Today's Viewpoint: A MarshBerry Publication

Strong Q4 2022 Earnings Wraps Up an Unsteady Year for Wealth Management Firms

While the economy had a mixed effect on firms Q4 earnings results, a common theme of optimism and confidence showed through in increased revenue and continued M&A activity.  

Despite economic uncertainty and changes to the market, Wealth Management firms remain overall positive about their performance in 2022 and optimistic about the outlook for 2023. Continued strong merger and acquisition (M&A) activity in the fourth quarter signals market strength despite inflationary pressures and interest rate hikes. In the Q4 earnings calls, five of the top wealth advisory firms communicated strong earnings and a confident end to 2022.  

LPL Financial (NYSE: LPLA) 

LPLA reported promising fourth quarter results with net income of $319 million and diluted earnings per share (EPS) of $3.95, a 199% increase year over year (YoY). President and CEO, Dan Arnold celebrated the results highlighting their continued focus on supporting advisors so they can best serve their clients.  

Q4 brought continued M&A activity with two deals closing in January of 2023. Boenning & Scattergood, a private client group, was acquired bringing on ~30 financial advisors with ~$4 billion of brokerage and advisory assets. Financial Resources Group Investment Services was also acquired, adding ~800 financial advisors with ~$40 billion of assets.  

Looking ahead, LPLA leadership strives to grow assets organically in traditional and new markets, giving them momentum and financial strength to create long term shareholder value, portraying a positive picture for 2023 and beyond.  

Read more about fourth quarter earnings for LPLA.  

Ameriprise Financial (NYSE: AMP)  

Achieving record results in 2022, AMP disclosed strong Q4 results with operating EPS up 13% reaching a new high of $25.14 for the full year. Leadership believes these results demonstrate the strength, diversification and capabilities of their business. Positive results can be partially attributed to strong client retention and attraction of new clients, a testament to their advice-based client experience and broad suite of solutions.  

The unstable market had a mixed impact on the firm. Rising interest rates benefited their cash offerings, at the bank and beyond, showing considerable growth. The Retirement and Protection Solution division benefitted from increased spread revenue while asset management was hindered by pressure from lower markets and volatility.  

A positive outlook for 2023 was communicated as the firm builds on the momentum of their strong 2022 results, further fueled by a higher rate environment and strong growth in wealth management services.  

Read more about fourth quarter earnings for AMP. 

CI Financial (NYSE: CI)  

The Canadian based firm reassured investors in their Q4 earnings call, communicating that the planned U.S. IPO will assist in paying down their expanded credit and debt ratio. This assurance comes as signs point to slowing in their aggressive, long term acquisition strategy in the U.S.  

Positive encouragement came from CEO, Kurt MacAlpine, citing three strategic acquisitions in the U.S., Eaton Vance WaterOak, Inverness Counsel, and Kore Private Wealth, and double-digit asset growth. The growth brought the US wealth management business to nearly $133 billion in assets at year end.  

While delivering EPS under 2021 results, the company remains hopeful as it’s still their second-best year and 27% higher than their next best. The change can be partly attributed to lower average AUM in asset management that was offset by strong profitability in the U.S. and Canadian wealth business. CI remains dedicated to becoming “the leading integrated ultra-high and high-net-worth manager in the U.S.”

Read more about fourth quarter earnings for CI. 

Avantax Financial (previously BluCora, NASDAQ: AVTA) 

AVTA announced record highs for many performance metrics in Q4. Adding over $401 million of recruited assets over the fourth quarter, for a total of $1.7 billion of new assets in 2022, leadership conveyed a positive message about 2022 and the future. A record high $495 million of net positive asset flows shows the strengthened position of the company following the close of the TaxAct sale and execution of its refinancing strategy.  

The company has seen strong results as it streamlines its organizational priorities to position the team as a wealth only firm and will continue along that path in 2023. In doing this, the firm has announced new leadership members who align with this strategy and can best serve the company.  

Total client assets experienced a 6% improvement, largely due to improving market conditions. Advisory assets ended Q4 at $38.3 billion, or 49.8% of total client assets, presenting a new record with momentum to carry them through 2023.   

Read more about fourth quarter earnings for AVTA. 

Focus Financial (NASDQ: FOCS)  

A 4.5% YoY revenue growth to $547.7 million provided insight into the mixed Q4 earnings of FOCS. Despite a negative 3.5% organic growth rate YoY, and net loss of $1.4 million in Q4, FOCS was able to grow revenue 19.2% for the year. A more challenging Q4 did not lessen the success of the 2022 year for the firm.  

Completing 24 transactions, including 5 new partner firms and 19 mergers, the company gained M&A momentum, contributing to its growth and revenue increases. Leadership remains optimistic about future performance as the company continues to perform well despite the challenging macro-economic environment. Relying on their core value proposition, capital allocation discipline and scale allowed them to endure volatile markets in 2022 and will position them to capitalize on an eventual recovery in 2023 and beyond. Positive 2022 results demonstrated the resiliency of their firm and business strategy.  

Outside of the quarterly report, private equity group, Clayton Dubilier & Rice, has made a bid to acquire Focus Financial Partners at a $4.1 billion valuation, or $53 per share, making them privately held. The current non-binding acquisition proposal is in exclusive due diligence as of February 27, 2023.1 

Read more about fourth quarter earnings for FOCS. 

As economic headwinds possibly wind down in 2023, wealth advisory firms could benefit from more stable conditions and higher interest rates. As the industry grows, firms remain agile and dedicated to their clients and advisors, helping firms to thrive no matter the economic conditions.  

If you think you are ready to start the conversation about exploring strategic partnerships, or would like to learn more about how MarshBerry can help you drive value for your business, please emailor call Kim Kovalski, Managing Director, at 440.769.0322. 

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Contact Kim Kovalski
If you have questions about Today's ViewPoint, or would like to learn more about how MarshBerry can help your firm determine its path forward, please email or call Kim Kovalski, Managing Director, at 440.769.0322.


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