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LPL Financial (LPLA) April Metrics Fall on Adverse Markets

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LPL Financial Holdings Inc.’s LPLA total brokerage and advisory assets were $1.1 trillion at the end of April 2022, declining 5.8% from the prior month. However, the metric climbed 3.1% year over year. Of the total assets, brokerage assets were $509.5 billion and advisory assets totaled $586.3 billion.

The decrease in LPLA’s assets balance was mainly due to the unfavorable equity market returns and a decline in net new assets balance.

LPL Financial’s total net new assets were $1.9 billion in the reported month. Net new assets were $6.3 billion and $73.8 billion in March 2022 and April 2021, respectively. It must be noted that last April, the company acquired Waddell & Reed's wealth management business. So, excluding this deal, organic net new assets were $6.7 billion in April 2021.

LPL Financial reported $61.8 billion of total client cash balance, stable with the March 2022-level and up 29.6% from April 2021. Of the total balance, $34.1 billion was insured cash and $9.2 billion was deposit cash, while the remaining was money-market balance.

LPL Financial’s recruiting efforts and solid advisor productivity will aid advisory revenues. Also, it is expanding through strategic buyouts on the back of a solid balance sheet position. However, extreme market volatility is hampering its financials to some extent.

Shares of LPL Financial have rallied 8.5% so far this year against a 21.5% decline witnessed by the industry.

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LPLA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Competitive Landscape

A couple of other brokerage firms that have come out with monthly data are Interactive Brokers Group IBKR and Charles Schwab SCHW.

Interactive Brokers’ Electronic Brokerage segment announced performance metrics for April 2022. The segment (dealing with the clearance and settlement of trades for individual and institutional clients globally) reported a decline in client Daily Average Revenue Trades (DARTs) on a sequential basis.

Total client DARTs for the month were 2,204,000, down 10% from the March 2022 level but up 1% year over year. On an annualized basis, IBKR recorded Cleared Average DARTs per customer account of 269. The metric declined 12% sequentially and 27% from the prior-year period.

Schwab released its activity report for April 2022. Total client assets were $7.84 trillion, down 7% from March 2022 and 1% from April 2021. The decline from the prior month was mainly due to client cash disbursements during tax season.

SCHW’s chief financial officer, Peter Crawford noted, “Client cash disbursements during this year’s tax season were the highest we’ve ever seen at Schwab.”


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