LPL Financial executives expect to get 65 to 70 percent of NPH assets once the second wave of account transfers is completed this year.
“Two thousand of the 3,200 [NPH reps] are coming over,” said Matt Audette, chief financial officer, on a call with analysts late Thursday. “We’re getting about 62 percent of the advisors and 70 percent of the production.”
The asset share is based on the $105 billion in assets LPL says the four NPH broker-dealers held, not including about $15 billion held directly at product sponsors or with third-party managers.
The bottom-line should be helped even more, with the capture of 80 percent of what LPL officials call the “EBITDA equivalent” of retained production, about $85 million. That result is due to a more profitable mix of business by the NPH reps who are staying.
Last August, when the NPH purchase was announced, LPL estimated that the purchase of NPH assets could generate $75 million to $100 million in additional EBITDA. Contingent payments, in addition to the $325 million initial price, were due to begin once 72 percent of production was transferred.
The first transition wave of 953 NPH advisors was completed this month. Another group of about the same size is expected to be completed later this month, said chief executive Dan Arnold.
That first wave brought assets of $37.5 billion, Audette said. Of that amount, $26.6 billion were brokerage assets, and $7.7 billion were advisory assets, or about 22 percent of the total. LPL’s existing advisors have about 45 percent of assets in fee accounts.
With the additional NPH reps, LPL’s advisor count finished the year at 15,210.
Total net new assets for the fourth quarter, before the NPH transition, were $3.3 billion, up from $2.9 billion in the third quarter and $2.5 billion a year ago.
The firm landed $25 billion in recruited assets for the year, Arnold said.