By Andrew Welsch

LPL Financial stock jumped 5.5% Friday morning after the company reported better-than-expected first quarter results. Investors got more good news when the company's CEO, Rich Steinmeier, reaffirmed that LPL is on track to meet its advisor retention target for its planned acquisition of rival Commonwealth Financial Network.

The San Diego-based company late Thursday posted first-quarter earnings per share of $5.15 on revenue of $3.67 billion. Wall Street analysts had expected earnings of $4.68 on revenue of $3.61 billion, according to FactSet.

The S&P 500 was flat late Friday.

Jeff Schmitt, an analyst at William Blair who rates LPL shares Outperform, said it was a good start for LPL in what could be a challenging year for markets and the economy. "With Commonwealth and First Horizon coming onboard, we expect this momentum to carry over into the second half," he wrote in a Friday research note. "The company is on pace for client asset growth of nearly 30% in 2025. This should drive EPS growth in the midteens despite the tough economic environment."

LPL's results were lifted by higher commission-based revenue during a quarter marked by volatility. It also posted strong net new assets of $71 billion for the quarter, representing 16% annualized growth. The figure includes the addition of two large institutional clients to LPL's platform: Prudential Advisors, with $27 billion of assets, and Wintrust Investments, with $16 billion of assets.

During LPL's earnings call, analyst questions quickly shifted toward the company's $2.7 billion Commonwealth acquisition, which will be its largest ever based on assets. Since LPL announced the deal about five weeks ago, rival wealth managers have been trying to recruit Commonwealth's 2,900 advisors (who oversee $285 billion in assets). Steinmeier isn't surprised. "We've seen there's been ample chatter in the marketplace around the deal, but that really speaks to the importance of the Commonwealth franchise, and quite honestly, the quality of their advisors," he said.

Steinmeier said LPL is "tracking towards our 90% retention target." And the company is redoubling its efforts to convince Commonwealth advisors to stay. The company intends to operate Commonwealth as a separate brand, and to maintain its corporate culture. LPL staff have been meeting with advisors in person and virtually. Steinmeier has also been courting Commonwealth advisors at conferences and in smaller group settings.

"What those discussions have really reflected for me and the two conferences I've attended the last two weeks is that Commonwealth is a very tight-knit community that oftentimes feels far more like a family, and we are deeply committed to keeping that community intact, safeguarding their experience, their cultures, their capabilities," he said.

The acquisition is expected to close in the second half of this year.

Growing head count. LPL has done a number of acquisitions over the past decade as the broker-dealer sector consolidates. The company's acquisition strategy has made it into one of the nation's largest wealth managers. LPL's total advisory and brokerage assets increased 25% year over year to $1.8 trillion. Advisory assets rose 23% to $977 billion. Advisor head count increased 2% to 29,493.

The first quarter results didn't include the sharp selloff in U.S. equities in April following President Donald Trump's implementation of broad tariffs. Market volatility can dampen advisor recruiting in the short term as advisors put career moves on pause, Steinmeier said. But LPL's pipeline remains strong, and he expects it to ultimately benefit as advisors look to join with companies that have strong platforms and service. He also anticipates that advisors will pick up new business as a result of recent market volatility.

"Investors are looking for support, they're looking for advice, they're looking for guidance," he said. "And so, it wouldn't surprise me that in highly volatile times, you see advisors winning more new clients while losing less clients at the same time."

Write to Andrew Welsch at andrew.welsch@barrons.com

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May 09, 2025 12:26 ET (16:26 GMT)

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