Displaying items by tag: wealth management

LPL Financial topped analysts’ estimates for Q3 earnings despite a slight 3% decline in earnings. It also reported a strong quarter in terms of recruiting and asset growth. It also laid out its growth plan for the future which involves expanding its capacity to serve all types of advisors. 

LPL added 462 advisors on a quarterly basis and 1,360 on an annual basis. It attributed this growth in part to its new affiliation models and to boosting its offerings to serve a wider variety of advisors. CEO Dan Arnold remarked that LPL’s goal is to eventually be able to compete for all 300,000 advisors on the marketplace.

Q3 was LPL’s best quarter for asset growth since Q2 of last year when it added $43.5 billion. In Q3, the firm added $31.2 billion in assets with $12 billion from Bank of the West and Commerce. However, the company believes that its current growth is higher quality and more durable.

Richard Steinmeier, managing director of business development, said “We are strengthening in the way that individual advisors and groups of advisors are choosing to come to [LPL] in a much more material way even than Q2 2022.” 

Finsum: LPL Financial reported strong Q3 results in terms of recruiting and asset growth. The firm has ambitious growth plans for the future. 

Succession planning is increasing in importance given the aging of the industry. Succession planning is essentially a plan for the business beyond an advisors’ involvement. It’s also a contingency plan in the event of an unforeseen event. Currently, less than 30% of advisors have a firm succession plan in place. Here are some options when it comes to succession planning.

The first option is an internal transfer of clients and assets to the next generation. It requires both parties to agree upon a value for the practice. The drawback is that often there’s a large gap in this assessment. However, the upside is that the transition for clients has much less friction.

The next option is to sell the practice to an aggregator or integrator. These firms specialize in acquiring RIAs and are often funded by private equity. Typically, this involves giving up control of the business, meaning that the successor has less upside and control due to ownership being diluted. 

Another option is to sell directly to a strategic buyer, which is often another financial institution or financial advisor practice. This entails some sort of transition period to merge operations, employees, and clients. It requires carefully choosing a successor and ensuring that the culture of the two firms can mesh. 

Finsum: Succession planning is increasingly important for clients. Here are some of the most common types of succession plans.

For a financial advisors practice to grow and thrive, there must be a continuous flow of new leads. Many advisors waste significant amounts of time and energy pursuing ineffective lead generation strategies. Instead, advisors need to refine their strategy to ensure that they are getting results on their efforts to create a pipeline of prospects. Here are some tips to increase your chances of success. 

You can establish trust with prospects by offering them something that is free and useful. This can include information in the form of content or directly answering questions around specific topics. This can take the form of blog posts, podcasts, or webinars. 

Social media can also be a powerful tool to connect with prospects and share your message. However, it can often be inefficient so it’s important to ensure that you are spending time on the same platforms as your target client. It can also mean doing research on the right keywords to increase the visibility of your content. 

Another source of leads is through your existing clients. Person to person recommendations remain the best source of warm prospects. You can simply ask them if they know anyone who is looking for help with their finances. 

Finsum: Many advisors aspire to work with high-net-worth clients. Here are some tips to increase your chances of success.

Raymond James CEO Paul Reilly was optimistic about efforts to close broker recruitment deals before year-end on its recent earnings call. In total, Raymond James only added 31 brokers in its Private Client Group, while it lost 24 brokers in its independent channel. 

The firm saw a 15% increase in assets to $1.3 trillion, although net new assets declined to $14.2 billion from $20.2 billion. Its Private Client Group segment saw a 29% increase in profit and a 13% jump in revenue. 

Earlier this month, Raymond James completed a deal for a group of 27 advisors managing $3 billion in assets away from Cetera Investment Services. The company also set aside $55 million for an SEC probe into off-channel communications. Similarly, rival firms like Stifel and Ameriprise also revealed similar amounts it was setting aside. 

Ameriprise also shared Raymond James’ optimistic assessment of recruiting despite a seasonal slowdown on its earnings call. It added 64 brokers but saw total headcount decline by 2%. But the company believes trends are positive and that there should be more additions into year-end. 

Ameriprise saw a 13% increase in revenue and a 23% increase in pretax profits. Assets increased by 15% to $816 billion while net new additions dropped 20% to $8.9 billion from $11.2 billion. 

Finsum: Raymond James and Ameriprise both noted a seasonal slowdown in recruitment but believe that activity should pick up into year-end. 

Financial advisors intuitively grasp the importance of planning to help their clients reach their financial goals. As business owners, advisors need to apply the same principles with succession planning to maximize the value of their practice. A succession plan should provide a contingency plan for unforeseen circumstances in addition to detailing how the practice will transition in the future. Here are some common mistakes to avoid.

The first mistake is to not have a proper understanding of the value of your practice. This includes financial as well as other considerations such as the impact on your clients, the organizational structure of your firm, and how the firm will function without you.

Another mistake is to be unclear clear about your needs and wants in order to determine the ideal successor. With this selection, it’s important to find alignment in terms of investment philosophy, location, mission statement, and how they will continue to serve your clients effectively.  

Many advisors also err by not sharing their succession plan with key stakeholders like employees, clients, family members, etc. Rather, the succession plan and any iterations should be shared with everyone to ensure that there is no lack of clarity. It can also help with client retention and recruitment. 

Finsum: Succession planning is quite important for financial advisors for several reasons. Here are some mistakes to avoid.