(Bloomberg) — Dan Arnold seemed so ordinary at the helm of LPL Financial Holdings Inc . that an industry publication complimented him on “Vanilla Vision.”
So the sudden dismissal this week of Arnold, 59, who took over as chief executive in 2017 and once told the firm's financial advisers that his mission was “to take care of you, so you can take care of the clients yours”, it turns out to be a shock.
The company has said little beyond a statement accusing it of violating LPL's “commitment to a respectful workplace.” She declined to elaborate beyond that. Arnold did not respond to requests for comment.
With an entrepreneurial background and decades of experience, Arnold championed the idea of putting customers first, with long-term growth to follow. He started as a managing director when his previous employer was taken over by LPL and rose through the ranks, gaining a reputation as a bold leader who oversaw a near tripling of assets and a soaring share price.
“Our impression is that he was generally well-liked internally and led the business through a period of success,” Citizens JMP Securities LLC analysts led by Devin Ryan said in a note to clients Wednesday morning, calling him “a unfortunate situation for the company”. that will leave investors asking questions.
Arnold's termination — along with loss of employment benefits and automatic forfeiture of unpaid equity awards, both vested and unvested — followed an investigation by an outside law firm and the recommendation of a special board committee, which revealed that he made statements to employees that he violated LPL rules. The firm did not disclose what he said.
“LPL's code of conduct requires every employee, regardless of title, to foster a supportive and professional workplace and to show respect for each other, our stakeholders and the wider community,” chairman James Putnam said in a statement. statement. “Mr. Arnold did not fulfill these obligations.”
Arnold earned a bachelor's degree in electrical engineering at Auburn University before going to Georgia State University for a master's in business administration. He co-owned a bar in Atlanta while attending high school, working as a bartender there with friends.
“Because we thought it was a cool idea — I'm not so sure it was,” he said in a 2021 interview. “It was fun.”
The acquired company
it they joined LPL in 2007 after the firm acquired UVEST Financial Services, where Arnold had served as president and chief operating officer. He became chief financial officer at LPL in 2012 and was named president of the firm three years later, tasked with driving its long-term growth strategy as well as overseeing the company's offerings to its clients.
Court records show no history of criminal or civil proceedings against Arnold in San Diego County, where he lives, and the Financial Industry Regulatory Authority BrokerCheck the platform shows no complaints against him.
Arnold earned almost $17 million in compensation awards last year, including a higher-than-target bonus. His total compensation awards rose 23% last year, with the lion's share in stock incentives, according to company filings.
At the end of February, Arnold had restricted and performance shares worth approximately $28 million at their target level, with the option to earn more than $50 million in shares, according to the terms of the awards disclosed in the annual proxy statement of the firm.
According to public records, Arnold bought a mansion in the San Diego neighborhood of La Jolla for $11.4 million in 2021. The seven-bedroom, 10-bathroom with Spanish tile roof has panoramic views of the Pacific Ocean, a pool and a sauna. The three floors of the house on the hill are accessible by elevator.
Federal Election Commission Bills show that Arnold gave $5,000 last year to the LPL political action committee, which has contributed for dozens of lawmakers on both sides of the aisle. A June 21 donation of $5,000 went to the campaign of Republican House Speaker Mike Johnson, while a June 20 donation of $2,500 went to the re-election of Congresswoman Terri Sewell, a Democrat from Alabama.
Growth of the firm
While serving as CEO, Arnold led significant growth at LPL. The company's total brokerage and advisory assets nearly tripled from $509 billion to QUARTER before taking over as CEO at $1.5 trillion in the second quarter of this year. He has overseen a sixfold rise in LPL's share price since taking over in early 2017.
He also oversaw an increase in the number of advisors of more than 60% during the same period, and has often spoken about the importance of advancing the firm's mission and maintaining a strong company culture. LPL offers financial advisors a variety of ways to connect with the firm and serves more than 23,000 people, according to the statement announcing Arnold's termination.
“I became a true believer that culture eats strategy for breakfast,” Arnold once said CEO magazine. “To achieve long-term success, our strategy and ability to execute must rest on top of a strong cultural foundation and be complemented by the best talent.”
'calm' behavior
He also spoke about the importance of creating a “mission-driven culture” with an emphasis on putting customers and their needs first. His “quiet” demeanor is seen as a contrast to “noisy” approaching his predecessor, Mark Casady.
But on LPL's most recent earnings call, in July, Arnold made comments that departed from his stable reputation, calling out some of the firm's associates. The company found that some firms were “strategically misaligned” with LPL's mission because “they were limiting advisers' ability to choose how and where to do business,” Arnold said on the call.
“This position is in stark contrast to our core principles of adviser independence,” Arnold said. “And as a result, we have decided to separate from these relationships.”
Days later, Merit Financial Group LLC, a private equity-backed investment advisory firm that oversees about $12 billion in client assets, ended its relationship with LPL, according to Citywire. A Merit representative did not immediately respond to a request for comment.
Now Arnold is out of a job and the company is left to search for its next CEO. For now, leadership responsibilities will fall to Rich Steinmeier, who previously served as the company's chief growth officer and was named Tuesday to become interim CEO.
“The board has every confidence in Rich and LPL's experienced management team to ensure a smooth and stable transition,” Putnam said in the statement.