After a decade of heading up one of the biggest brokerage firms, LPL Financial Holdings Corp., Mark Casady is retiring. This may be the first step toward a sale of LPL, as The Wall Street Journal reports that the company has been considering “strategic alternatives.”
News of Mr. Casady’s departure follows the October disclosure that LPL is considering strategic alternatives, which are being led by Goldman Sachs Group Inc. and could include a sale of the company. Messrs. Arnold and Casady declined to comment on the review process.
But Mr. Arnold and lead board director James Putnam both said the company is well-positioned to navigate the brokerage industry’s challenges as a stand-alone business.
Mr. Casady, 56 years old, will continue to serve on the boards of several companies, including Citizens Financial Group Inc. and venture firm Vestigo Ventures. He said he has no plans to take on a full-time job in the immediate future, saying he will instead devote more time to his two grandchildren and wife.
LPL has grown considerably over the past 10 years Mr. Casady has led the firm. LPL added thousands of advisers to further establish itself as a top brokerage firm that caters to independent brokers, and it grew to become one of the biggest providers of retail financial advice behind rivals like Morgan Stanley and Bank of America Corp.’s Merrill Lynch.
But that growth came at a price, LPL executives have said. LPL’s compliance and technology infrastructure didn’t keep pace with the influx of new advisers, and regulators hit the firm over the past several years with millions of dollars in fines for issues ranging from failing to keep emails to sales violations around alternative investment products such as annuities. Just last week, Massachusetts’ state regulator charged LPL with failing to supervise a top-producing broker who allegedly engaged in fraud and sold unsuitable variable annuities to retirees.
Besides that, LPL has seen revenue tied to the sale of investment products erode in recent years after regulators tightened rules around how those products are sold. Most recently, LPL said the continuing sales commission slowdown and market volatility helped pull third-quarter revenue down 4% to $1.02 billion. LPL has been managing its costs in recent quarters to improve profitability; lower spending helped push its profit up 27% to $52 million last quarter.
The struggles have weighed on LPL shares, which are down 6.6% for the year after having lost nearly half their value in February. LPL shares have benefited from a broader financial sector rally in the wake of Donald Trump’s presidential election win. A Trump presidency has brought speculation that a number of costly regulations, including the fiduciary rule, would be rolled back under Republicans, buoying financial companies’ shares.