliation models in the third quarter, he said. Those included a strategic wealth model, an independent employee model, and an enhanced RIA offering, which led to the recruitment of roughly $3 billion in assets.

“And as we look ahead, we expect that the increasing awareness of these models in the marketplace and the ongoing enhancements to our capabilities will drive a sustained increase in their growth,” he said.

Average total assets per advisor grew to $67.2 million, a 5% increase from the second quarter but a 22% increase from the third quarter of last year. Total client accounts grew 1% from the second quarter, to 8.7 million from 8.6 million.

Although LPL had an 97% asset retention rate, that was a slight drop from the 98.4% retention rate in the second quarter. Audette said the advisor/asset retention rate for its M&A acquisitions, such as Atria, has been 80%.

Despite all the hoopla last quarter over cash-sweep programs, client cash balances increased 4% in the third quarter to $45.8 billion, representing 2.9% of total assets.

Audette said LPL is preparing to onboard the wealth management businesses of Prudential Financial and Wintrust Financial. In addition, LPL has reached an agreement to buy the Investment Center, which will also be onboarded in the first half of 2025.

Gross profit, he said, was $1.128 billion, up $49 million, with commission advisory fees net of payout at $274 million, up $11 million from Q2. And the payout rate was 87.5%, up 20 basis points from the second quarter, “due to typical seasonality,” he said.

Regulatory expenses were high, at $25 million in Q3 as LPL had to pay $18 million in an SEC settlement over anti-money laundering controls, but going forward Audette said he expects that to normalize at roughly $10 million per quarter.

Capital deployment going forward will remain focused on organic growth, M&A, and returning excess capital to shareholders. The company said it would repurchase $100 million in stock.

“In Q3, the majority of our capital deployment was focused on supporting organic growth, as well as M&A, where we allocated capital to our liquidity and succession solution, and on October 1st, closed on the acquisition of Atria,” he said. “Specific to share repurchases, a reminder that we paused buybacks following the announcement of the Atria acquisition.”

Now that LPL has closed on that transaction, the firm plans to restart share repurchases in Q4 and anticipates buying back $100 million of its shares in the quarter, he said.