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Tuesday, Feb 27, 2024

LPL Launches Private Wealth Management Biz

FINANCE: Focus on Growing High-Net-Worth Demographic

Financial advisory firm LPL Financial (Nasdaq: LPLA) announced the launch of LPL Private Wealth Management (“Private Wealth”), its new model focused on high-net-worth (“HNW”) clients.

Gary Carrai
EVP, Advisor Business Lines

“Private Wealth represents the best of both worlds – exclusive access to specialized teams and resources vital to supporting the needs of high-net-worth investors while enjoying all the benefits of independence, all while earning up to 50% higher payouts than the average wire,” said LPL Advisor Business Lines Executive Vice President Gary Carrai. “Private Wealth allows advisors the same full support of working in a wirehouse, without the common downsides of grid changes, growth targets, household minimums and proprietary products.”

Carrai said that the market is ripe with the opportunity to cater to the tremendous growth in HNW individuals. LPL defines HNW (high net worth) clients as having $5 million or more of investable assets. “While wirehouses and private banks hold about 50% of high-net-worth client assets, they are slowly losing market share,” he added. “Advisors in wirehouses generally have lower payouts and a lack of freedom. Private banks tend to have a greater focus on banking activities than wealth management, which can lessen advisors’ access to [HNW] capabilities and services. Over the years, we have heard [HNW-focused] advisor feedback that they want a better option for supporting their clients and their practices.”

According to 2023 data on Statista, the number of HNW individuals in the U.S. has increased from 2.67 million in 2008 to 7.4 million in 2021, with its definition of HNW earners having at least $1 million in assets.

“The high-net-worth demographic is one of the fastest-growing in the market,” added Carrai, who also referenced a report from research firm Cerulli, showing the market is projected to grow to $20 trillion by 2026. “Wealth generation in the U.S. has not only created new HNW households, but it has also accelerated the increase of investable assets with existing HNW households.”

Q3 2023 Earnings Report

LPL’s current enterprise value sits at $19.86 billion. The firm’s Q3 2023 earnings, released in late October, revealed a net income of $224 million, or $2.91 per share, up 2% from a year ago. Its corporate cash was $309 million, leverage was 1.26x and share repurchases were $250 million and dividends paid were $23 million. Carrai said that its total advisory and brokerage assets have risen from $628 billion in 2018 to $1.238 trillion as of Sept. 30, 2023.

With its 13-story office building headquartered in La Jolla, the company reports that it currently supports about 200 advisor brands in the San Diego area.

“San Diego and its people have embraced our mission to empower the success of financial advisors and institutions as part of its innovative and entrepreneurial culture,” Carrai said. “From Private Ledger’s establishment to LPL Financial’s founding to the fastest-growing wealth advisory firm in the country, San Diego has been a cornerstone of our corporate presence.”

Next year, LPL plans to launch a new key area in the HNW space called Family Wealth Resources, a lifestyle resources and family learning platform.

“We are also investing heavily to further build out the teams and technologies serving these HNW-focused advisors,” Carrai added.

LPL Financial

EMPLOYEES: 1,700 locally & 8,000+ total
BUSINESS: financial services
VALUATION: $19.86 billion
CONTACT: 800-877-7210
NOTABLE: LPL Financial has been recognized as one of Newsweek’s America’s most responsible companies for 2023. This is the fourth consecutive year that LPL has been named to the list and is the only financial services company to be recognized all four years.


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