(Recasts; adds comments from earnings call, CEO interview)
By Elizabeth Dilts
NEW YORK Feb 9 Independent brokerage LPL
Financial Holdings Inc posted a fourth-quarter profit
that surged 56 percent as an increase in advisory assets helped
soften the costs of an uncertain regulatory environment.
The firm, which provides products and support services to
more than 14,000 independent financial advisers, reported net
income rose to $41.74 million, or 46 cents per share, in the
quarter ended Dec. 31, up from $26.81 million, or 28 cents a
share, in the same quarter a year earlier.
Total net revenue fell 1.3 percent to about $1 billion. But
total brokerage and advisory assets rose 7 percent over the
prior year to $509 billion, with a total of $2.5 billion in net
Roughly two-thirds of new assets were from investors
interested in financial advisory accounts, and a third went into
That is a departure from LPL's legacy client assets, of
which 42 percent are held in advisory and 58 percent are in
The wealth management industry has seen a multiyear trend of
clients investing in advisory accounts, where they pay a fee
based on their total assets, over brokerage, where they pay a
commission per transaction.
This trend was amplified in 2016 as firms prepared for the
start of the U.S. Department of Labor's fiduciary rule, which
aims to put clients' interests first by eliminating conflicts of
interest, such as products in brokerage accounts that may pay an
adviser a greater commission than others.
The U.S. Labor Department is now preparing to delay that
Dan Arnold, LPL's new chief executive who replaced Mark
Casady on Jan. 3, said whether the rule is delayed or not, the
firm will press on with compliance changes it is making, such as
plans to launch a robo-adviser and the standardization of some
brokerage product fees.
"A delay would be the next logical step," Arnold said. "But
if you create innovation and outcomes that are better, with or
without the rule, you continue with those."
Casady, 56, joined LPL in 2002. He will remain on LPL's
board of directors as a non-executive chair until he retires in
(Reporting by Elizabeth Dilts, additional reporting by Sruthi
Shankar in Bengaluru; editing by Bernard Orr, G Crosse)