The fired LPL boss championed the company culture, which he later violated

(Bloomberg) — Dan Arnold seemed so normal at the helm of LPL Financial Holdings Inc. that an industry publication praised him for his “vanilla vision.”

So this week saw the sudden dismissal of 59-year-old Arnold, who took over as CEO in 2017 and once told the company’s financial advisers that his job was “to take care of you so that you can take care of your customers.” can take care of.” “Proves to be a shock.

Related: Analysts largely view LPL’s CEO firing as an ‘isolated incident’

The company has said little about it other than a statement accusing it of violating LPL’s “commitment to a respectful workplace.” It was declined to make any further comments. Arnold did not respond to requests for comment.

With an entrepreneurial background and decades of experience, Arnold represented the idea of ​​putting the customer at the center and pursuing long-term growth. When his former employer was acquired by LPL, he started as CEO, rose through the ranks, and gained a reputation as a balanced leader, overseeing a nearly tripling of assets and a rapid rise in stock price.

Related: LPL fires CEO Dan Arnold for violating code of conduct

“Our impression is that he was generally well-liked internally and led the company through a period of success,” Citizens JMP Securities LLC analysts led by Devin Ryan said in a note to clients Wednesday morning, calling it “an unfortunate situation for the company”. This will raise questions among investors.

Arnold’s termination – along with the loss of severance benefits and the automatic forfeiture of outstanding stock awards, both vested and vested – came after an investigation by an outside law firm and the recommendation of a special board committee that found he had made appropriate representations to employees submitted had violated the LPL rules. The company did not disclose what he said.

“LPL’s Code of Conduct requires every employee, regardless of title, to promote a supportive and professional workplace and to demonstrate respect for each other, our stakeholders and the broader community,” Chairman James Putnam said in a statement. “Mr. Arnold has not fulfilled these obligations.”

Arnold earned a bachelor’s degree in electrical engineering from Auburn University before attending Georgia State University for his Master of Business Administration. During his studies, he became co-owner of a bar in Atlanta and worked there as a bartender with friends.

“Because we thought it was a cool idea — I’m not so sure it was,” he said in an interview in 2021. “It was fun.”

Company taken over

He joined LPL in 2007 after the company acquired UVEST Financial Services, where Arnold served as president and chief operating officer. In 2012, he became LPL’s chief financial officer and three years later became the company’s president, tasked with driving its long-term growth strategy and overseeing the company’s offerings to its customers.

Court records show no history of criminal or civil cases against Arnold in San Diego County, where he lives, and no complaints against him can be found on the Financial Industry Regulatory Authority’s BrokerCheck platform.

Arnold collected nearly $17 million in compensation last year, including a higher-than-planned bonus. According to company filings, his total compensation rose 23% last year, with the lion’s share coming from equity incentives.

At the end of February, Arnold had approximately $28 million in restricted and performance stock awards at target levels, with the opportunity to purchase shares valued at more than $50 million, under the terms of the awards set forth in the be disclosed in the company’s annual proxy statement.

According to public records, Arnold purchased a mansion in San Diego’s La Jolla neighborhood for $11.4 million in 2021. The seven-bedroom, ten-bathroom Spanish tile roof features panoramic views of the Pacific Ocean, a pool and a sauna. The three floors of the hillside house can be reached by elevator.

Federal Election Commission receipts show Arnold donated $5,000 to the LPL political action committee last year, helping dozens of lawmakers on both sides of the ballot. A June 21 donation of $5,000 went to Republican House Speaker Mike Johnson’s campaign, while a June 20 donation of $2,500 went to the re-election of Congresswoman Terri Sewell, an Alabama Democrat came.

Business growth

As CEO, Arnold drove LPL’s significant growth. The company’s total brokerage and advisory assets nearly tripled from $509 billion in the quarter before he took over as CEO to $1.5 trillion in the second quarter of this year. Since taking office in early 2017, he has caused LPL’s share price to increase sixfold.

He also drove a more than 60% increase in consultant numbers over the same period and has spoken often about the importance of advancing the company’s mission and maintaining a strong company culture. LPL offers various opportunities for financial advisors to join the firm and serves more than 23,000 clients, according to the statement announcing Arnold’s termination.

“I am a firm believer that culture eats strategy for breakfast,” Arnold once told CEO Magazine. “To drive long-term success, our strategy and our ability to execute must be based on a strong cultural foundation and complemented by the best talent.”

“Calm” behavior

He has also spoken about the importance of establishing a “mission-driven culture” with an emphasis on putting customers and their needs first. His “calm” demeanor was seen as a contrast to the “boisterous” approach of his predecessor, Mark Casady.

But in LPL’s most recent earnings release in July, Arnold made comments that strayed from his staid reputation by denouncing some of the company’s employees. The company found that some firms were “strategically misaligned” with LPL’s mission because “they limited advisors’ ability to decide how and where they do business,” Arnold said on the call.

“This attitude is in stark contrast to our core principles of advisor independence,” said Arnold. “And that is why we have decided to separate ourselves from these relationships.”

A few days later, Merit Financial Group LLC, a private equity-backed investment advisory firm that manages about $12 billion in client assets, ended its relationship with LPL, according to Citywire. A representative for Merit did not immediately respond to a request for comment.

Now Arnold is unemployed and the company must search for its next CEO. For now, leadership responsibility lies with Rich Steinmeier, who previously served as the company’s chief growth officer and was named interim CEO on Tuesday.

“The Board has full confidence in Rich and LPL’s experienced management team to ensure a smooth and stable transition,” Putnam said in the statement.