LPL Investment Holdings' CEO Discusses Q4 2011 Results - Earnings Call Transcript
LPL Investment Holdings (
)
Q4 2011 Earnings Call
February 7, 2012 5:00 p.m. ET
Executives
Trap Kloman – Investor Relations
Mark Casady – Chairman and Chief Executive Officer
Robert Moore – Chief Financial Officer
Analysts
Thomas Allen – Morgan Stanley
Chris Harris - Wells Fargo Securities
Ed Ditmire - Macquarie
Daniel Harris – Goldman Sachs
Ken Worthington – JPMorgan
Devin Ryan – Sandler O'Neill
Xiaowei Hargrove - William Blair
Bill Katz - Citigroup
Joel Jeffrey – Keefe, Bruyette & Woods
Alex Kramm - UBS
Presentation
Operator
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Good day, and welcome to the LPL Investment Holdings fourth quarter earnings conference call. [Operator instructions.] I would now like to introduce the host of today’s conference, Mr. Trap Kloman. Sir, please go ahead.
Trap Kloman
Thank you. Good morning and welcome to the LPL Financial fourth quarter earnings conference call. On the call today is Mark Casady, our chairman and chief executive officer, who will provide his perspective on our performance during the quarter. Following his remarks, Robert Moore, our chief financial officer, will highlight drivers of our financial results. We will then open the call for questions.
Please note that we have posted a financial supplement on the Events section of the Investor Relations page on lpl.com. Before turning the call over to Mark, I would like to note that comments made during this conference call may incorporate certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements concerning such topics as earnings growth targets, operational plans, and other opportunities we foresee.
Underpinning these forward-looking statements are certain risks and uncertainties. We refer our listeners to the Safe Harbor disclosures contained in the earnings release and our latest SEC filings to appreciate those factors that may cause results to differ from those contemplated in such forward-looking statements. In addition, comments during this call will include certain non-GAAP financial measures governed by SEC Regulation G. For a reconciliation of these measures, please refer to our earnings press release.
With that, I’ll turn the call over to Mark Casady.
Mark Casady
Thank you Trap, and thank you everyone for joining this afternoon’s call. For the fourth quarter and full year 2011, LPL Financial continued to perform well despite volatile markets and a challenging global economy. Against this backdrop, I’m very pleased by the record levels of revenue and adjusted earnings we generated for the year.
The cornerstone of our performance, as always, remains the commitment of our advisors to actively engage with our clients, providing guidance and reassurance through uncertain conditions. The example our advisors set is a constant reminder of our purpose as a company.
Our fourth quarter marked the one-year anniversary of our initial public offering. Then, as now, our singular focus remains supporting our financial advisors and institutions as they serve the best interests of their clients. The steadfast dedication to our advisors and institutions is a fundamental driver behind our overall success in 2011.
Our 12% revenue growth for the year was primarily derived from high single-digit same-store sales growth from our seasoned advisors who are a significant driver of our long term growth. Additionally, we continue to retain our existing advisors, resulting in production retention for 2011 exceeding 96%.
Even as the market for new business remains highly competitive, we added 549 net new advisors for the year from all channels. This excludes the attrition of 146 advisors related to the previously announced US conversion.
Our business development success has been enhanced by tremendous growth on our RIA platform. It saw assets increase 68% to $22.7 billion and the number of RIA firms grow to 146 compared to 114 firms in 2010.
Looking forward, our advisor pipeline remains strong as LPL Financial remains the provider of choice for advisors seeking an enabling business partner to help them establish and grow their practices.
In order to maintain our leadership position, we continue to invest in technology to help our advisors better serve their clients. Investments in our integrated platform enable our advisors to be more productive, attract new clients, and focus on what they do best, building relationships.
For example, we have enhanced the access to critical data and important client performance information provided through Portfolio Manager, our advisor reporting tool. We also invested in employee home office technology, leading to greater operational efficiencies and savings.
In 2011, we upgraded our suite of servers that support our integrated web-based technology and virtualized software to increase capacity and reduce energy needs. We also dramatically streamlined our relationships with third-party vendors by increasing the automation and efficiency of our procurement, sourcing, and vendor management capabilities.
Other notable successes in 2011 include the full-scale launch of our service value commitment, which is built upon a methodology referred to as [Lean]. Employee-based teams are empowered to rationalize processes and gain efficiencies in our operation.
The ultimate objective is to make continuous improvement a way of life for our employees and advisors. For 2011, we achieved productivity and efficiency goals in a number of areas in our organization and we expect to realize incremental economic benefits in 2012 and beyond.
In addition to enhancing productivity, we are pleased with the positive impact our service value commitment has had on increasing advisor satisfaction and raising employee engagement. Our service value commitment is not a one-year program, but a permanent part of our culture and we look forward to expanding it into more areas in 2012.
In 2011, we effectively deployed our capital by closing two acquisitions, National Retirement Partners and Concord. In January 2012, we announced our intent to acquire Fortigent, a leading provider of high net worth solutions and consulting services to RIAs, banks, and trust companies.
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