Dan Arnold: Let me take a stab at that one. It’s Dan and hopefully, I’ll get all your questions inside of there. So I think, as you know, M&A remains a core part of our strategy complement to our organic growth opportunities. And to your question, we focus on three primary categories of opportunities. One is, first to grow in our market. So potential acquisitions might include both broker-dealers and RIAs. Examples of that are our Boenning & Scattergood’s acquisition, Waddell & Reed acquisition and then Crown Capital, which we’re closing earlier this year. So those are good examples of how we might look across the marketplace for those opportunities. And look, as the industry continues to consolidate, we would expect to be a participant in that consolidation.
The second type of transactions that we’ll look at is to add capabilities and these are capabilities where we would ultimately evaluate, allocate and should we allocate capital to build, buy or partner. And to the extent this accelerates our desire to create that vertically integrated, feature-rich platform and, this is where we would look to an opportunity like that. As capability transactions would include advisory world and delays. And to remind you, delays a trading platform that we’re turning in to what we think will be a really industry-leading trading and rebalancing tool that we’re making available to our entire client base in early in the spring. So excited about that type of transaction and what we can do with it. The third type of category or example of a transaction would be deploying capital against this newest capability of liquidity and succession.
Certainly gives us a path for our capital work in a way that both meets our disciplined return thresholds and then helps both internal and external advisors solve a really important question around this succession needs and requirements that we’ve talked a lot about over the next 10 years. And again, I think in doing that, it positions us well to not only do that for internal advisors, but also to potentially create that solution for those that aren’t part of our enterprise today. So if you just summarize all of that, we consider M&A opportunities, a core part of our strategy, but we will remain disciplined to make sure that the framework with which we assess them as they benefit strategically, financially, culturally and operationally, and we’ll do it with good discipline around each of these two.
I hope that helps.
Operator: And our next question comes from Devin Ryan with JMP Securities.
Devin Ryan: Okay. Great. A question for Dan. I was interested by the comments you made about some of the new service innovations and really to encourage advisors to move and, I guess, move to LPL. And I guess I took that more as LPL looking to win more advisors in motion. But if I look at industry churn, it’s been pretty anchored at 5% to 6% in recent history. So I’m just curious, based on what you just talked about, whether it’s some of the innovations in the services portfolio or just that you’re seeing more broadly occurring in the industry that could really change that 5% to 6% rate, and it would seem like it would be a pretty big deal, if you can. So just love to get a sense of kind of what those innovations actually mean? And then can that rate move for either LPL reasons or industry reasons?
Dan Arnold: Yes, good question. So I think if we just sort of start with the first question around churn or that movement in the marketplace. And we continue to see advisor movement will remain flat. Think about that in the range of 5%, 5.5% over the other part of the last couple of years, which is you know is below historical norms. Now there has been some mix shift in that turnover where it’s coming from. In fact, in the last year, you’ve seen movement in the traditional independent market move up where there’s been a slowdown as an example from the wires. That said, notwithstanding all of that, I think we first and foremost look at our overall win rates or what is moving across all of our different affiliation models as a way to continue to understand their absolute appeal as well as their hopefully growing appeal as we invest more into the platform or the model.
And as we said earlier, despite this lower movement in advisors. If you look at the relative market share, we’re picking up in our win rates, you’ve seen those increase over the past three years with that investment back into the model. And I think look, for the newer models, not only do we have higher opportunities to enhance the capability set there as they’re on a — just a pressure journey, if you will, in terms of our investment capabilities there. Also, their seasoning, the growing awareness and credibility they have in the marketplace can also be a catalyst for higher win rates there. So it’s not just even the investment. It’s that it’s growing seasoning around our right to win, if you will, with those new models. And then finally, to your point, I think one of the things that we look at is we can’t completely control the movement of advisors in the marketplace.
What could we do to contribute to it in this notion of concept making it easier to help an advisor move from one practice to another, given that being what we believe is one of the big hurdles for advisors moving, boy, if you could solve that or begin to break that down and imagine that in different ways and thus create a much different rubric, if you will, for the change management effort sort of associated to moving the A to B that, that could be a real catalyst to increase that movement in the industry. And so that’s the question I think we’re trying to explore and that I alluded to in my remarks, and we’re using our services portfolio and some of the ways at which we’ve learned how to add value to advisors and helping them operate, fund their practices and realize that we tweak them a bit and offered them while someone is going through a conversion, that actually could be a catalyst to making easier to go through that change management.
And thus, it’s successful at doing that more structurally, but then you could see the knock-on effect, if you will, of potentially accelerating the movement in this industry. And with our ability to recruit and our positioning of our models in the marketplace, certainly, that’s a strategic opportunity for us. So that’s how we pulled that together. I hope that color added some little…
