LPL Financial Expands Advisory Assets as Net Interest Income Slides
Total client assets rose 10% sequentially to $2.56 trillion in the second quarter.
LPL Financial Holdings (LPLA), the independent broker-dealer and investment advisor, saw a significant shift toward advisory services as total client assets grew 10% sequentially to $2.56 trillion in the second quarter. Advisory assets increased 11% to $1.55 trillion, while brokerage assets rose 7% to $1.01 trillion.
This migration toward fee-based accounts pushed advisory assets as a percentage of total client assets to 60.4%. This represents a 90bps increase from the first quarter and a rise from 55.3% in the second quarter of 2024. The firm also reported total organic net new assets of $23.1 billion, up from $21.4 billion in the prior quarter.
Net interest income fell 40% year-over-year compared to the second quarter of 2024, though it rose 3% sequentially to $46.5 million. The decline in annual interest earnings occurred alongside a 4% sequential drop in total client cash balances, which fell to $56.9 billion from $59.1 billion.
Despite the lower cash balances, the net yield on total client cash increased to 329 bps, up from 324 bps in the first quarter.
LPL resumed its share repurchase program in the second quarter, spending $309 million. On July 23, 2024, the company approved a $2.5 billion increase to its repurchase authorization. The payout rate rose 22bps sequentially to 87.44%.
The leverage ratio stood at 1.91x as of June 30, 2024, compared to 1.86x in the first quarter and 1.95x in the fourth quarter of 2023.
Management lowered its 2024 core G&A outlook to a range of $2,140 million to $2,165 million, down from the previous forecast of $2,155 million to $2,190 million.