LPL hanging onto Waddell & Reed advisers and assets

LPL Financial said on Thursday it has surpassed its target for retaining advisers from Waddell & Reed Financial Inc. and has commitments from advisers with 80% of client assets to move to LPL when the acquisition closes later this year.

In December, LPL said it was buying the wealth management business of Waddell & Reed as part of a larger, complicated transaction. The price tag was $300 million for 70% Waddell & Reed’s 921 advisers, who work with close to $70 billion in client assets.

LPL has a long history of deal making and large acquisitions.

But broker-dealer mergers are always fraught with tension as management and back-office employees hustle to hang onto as many of the desirable advisers from the acquired firm as possible. Competition is fierce, and rival broker-dealers routinely dangle promises of better service and more lucrative recruiting bonuses.

Just days after it announced the deal, LPL rolled out its stay bonus package with advisers being offered between 30% and 50% of their prior year’s fees and commissions to sign on, according to several industry sources.

“We announced the transaction in early December and at that point we began our retention efforts associated with the Waddell & Reed advisers,” said LPL’s CEO Dan Arnold on a call with analysts Thursday afternoon to discuss last quarter’s earnings. “We have been at that largely six weeks. And so what you are seeing is that 80% retention rate has more to do with just the timing and where we are in the overall process than anything else.”

Meanwhile, LPL reported $903 billion in client assets at the end of 2020, a year-over-year increase of 18%. Its advisor assets at the end of December reached $461 billion, or more than half its total, an increase of 26% when compared to the end of 2019.

The company reported adviser headcount was 17,287, up 119 from the end of September and 823 year-over-year.

As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.

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