LPL sees demand for yield products amid down market

LPL Financial Holdings Inc. has seen financial advisers and their clients turn to commission-based products that promise yield, including fixed income, annuities and alternative investments, in recent months as equities struggle and concerns about a US recession permeate the market. ought to.

Commission income at LPL Financial for annuities increased 4% in the third quarter, compared to the third quarter of 2021, to $327.4 million, while commissions from fixed income sales increased 9% over the same period. , and reached $32.7 million.

Commission income for the same products also rose 5% and 13%, respectively, compared to the quarter ended in June, according to LPL Financial’s third-quarter earnings report, released Thursday after the market closed. .

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Over the past 12 months, the S&P 500 index is down 15.4% in Friday morning trading. Shares of LPL Financial Holdings (LPLA) traded at $254.59, below the 52-week high of $256.59 hit on Thursday.

The increase in commission income reflects the impact of this year’s market downturn; Fee income at independent broker-dealers like LPL has been increasing for years.

During a conference call with analysts Thursday, LPL CEO Dan Arnold was asked about current investor demand for brokerage products that charge a commission, compared to the basic advisory products that have been a longtime favorite of large firms like LPL.

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“We’re seeing some confusion,” Arnold said. “I think you’re right that it depends a lot on the environment in terms of macro market conditions.”

“Fixed income is a good example of that,” he noted. “I think you’re seeing that in the alt space and in annuities. I think you’ve also seen it seem a little slow in some of the transition from brokerage to consulting.

LPL’s financial advisor head count was 21,044 at the end of the third quarter, up 173, or 1%, from the end of June and 1,417, or 7% from last September. The firm reported total revenue for the quarter of nearly $2.2 billion, up 6 percent from June and up 7 percent from the end of last September.

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The company reported that assets assigned were $13 billion for the quarter, while assets acquired in the trailing twelve months were $84 billion, up nearly 2% from a year ago.

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