LPL Financial Holdings Inc. (NASDAQ:LPLA) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 05:00 pm ET


LPL Financial Holdings Inc. (NASDAQ:LPLA) Q2 2020 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Ladies and gentleman, thank you for standing by, and Welcome to the LPL Financial Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

[Operator Instructions] I would now like to hand the conference over to your speaker today, to Mr. Dan Arnold, President and CEO.

Thank you. Please go ahead, sir.

Dan H. Arnold

Thank you, Dylan, and thanks to everyone for joining our call today. Over the past quarter, in the face of a challenging operating environment, our advisors have responded with resilience, flexibility and ingenuity. I want to acknowledge the essential roles they are playing by providing much needed financial advice to millions of Americans, while at the same time, pivoting their own practices to work remotely. I also want to thank our employees for their ongoing commitment and dedication to our mission of taking care of our advisors, so they can take care of their clients.

Now, while the environment we are operating in has changed, our principles remain the same. We believe a good strategy matched with extraordinary execution and alignment with the mission-driven culture, will drive long-term growth and value. Following those principles, in the second quarter, we continued to focus on executing the components of our business priorities, while also moving forward on our strategic plan. Today, I will share color on both of those areas.

Starting with our business results. Organic growth remained solid as second quarter net new assets totaled $13 billion, which translated to a 7.8% annualized growth rate. This was our third quarter in a row at 7% or higher, and was driven by continued strength across new store sales, same-store sales and retention.

In the second quarter, recruited assets were a new high at $11.1 billion. These results, against the backdrop in which industry advisor movement was down by over 30% from a year ago, are a testament to the appeal of our model and the performance of our business development team. Looking at the past year, recruited assets were nearly $39 billion, which is also a new high for the team.

With respect to the advisor service experience, we were able to pull forward solid outcomes in a challenging operating environment as our net promoter scores remained consistent with the increased levels we delivered in Q1. Additionally, our retention was at a new high of over 98% for the first half of the year, as the flexibility of our affiliation models, evolving capabilities, and enhanced service experience continued to resonate with advisors. These key business results also led to solid financial outcomes with second quarter EPS prior to intangibles of $1.42.

Now, while we remained focused on operating the business in the second quarter, the influence of the remote work environment created new challenges and opportunities to solve for. As an example, to help advisors effectively operate remotely, we developed a bundle of new and enhanced capabilities including; an online calendaring solution for advisors and their clients to schedule time to meet virtually, intra-office