LPL Financial's (LPLA) February Metrics Down on Weak Markets

·3-min read

LPL Financial's LPLA total brokerage and advisory assets were $1.15 trillion at the end of February 2023, decreasing 1.5% from the prior month but growing 0.3% year over year. The fall in LPLA’s assets balance from the January 2023 level was mainly due to weak market performance.

Of LPLA’s total assets, brokerage assets were $541.7 billion and advisory assets amounted to $606.1 billion. Brokerage assets were down 1.5% from January 2023 but increased 1.8% year over year. Advisory assets declined 1.5% from the prior month and 1.1% from February 2022.

LPL Financial’s total net new assets (NNAs) were $5.2 billion in the reported month. NNAs were $8.6 billion and $5.2 billion in January 2023 and February 2022, respectively.

The company reported $56.2 billion of total client cash balance, down 5.9% from January 2023 and 7% from February 2022. Of the total balance, $40.7 billion was insured cash and $10.3 billion was deposit cash, while the remaining was money-market balance.

Additionally, LPLA provided an update to its total client cash balance as of Mar 22, given the current market condition. The company noted that total client cash balances were down marginally from the February level, while net buying activity was elevated.

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, the challenging operating backdrop is a major near-term headwind.

The stock has gained 8.7% over the past year against a 15.8% 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 already come out with monthly data for February are Interactive Brokers Group IBKR and Charles Schwab SCHW.

Interactive Brokers’ Electronic Brokerage segment announced performance metrics for February 2023. The segment (dealing with the clearance and settlement of trades for individual and institutional clients globally) reported a rise in client Daily Average Revenue Trades (DARTs) on a sequential basis. On a year-over-year basis, client DARTs declined.

Total client DARTs for the month were 2,121,000, up 7% from the January 2023 level but down 13% year over year. On an annualized basis, IBKR recorded Cleared Average DARTs per customer account of 222. The metric increased 5% sequentially but fell 30% from the prior-year period.

Schwab released its monthly activity report for February 2023. Core net new assets were $41.7 billion in the reported month, up 16% sequentially and 3% year over year.

SCHW’s total client assets were $7.38 trillion, down 1% from January 2023 and 4% from February 2022. Client assets receiving ongoing advisory services were $3.81 trillion, down 2% from the prior month as well as year over year.

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