(Bloomberg) — Dan Arnold appeared so completely extraordinary on the helm of LPL Monetary Holdings Inc. that one trade publication complimented him for his “vanilla imaginative and prescient.”
So the abrupt firing this week of the 59-year-old Arnold, who took over as chief govt officer in 2017 and as soon as informed the agency’s monetary advisers that his mission was about “taking good care of you, so you may care for your shoppers,” is proving a shock.
The corporate has stated little past an announcement that charged him with violating LPL’s “dedication to a respectful office.” It declined to elaborate past that. Arnold didn’t reply to requests for remark.
With an entrepreneurial background and a long time of expertise, Arnold championed the concept of placing clients first, with long-term progress to comply with. He began out as a managing director when his earlier employer was taken over by LPL and moved up the ranks, gaining a popularity as an even-keeled chief who oversaw a close to tripling of belongings and a hovering share value.
“Our impression is that he was typically nicely preferred internally and led the enterprise by way of a interval of success,” Residents JMP Securities LLC analysts led by Devin Ryan stated in a word to shoppers Wednesday morning, calling it “an unlucky state of affairs for the corporate” that may go away traders asking questions.
The termination of Arnold — together with the lack of severance advantages and computerized forfeiture of excellent fairness awards, each vested and unvested — adopted a probe by an outdoor legislation agency and the advice of a particular board committee, which discovered he made statements to staff that violated LPL guidelines. The agency didn’t disclose what he stated.
“LPL’s code of conduct requires each worker, regardless of their title, to foster a supportive {and professional} office and present respect to one another, our stakeholders and the broader neighborhood,” Chair James Putnam stated in an announcement. “Mr. Arnold failed to fulfill these obligations.”
Arnold earned a bachelor’s diploma in electrical engineering at Auburn College earlier than going to Georgia State College for his grasp of enterprise administration. He turned a co-owner of a bar in Atlanta whereas he was attending grad faculty, working there as a bartender with mates.
“As a result of we thought that was a cool concept — I’m not so certain it was,” he stated in a 2021 interview. “It was enjoyable.”
Firm Acquired
He joined LPL in 2007 after the agency acquired UVEST Monetary Providers, the place Arnold had served as president and chief working officer. He turned chief monetary officer at LPL in 2012 and was named the agency’s president three years later, given the duty of driving its long-term progress technique in addition to overseeing the corporate’s choices for its shoppers.
Courtroom information present no historical past of legal or civil proceedings towards Arnold in San Diego County, the place he lives, and the Monetary Business Regulatory Authority’s BrokerCheck platform reveals no complaints towards him.
Arnold raked in nearly $17 million in compensation awards final 12 months, together with a higher-than-targeted bonus. His whole compensation awards jumped 23% final 12 months, with the lion’s share in inventory incentives, in keeping with firm filings.
On the finish of February, Arnold had restricted and efficiency inventory awards price roughly $28 million at their goal degree, with the chance to earn greater than $50 million price of shares, in keeping with the phrases of the awards disclosed within the agency’s annual proxy assertion.
In response to public information, Arnold purchased a mansion within 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 hillside dwelling’s three tales are reachable by elevator.
Federal Election Fee receipts present that Arnold gave $5,000 final 12 months to LPL’s political motion committee, which has contributed to dozens of lawmakers on each side of the aisle. A June 21 donation of $5,000 went to the marketing campaign of Republican Home Speaker Mike Johnson, whereas a June 20 donation of $2,500 went for the re-election of Congresswoman Terri Sewell, an Alabama Democrat.
Agency’s Progress
Whereas serving as CEO, Arnold steered important progress at LPL. The corporate’s whole brokerage and advisory belongings almost tripled from $509 billion within the quarter earlier than he took over as CEO to $1.5 trillion within the second quarter of this 12 months. He’s overseen a sixfold soar in LPL’s inventory value since taking on in the beginning of 2017.
He additionally oversaw a rise in adviser depend of greater than 60% over the identical interval, and has usually spoken in regards to the significance of furthering the agency’s mission and sustaining a powerful firm tradition. LPL presents monetary advisers alternative ways to affiliate with the agency, and serves greater than 23,000 in keeping with the assertion saying Arnold’s termination.
“I turned an actual believer that tradition eats technique for breakfast,” Arnold as soon as informed CEO Journal. “With a view to drive success over the long run, our technique and skill to execute have to sit down atop a powerful cultural basis and be complemented by one of the best expertise.”
‘Quiet’ Demeanor
He’s additionally spoken in regards to the significance of building a “mission-driven tradition” with an emphasis on placing shoppers and their wants first. His “quiet” demeanor has been seen as contrasting with the “boisterous” strategy of his predecessor, Mark Casady.
However in LPL’s most up-to-date earnings name, in July, Arnold made feedback that veered away from his staid popularity, calling out a few of the agency’s collaborators. The corporate discovered that a number of corporations have been “strategically misaligned” with LPL’s mission as a result of “they have been limiting advisors’ means to decide on how and the place they do enterprise,” Arnold stated on the decision.
“That posture is in stark distinction to our core rules of advisor independence,” Arnold stated. “And in consequence, now we have resolved to separate from these relationships.”
Just a few days later, Benefit Monetary Group LLC, a personal equity-backed investment-advisory agency overseeing about $12 billion in shopper belongings, ended its relationship with LPL, in keeping with Citywire. A consultant for Benefit didn’t instantly reply to a request for remark.
Now Arnold is out of a job, and the corporate is left to seek for its subsequent CEO. In the intervening time, management obligations will fall to Wealthy Steinmeier, who beforehand served as the corporate’s chief progress officer and was tapped on Tuesday to grow to be interim CEO.
“The board has each confidence in Wealthy and LPL’s seasoned administration staff to make sure a clean and steady transition,” Putnam stated within the assertion.