LPL Financial Holdings Inc.

Good afternoon, and thank you for joining the third quarter 2024 earnings conference call for LPL Financial Holdings, Inc. Joining the call today are our Chief Executive Officer, Rich Steinmeier, and President and Chief Financial Officer, Matt Audet. Rich and Matt will offer introductory remarks, and then the call will be open for questions. The company would appreciate if analysts would limit themselves to one question and one follow-up each. The company has posted its earnings press release and supplementary information on the investor relations section of the company's website, investor.lpl.com. Today's call will include forward-looking statements, including statements about LPL Financial's future financial and operating results, outlook, business strategy and plans, as well as other opportunities and potential risks that management foresees. Such forward-looking statements reflect management's current estimates or beliefs and are subject to known and unknown risks and uncertainties that may cause actual results or the timing of events to differ materially from those expressed or implied in such forward-looking statements. For more information about such risks and uncertainties, the company refers listeners to the disclosure set forth under the caption forward-looking statements in the earnings press release, as well as the risk factors and other disclosures contained in the company's recent filings with the Securities and Exchange Commission. During the call, the company will also discuss certain non-GAAP financial measures. For reconciliation of such non-GAAP financial measures to the comparable GAAP figures, please refer to the company's earnings release, which can be found at investor.lpl.com. With that, I will now turn the call over to Mr. Steinmeier.

Thank you so much, Operator. As a long-time listener and first-time caller, it is great to speak to everyone on today's call. And for those that haven't met me, I'm Rich Steinmeier, and it is my privilege to serve as LPL's Chief Executive Officer. I joined the firm in 2018 following roughly a decade working in wealth management at a couple of wire houses after having started my career in management consulting. I joined LPL with the mandate to accelerate our growth, and for the past six years, I've have worked closely with Matt and the rest of our leadership team to set our strategic vision and to build and execute on the plan to achieve that vision. Looking forward, our opportunity is clear to assert our leadership and shape both the advisor and institutional markets. Our focus is on creating the culture, strategy, and capabilities to achieve sustainable outperformance by serving as an indispensable partner to our advisors and institutions while delivering long-term value to shareholders. Okay, with introductions complete, let's turn to our results. In the quarter, total assets increased to a record $1.6 trillion as we attracted organic net new assets of $27 billion, representing a 7% annualized growth rate. This was on pace with the past 12 months, during which we brought on nearly $100 billion of organic net new assets. representing approximately 8% growth rate. Our third quarter business results led to strong financial performance with an adjusted EPS of $4.16. Next, let's turn to our strategic plan and recent growth across our organic and inorganic initiatives. As a reminder, our long-term vision is to become the leader across the advisor-centered marketplace. To do that, our strategy is to invest back into the platform and provide unmatched flexibility in how advisors can affiliate with us, and to deliver capabilities and services to help maximize advisors' success throughout the lifecycle of their businesses. Doing this well gives us a path to sustainable industry leadership, not just in the independent and institution markets, but across all of wealth management. In the third quarter, recruited assets were $26 billion. bringing our total for the trailing 12 months to $87 billion, both of which represent records excluding periods where we've onboarded large institutions. In our traditional independent market, recruiting reached a new quarterly high of approximately $23 billion in assets, improving on our already industry-leading capture rates of advisors in motion while also expanding the breadth and depth of our pipeline. With respect to our new affiliation models, strategic wealth, independent employee, and our enhanced RIA offering, we delivered another solid quarter, recruiting roughly $3 billion in assets. And as we look ahead, we expect that the increasing awareness of these models in the marketplace and the ongoing enhancements to our capabilities will drive a sustained increase in their growth. During the quarter, we also continue to make progress within the large institution marketplace, where we advanced our preparation to onboard the retail wealth management businesses of Prudential Financial and Wintrust Financial. Collectively, these two partnerships will add approximately 76 billion of brokerage and advisory assets by early 2025. As a compliment to our organic growth, earlier this month, we closed the acquisition of Atria Wealth Solutions, welcoming their approximately 2,200 advisors 160 institutions, and home office staff to the LPL family. The transaction is progressing well, and we are on track to meet our 80% retention target. And as an aside, I've had the opportunity to spend time with the Atria team over the past several months, and it is clearer than ever that their advisor-centric orientation and high-quality relationships with their advisors and institutions makes them a perfect fit for LPL. As for our broader business, asset retention remains industry leading at 98% over the last 12 months. This is a testament to our continued efforts to enhance the advisor experience through the delivery of new capabilities and technology and the evolution of our service and operations functions. In that spirit, I would be remiss not to call out a driving force behind our improving advisor experience, which is the ongoing operational transformation of the firm. spearheaded by Matt. Beyond his leadership as CFO, Matt has been at the helm of our operations and risk organizations, and in his expanded role as president, we've consolidated additional responsibilities for the day-to-day operations of the firm under his purview, including customer service and supervision. It goes without saying that all of these critical functions are in very good hands. In closing, I want to reiterate how honored I am to lead this amazing firm, and to express my gratitude to our employees for the way they show up every single day, to our advisors and institutions for their partnership, and to our shareholders for continuing to place their support and trust in LPL Financial. With that, I'll turn the call over to Matt, who I would like to point out dressed up as Johnny Cash for our company Halloween event last Friday, and I just wanted you all to visualize that image as he dives into our results.

Are you telling me that was a Halloween event on Friday?