LPL Financial Board of Directors fired President and CEO Dan Arnold for cause this weekciting violations of respectful workplace policies. Several analysts covering the firm maintained their ratings on LPL, saying it will not materially affect the firm's day-to-day operations.
LPL Financial, the independent broker/dealer with more than 23,000 advisers, said its board terminated Arnold for cause. He also resigned from the board and Rich Steinmeier, managing director and chief growth officer, was named interim CEO, effective immediately.
Steven Chubak with Wolfe Research said he expected no change in the firm's strategy and a smooth CEO transition. He believes Steinmeier should take on the permanent role of CEO.
“Steinmeier has been the primary architect of LPLA's growth strategy in recent years, and the strong relationships he has built with LPLA's advisors/venture partners have been critical to the company's success, contributing to the acceleration of organic growth since his appointment,” Chubak wrote in an analyst note. “Steinmeier has a wealth of experience having served in leadership roles at both UBS and Merrill, and is well suited to take the reins as CEO.”
The company's organic growth rate has increased by 650 basis points since Steinmeier joined the firm in 2018. Wolfe maintained her “outperform” rating.
Chubak also doesn't believe the firing is indicative of “pervasive cultural issues” at LPL and that the misconduct “seems more idiosyncratic.”
According to LPL, Arnold “made statements to employees that violated LPL's Code of Conduct.”
Devin Ryan with JMP Securities said he believed Arnold's firing was an “isolated incident” and maintained a “market outperform” rating and price target of $310. He also doesn't expect it to disrupt the company's day-to-day operations.
“Advisors primarily operate as independent entities and they should not expect any changes in their level of service, customer support, technology or economics, factors that affect their day-to-day business prospects and client relationships,” Ryan wrote. in an analyst note.
“Furthermore, Mr. Steinmeier is well-regarded and we believe he represents a comfort choice, as he has played a key role in recent strategy and we would not anticipate any material strategic change at the company, especially given the current momentum experience. today across the channels,” Ryan wrote.
Michael Cho at JP Morgan said that while the change in leadership may affect short-term sentiment, he expects a smooth long-term transition.
“While we are surprised by the change in management, our understanding is that the board acted quickly to remedy the situation,” Cho said in an analyst note. “We feel that any investigation related to this incident is fully concluded and we do not expect another shoe to drop.”
He added that Steinmeier and CFO Matt Audette had guided the firm's strategy for many years.
“Our view is that the current executive team (interim CEO and CFO) will remain in place and continue to implement LPL's strategic initiatives,” he wrote.
Cho lowered its revenue estimates for the third quarter of 2024, but this is due to lower expected money laundering revenue. He lowered his December 2025 price target to $264 a share. LPL is currently trading at $230.77, up 0.40% during trading on Wednesday as of 3:56 PM ET.
Morningstar analyst Michael Wong said he would maintain his recently raised fair value estimate of $314 per share despite Arnold's departure.
Under Arnold's tenure, LPL's total return to shareholders was 537%.