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- Total Revenue: $3,512.351 million (**+33% YoY**)  **[0001397911-25-000006_a2024q4earningsrelease.htm:4]** **[0001397911-24-000011_lpla-20231231.htm:96]**   
- Total Commission Revenue: $965.6 million (**+42% YoY**)  **[0001397911-25-000006_a2024q4earningsrelease.htm:5]**   
- Net Income: $270.749 million (+24% YoY)  **[0001397911-25-000006_a2024q4earningsrelease.htm:4]** **[0001397911-24-000011_lpla-20231231.htm:96]**   
- Interest Expense: $81.979 million (**+51% YoY**)  **[0001397911-25-000006_a2024q4earningsrelease.htm:4]** **[0001397911-24-000011_lpla-20231231.htm:96]**   
- EPS (Diluted): $3.59 (+25% YoY)  **[0001397911-25-000006_a2024q4earningsrelease.htm:4]** **[0001397911-24-000011_lpla-20231231.htm:96]**   

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| Name               | Position                                           | Start Date         | Short Bio                                                                                                                                                                                                                                                                                                                                 |
|--------------------|----------------------------------------------------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Dan H. Arnold      | President and Chief Executive Officer              | January 2017       | Dan H. Arnold has been with LPL Financial since January 2007, following LPL's acquisition of UVEST Financial Services Group, Inc. He served as the company's president starting in March 2015 and as chief financial officer from June 2012 to March 2015. He holds a B.S. in electrical engineering and an M.B.A. in finance  **[0001397911-24-000011_lpla-20231231.htm:56]** **[0001193125-24-080802_d455853ddef14a.htm:13]** **[0001397911-23-000024_lpla-20221231.htm:56]** . |
| Matthew J. Audette | Chief Financial Officer and Head of Business Operations | 2015               | Matthew J. Audette joined LPL Financial in 2015. He became Head of Business Operations in February 2023. Before LPL, he was the CFO of E*TRADE Financial Corporation. He holds a B.S. in accounting from Virginia Tech  **[0001397911-24-000011_lpla-20231231.htm:56]** **[0001193125-24-240432_d884290d8k.htm:1]** **[0001397911-23-000024_lpla-20221231.htm:56]** .                                                                                                       |
| Althea Brown       | Managing Director, Chief Legal Officer             | September 2023     | Althea Brown is responsible for legal, regulatory, and government relations matters at LPL Financial. She has over 25 years of experience, having worked at Google, Morgan Stanley Smith Barney, and J.P. Morgan  **[0001397911-24-000011_lpla-20231231.htm:57]** .                                                                                                                   |
| Sara Dadyar        | Managing Director, Chief Human Capital Officer     | January 2024       | Sara Dadyar oversees human resources and talent development at LPL Financial. She was previously the Chief People Officer at Proterra Inc. and has over 24 years of experience at GE  **[0001397911-24-000011_lpla-20231231.htm:57]** .                                                                                                                                               |
| Matthew Enyedi     | Managing Director, Client Success                  | February 2023      | Matthew Enyedi leads a client-centered team at LPL Financial. He joined LPL in 2003 and has held various leadership roles, including leading national sales and wealth management organizations  **[0001397911-24-000011_lpla-20231231.htm:57]** **[0001397911-23-000024_lpla-20221231.htm:57]** **[0001193125-23-041083_d814797dex991.htm:0]** .                                                                                                                             |
| Greg Gates         | Managing Director, Chief Technology & Information Officer | July 2021         | Greg Gates manages technology and systems applications at LPL Financial. He joined LPL in 2018 and previously worked at PayPal and Bank of America  **[0001397911-24-000011_lpla-20231231.htm:58]** **[0001397911-23-000024_lpla-20221231.htm:57]** **[0001397911-22-000014_lpla-20211231.htm:57]** .                                                                                                                                                                           |
| Aneri Jambusaria   | Managing Director, LPL Services Group              | February 2023      | Aneri Jambusaria is responsible for LPL Financial's business services and planning functions. She joined LPL in 2020 and previously worked at Fidelity Investments  **[0001397911-24-000011_lpla-20231231.htm:58]** **[0001397911-23-000024_lpla-20221231.htm:58]** .                                                                                                                                                              |
| Kabir Sethi        | Managing Director, Chief Product Officer           | May 2022           | Kabir Sethi oversees technology platforms and wealth management offerings at LPL Financial. He spent 18 years at Merrill Lynch before joining LPL  **[0001397911-24-000011_lpla-20231231.htm:59]** **[0001397911-23-000024_lpla-20221231.htm:59]** .                                                                                                                                                                             |
| Richard Steinmeier | Managing Director, Divisional President, Business Development | August 2018       | Richard Steinmeier is responsible for recruiting new advisors and exploring new markets at LPL Financial. He previously held leadership roles at UBS Wealth Management Americas and Merrill Lynch  **[0001397911-24-000011_lpla-20231231.htm:59]** **[0001397911-23-000024_lpla-20221231.htm:59]** .                                                                                                                            |
| Rich Steinmeier    | Chief Executive Officer and Director               | October 21, 2024   | Rich Steinmeier was appointed CEO of LPL Financial on October 21, 2024, after serving as interim CEO since October 1, 2024. He joined LPL in August 2018 and previously worked at UBS Financial and Merrill Lynch  **[0001193125-24-240432_d884290dex991.htm:1]** **[0001193125-24-240432_d884290d8k.htm:1]** **[0001193125-24-230215_d844936dex991.htm:1]** **[0001193125-24-230215_d844936d8k.htm:1]** .                                                                                                      |
| Matt Audette       | President and Chief Financial Officer              | October 21, 2024   | Matt Audette joined LPL Financial as CFO in 2015. He became Head of Business Operations in February 2023 and was appointed President and CFO on October 21, 2024  **[0001193125-24-240432_d884290dex991.htm:1]** **[0001193125-24-240432_d884290d8k.htm:1]** .                                                                                                                                                              |

43efcd2f018c5043bfce12ff79c98329f66b07ad6086909259538e66c9d50655

Advisory Revenue

Commission Revenue - Sales-based

Commission Revenue - Trailing

Total Commission Revenue

Asset-based Revenue - Client Cash

Asset-based Revenue - Other

Total Asset-based Revenue

Service and Fee Revenue

Transaction Revenue

Interest Income, Net

Other Revenue

Total Revenue

d995b9215dd682e6523cae85ba47c0a209daf4304f215f85138a0fe501dca992

1. With the recent offboarding of two large OSJs representing approximately $20 billion in client assets due to strategic misalignment, how do you anticipate this will impact your organic growth and asset retention going forward?  **[LPLA_3394360_2]** 

2. Given the regulatory scrutiny on cash sweep programs at other firms and your decision not to change your sweep pricing, how are you evaluating potential regulatory risks to your cash sweep revenue, and what steps are you taking to ensure compliance and mitigate possible impacts?  **[LPLA_3394360_12]** **[LPLA_3394360_11]** **[LPLA_3394360_6]** 

3. Your advisor loans increased by approximately 12% quarter-over-quarter due to record recruiting and transition assistance; how are you balancing the need for aggressive recruiting with the financial risks associated with higher transition assistance and advisor loans?  **[LPLA_3394360_21]** **[LPLA_3394360_10]** **[LPLA_3394360_18]** 

4. With upcoming maturities of fixed-rate contracts in your ICA portfolio and a current fixed-rate mix at about 70%, how are you positioning your balance sheet to optimize net interest income amid potential changes in the interest rate environment?  **[LPLA_3394360_20]** 

5. As you invest in vertical integration and new technology platforms like ClientWorks Rebalancer, can you provide more details on the expected timelines, costs, and anticipated returns on these investments, and how they will enhance your competitive positioning?  **[LPLA_3394360_2]** 

cd9bf13881b5f2229771740b5ce089323792443acfdfbed1894bf4728d32a6bf

LPL Financial Holdings Inc. (LPLA) is the nation's largest independent broker-dealer, a leading investment advisory firm, and a top custodian. The company supports over 23,000 financial advisors across various institutions and registered investment advisor (RIA) firms nationwide. LPL Financial provides a comprehensive platform that includes integrated technology solutions, brokerage and advisory platforms, and clearing and custody services. The company generates revenue primarily through fees and commissions from products and advisory services offered by their advisors to clients.

1. **Advisory Services** - Offers financial advisory services through a network of advisors, providing personalized investment advice and management.
2. **Commission** - Includes sales-based and trailing commissions from the sale of financial products.
   - **Sales-based Commission** - Earned from the initial sale of financial products.
   - **Trailing Commission** - Generated from ongoing client investments in financial products.
3. **Asset-based Revenue** - Derived from client cash balances and other asset-based fees.
   - **Client Cash** - Revenue from client cash balances held in insured bank sweep vehicles and money market accounts.
   - **Other Asset-based** - Fees from mutual funds, insurance companies, banks, and other financial product sponsors.
4. **Service and Fee Revenue** - Includes fees for various services provided to clients and advisors.
5. **Transaction Revenue** - Generated from transaction fees related to client trading activities.
6. **Interest Income, Net** - Income from interest-earning assets, net of interest expenses.
7. **Other Revenue** - Includes miscellaneous revenue streams not categorized under other segments.

01af882c7243d9fd0b0005d60385758701b19724f43ccb70873ac4a2d3f4853d

- **Sustained Strong Organic Growth**: LPL Financial expects to maintain robust organic growth, with confidence in achieving net new asset growth in the range of 7% to 13%. This is driven by increasing market share and successful recruiting efforts, even as the overall advisor movement market slows down.  **[LPLA_3413891_5]**
- **Operating Leverage and Margin Expansion**: The company anticipates operating leverage and margin improvement through expense efficiencies and enhanced monetization strategies. They plan to slow core G&A expense growth to 6%-8% while continuing to drive organic growth, leading to higher profitability.  **[LPLA_3413891_10]**
- **Expansion into New Services**: LPL is expanding into new services such as banking, lending, and alternative investments. Initiatives include launching cash management accounts, introducing securities-based lending, and enhancing the alternative investments platform. These efforts are expected to open new revenue streams and enhance monetization of client assets.  **[LPLA_3413891_6]** **[LPLA_3413891_14]**

0a499f6d9baa4b504ee39fe04fa9e1366986424622cd6333fb962dc5fcb78984

- **LPL Financial's recent asset growth is heavily reliant on acquisitions**, such as Prudential and Atria, with significant portions of net new assets coming from these deals rather than organic growth. Excluding these acquisitions, **organic growth rates are lower**, indicating potential challenges in sustaining growth without continued acquisitions.  **[LPLA_3413891_6]** ,  **[LPLA_3413891_11]**
- There are **risks associated with the integration of large acquisitions** like Atria and Prudential, including potential failure to realize expected synergies, which could **negatively impact profitability** and **increase expenses**.  **[LPLA_3413891_13]** ,  **[LPLA_3413891_7]**
- **Recent changes to pricing and advisor payout structures**, including adjustments to production bonuses and account fees, could lead to **advisor dissatisfaction or attrition**, potentially affecting recruiting and retention efforts negatively.  **[LPLA_3413891_16]**

4a5bc46dabb3c11ef1dab052da6dba3ee5db4e42ca10bc60bb10d6da869c32b1

1. **Organic Growth Outlook**  
   **Q:** Can you sustain high organic growth rates despite a larger asset base?  
   **A:** Management expressed confidence in sustaining organic growth rates of **7% to 13%** even with a larger asset base, citing a **10% growth** in '24 with AUM at **$1.7 trillion**.  **[LPLA_3413891_5]**  They believe investments in their model and capabilities, including new offerings in liquidity and succession, will continue to drive growth.  **[LPLA_3413891_5]** 

2. **Prudential Integration and Growth Potential**  
   **Q:** How is the Prudential integration progressing, and what is its impact?  
   **A:** The Prudential integration is going well, providing advisers with simplified, integrated capabilities, leading to an easier operating environment.  **[LPLA_3413891_7]**  Management expects Prudential advisers to potentially grow faster due to lead generation and new-to-industry advisers.  **[LPLA_3413891_7]**  The successful partnership may also attract more firms to consider joining.  **[LPLA_3413891_7]** 

3. **Asset Monetization Opportunities**  
   **Q:** What are the key areas for improving return on client assets?  
   **A:** Management highlighted the growth in centrally managed assets, with a record **$6.5 billion** core growth.  **[LPLA_3413891_6]**  They see opportunities in moving advisers from brokerage to advisory and expanding into banking and lending services to enhance revenue monetization over the next couple of years.  **[LPLA_3413891_6]** 

4. **Expense Management and Operating Leverage**  
   **Q:** How are you driving efficiencies to achieve operating leverage?  
   **A:** The company is focusing on automating manual processes and improving efficiency in operations and service, aiming to reduce core G&A growth.  **[LPLA_3413891_10]**  Management has a disciplined approach to expense management and sees opportunities in both expense reduction and revenue enhancement.  **[LPLA_3413891_10]** 

5. **Interest Rate Strategy**  
   **Q:** Any changes in managing fixed vs. floating assets amid shifting rates?  
   **A:** Management plans to maintain their strategy, targeting a fixed-rate percentage between **50% to 75%**, and will move back to the midpoint of that range.  **[LPLA_3413891_8]**  They prefer a rolling portfolio of **3- to 5-year** durations rather than making interest rate predictions.  **[LPLA_3413891_8]** 

6. **Cash Levels and Trends**  
   **Q:** What are the recent trends in cash levels and January outlook?  
   **A:** December saw a cash build of nearly **$5 billion**, with approximately **$2 billion** redeployed in January.  **[LPLA_3413891_11]**  January cash balances are just under **$51.5 billion**.  **[LPLA_3413891_11]**  Organic growth in January is expected to be around **3% to 4%**, with potential for mid-teens when including Prudential and Wintrust assets.  **[LPLA_3413891_11]** 

7. **Depreciation & Amortization Expectations**  
   **Q:** What is the outlook for D&A expenses moving forward?  
   **A:** The recent increase in D&A was due to Prudential integration and new data centers.  **[LPLA_3413891_9]**  Management expects D&A growth to normalize to a few million per quarter sequentially as they progress through 2025.  **[LPLA_3413891_9]** 

8. **High Net Worth Channel and Alts Platform**  
   **Q:** How are you expanding services for high net worth clients and Alts?  
   **A:** Management is building capabilities in the high net worth segment, including expanding the Alts platform with over **80 selling agreements** by year-end.  **[LPLA_3413891_12]**  They are enhancing custody and operational capabilities, aiming for a best-in-class position to attract sophisticated advisers.  **[LPLA_3413891_12]** 

9. **Atria Synergy Realization**  
   **Q:** What's the pacing of synergy realization from Atria acquisition?  
   **A:** Synergies will build up to **$150 million** in EBITDA, largely around the onboarding schedule.  **[LPLA_3413891_13]**  The company expects the impact to center around mid-year when onboarding occurs.  **[LPLA_3413891_13]** 

10. **Enhanced Monetization Through Banking and Lending**  
    **Q:** How will you monetize assets through banking and lending services?  
    **A:** The company plans to introduce cash management accounts and securities-based lending, integrating these services into their platform.  **[LPLA_3413891_14]**  They aim to achieve industry-leading penetration over multiple years, enhancing monetization of client assets.  **[LPLA_3413891_14]** 

d7c3dcae87e5ad8786463b774cec044806eedaac3051f00abd95b6fab58f11f8

With plans to sustain 7–13% net new asset growth (targeting 10% in 2024 at $1.7T AUM) and slow core G&A to 6–8%, LPL Financial projects stronger margins ahead. However, watch for continued reliance on acquisitions that could challenge truly organic growth.

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9a6b5cd681a4c7812fa74999045a1cb3e0ad0878ca7ca0deac37773c1a1d0067

**Quarterly guidance for Q1 2025:**
- **Core G&A Expenses**: $420 million to $430 million  **[LPLA_3413891_3]**  (no prior guidance)
- **Promotional Expenses**: $160 million  **[LPLA_3413891_3]**  (no prior guidance)
- **Share-Based Compensation Expense**: $20 million  **[LPLA_3413891_3]**  (no prior guidance)
- **Depreciation & Amortization**: expected to increase by a few million dollars sequentially  **[LPLA_3413891_3]**  (no prior guidance)
- **Organic Growth**: around 6% excluding onboarding assets (mid-teens including Prudential and Wintrust)  **[LPLA_3413891_11]**  (no prior guidance)
- **Client Cash Balances**: expected to stabilize at just under $51.5 billion in January 2025  **[LPLA_3413891_11]**  (no prior guidance)

**Annual guidance for FY 2025:**
- **Core G&A Expenses**: 6% to 8% growth prior to acquisitions; $1.730 billion to $1.780 billion including Atria and Prudential  **[LPLA_3413891_3]**  (no prior guidance)
- **Interest Expense**: expected to decrease by roughly $5 million annually  **[LPLA_3413891_3]**  (no prior guidance)

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9aeba927b88379a72390aff4848fbe10fd887d7ab2291054835db6afb5c8ab5a

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | N/A             |
| End Date/Duration        | N/A             |
| Total Additional Amount  | N/A             |
| Remaining Authorization  | **$830.0 million** (as of 2024-09-30)  **[0001397911-24-000141_lpla-20240930.htm:56]** **[0001397911-24-000141_lpla-20240930.htm:25]**  |
| Details                  | The company paused share repurchases in early 2024 due to its planned acquisition of Atria but expects to resume in Q4 2024. The program aims to return excess capital to shareholders while prioritizing organic growth, acquisitions, and liquidity needs.  **[0001397911-24-000141_lpla-20240930.htm:56]**  |

a0250818161849919e2a37f15b26fd2903da033c4e1937e8c817769ddde30f5b

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- **Strong Recruiting Momentum**: LPL Financial achieved **$24 billion** in recruited assets in Q2, marking the highest quarter on record prior to large institutions. This momentum is expected to continue into Q3, bolstered by an additional **$66 billion** from large institutions like Prudential and Wintrust yet to onboard.  **[LPLA_3394360_18]** **[LPLA_3394360_2]**
- **Disciplined Underwriting Standards**: The company maintains prudent financial management, bringing recruited advisors onboard at **3 to 4 times EBITDA** with no changes in return hurdles or underwriting standards.  **[LPLA_3394360_18]**
- **Confidence in Regulatory Positioning**: LPL Financial feels assured about its regulatory and competitive stance regarding cash sweep programs, with **no plans to change sweep pricing**, thereby maintaining stability in a key revenue area amid industry changes.  **[LPLA_3394360_12]** **[LPLA_3394360_11]**

be5805a0c85df0918dfc3583fbd38838efa673d3e260fda343f79bfc8e635e6d

- **Increased attrition expected in January due to two practices being acquired, leading to higher attrition in that month.**  **[LPLA_3371608_6]**
- **Potential regulatory headwinds from the proposed DOL rule may reduce brokerage business, creating headwinds for sales-based commissions from annuities.**  **[LPLA_3371608_13]**
- **Inability to accelerate reinvestment of maturing fixed rate contracts limits the company's ability to lock in higher interest rates, potentially affecting future client cash revenues.**  **[LPLA_3371608_8]**

55447b1b99c0837ca270c8f427e346ee232f9a82fe85ead81d902e0de3f623a5

- **Increasing expenses due to onboarding large enterprises may impact profitability**. LPL Financial is incurring significant costs related to onboarding and integrating Prudential's wealth management business, with total onboarding and integration costs estimated at approximately $125 million, including about $100 million expected in 2024. These expenses add to promotional costs and may affect operating margins.  **[LPLA_3362186_3]** ,  **[LPLA_3362186_4]** ,  **[LPLA_3362186_15]** ,  **[LPLA_3362186_16]** ,  **[LPLA_3362186_14]**
- **Declining client cash balances and cash revenue could reduce interest income**. Client cash revenue decreased by $18 million from Q2, as cash balances declined $3 billion to $47 billion in Q3. The company expects its ICA yield to decline further due to the mix impact of lower floating rate balances, which may continue to pressure revenues.  **[LPLA_3362186_3]** ,  **[LPLA_3362186_6]**
- **Increasing payout rates to advisers may compress margins**. The payout rate increased to 87.3% in Q3, up 60 basis points from Q2 due to seasonality and onboarding of new enterprises. LPL Financial expects the payout rate to rise to approximately 88% in Q4, which could compress profitability.  **[LPLA_3362186_3]**

ff7314eef849d8d4afb88aea1084f16e6d3faf60e33f798531b78915f42a956e

1. **Growth Strategy and Priorities**  
   **Q:** What are your key priorities and strategic focus for the next 1–2 years?  
   **A:** Rich Steinmeier emphasized three top priorities: maintaining **client centricity** by supporting advisers and institutions to serve their clients effectively  **[LPLA_3404762_5]** ; empowering employees by giving them authority to make better decisions for clients  **[LPLA_3404762_5]** ; and **driving operating leverage** to create value for shareholders.  **[LPLA_3404762_5]**  He stated that their long-term vision remains to become the leader in the adviser-centered marketplace, leveraging structural trends like the **growing demand for investor advice**, preference for professional advisers, and the appeal of the independent model.  **[LPLA_3404762_5]** 

2. **Institutional and Private Wealth Channels Expansion**  
   **Q:** Can you outline your strategic vision and growth priorities for the institutional and private wealth channels?  
   **A:** Rich detailed their progress in the institutional channel, highlighting partnerships with larger firms like **M&T Bank**, which led to a pivotal change in the marketplace.  **[LPLA_3404762_7]**  He noted the **$1 trillion** market opportunity in the large bank segment and the **$1.5 trillion** in the product manufacturer and insurance segment.  **[LPLA_3404762_7]**  In private wealth, they introduced offerings like Strategic Wealth Services and **Linsco**, attracting advisers from wirehouses and regionals, with early momentum from four teams serving over **$2 billion** in assets since launching a year ago.  **[LPLA_3404762_7]** 

3. **Operating Leverage Plans**  
   **Q:** What steps are you taking to drive operating leverage, and what magnitude is achievable over the next few years?  
   **A:** Matt Audette mentioned investing in efficiencies like robotics and improving technology to reduce the **cost to serve**.  **[LPLA_3404762_10]**  By enhancing capabilities, they aim to grow without proportionally increasing costs.  **[LPLA_3404762_10]**  Their focus is on balancing investment in organic growth with delivering operating leverage.  **[LPLA_3404762_10]**  Rich added that having Matt lead both finance and operational areas enhances their ability to improve operating leverage.  **[LPLA_3404762_10]** 

4. **Liquidity and Succession Program Investment**  
   **Q:** Can you update us on your liquidity and succession initiatives and anticipated capital deployment?  
   **A:** Rich discussed their program to address the expected retirement of **one-third of advisers over the next 10 years**.  **[LPLA_3404762_9]**  They offer solutions for advisers to monetize their business fairly, with **70%** of transactions involving an identified next-generation adviser.  **[LPLA_3404762_9]**  They've completed about **40 deals**, typically ranging from **$10 million to $20 million** per deal at **6x to 8x EBITDA**.  **[LPLA_3404762_9]**  Matt noted the significant opportunity and that external deals might have lower multiples due to combined recruiting economics and succession transactions.  **[LPLA_3404762_9]** 

5. **Capital Allocation and Share Buybacks**  
   **Q:** Given the undervaluation of your stock, why not lean more aggressively into share buybacks?  
   **A:** Matt acknowledged they view the stock as **undervalued** but emphasized maintaining a **strong balance sheet** with leverage targets of **1.5x to 2.5x**.  **[LPLA_3404762_8]**  They prioritize allocating capital to organic growth, M&A, and share repurchases within their leverage framework.  **[LPLA_3404762_8]**  He highlighted the importance of financial strength in supporting growth and providing stability to clients.  **[LPLA_3404762_8]** 

6. **Alternative Investment Offerings Expansion**  
   **Q:** What is your current alternative investment offering, and do you plan to expand it further?  
   **A:** Rich confirmed plans to expand their alternative investment platform.  **[LPLA_3404762_12]**  Over the past year, they've made significant progress by enhancing custodial and operational capabilities and expanding their product shelf.  **[LPLA_3404762_12]**  With over **20 people** dedicated to alternatives, they launched a new **Alternative Investment Order Entry system**, receiving positive feedback from advisers.  **[LPLA_3404762_12]**  This expansion aims to attract high-net-worth advisers and enhance their recruiting efforts.  **[LPLA_3404762_12]** 

7. **Constraints in Institutional Growth**  
   **Q:** What are the constraints in growing the institutional channel, and can onboarding speed increase with larger clients?  
   **A:** Rich explained that while they've increased capacity to handle multiple major transitions per month, constraints remain due to longer **sales cycles** and **complex solutioning** with large firms.  **[LPLA_3404762_13]**  The institutional sales process can take **up to two years**, and onboarding may involve custom builds, making it challenging to significantly compress timelines.  **[LPLA_3404762_13]** 

8. **2025 Core G&A Growth Outlook**  
   **Q:** Is the prior core G&A growth range of 7.5%–8.5% applicable for 2025, and what are the considerations?  
   **A:** Matt indicated that they're in the planning process but will factor in the full-year impact of **Prudential and Atria** in 2025.  **[LPLA_3404762_14]**  He emphasized their continued focus on investing to drive organic growth while delivering operating leverage.  **[LPLA_3404762_14]** 

9. **Free Cash Flow Conversion and Liquidity Objectives**  
   **Q:** How should we think about your cash and liquidity objectives, and what metrics are you focused on?  
   **A:** Matt stated they focus on overall leverage, maintaining a target range of **1.5x to 2.5x**.  **[LPLA_3404762_11]**  They allocate capital based on this framework to organic growth, M&A, and share repurchases.  **[LPLA_3404762_11]**  Cash levels were elevated due to the Atria acquisition but are expected to return to about **$200 million**.  **[LPLA_3404762_11]** 

10. **Cash Balances and Interest Income**  
    **Q:** Are you seeing a durable outlook on cash balances starting to grow from current levels?  
    **A:** Matt noted that operational cash balances have stabilized at just over **$5,000** per account.  **[LPLA_3404762_6]**  With strong organic growth and new accounts averaging similar cash levels, there's potential for cash balances to start growing again.  **[LPLA_3404762_6]**  However, he cautioned that predicting the exact timing is challenging.  **[LPLA_3404762_6]** 

2b478f4d954637337d2c292fe684af6aa700929259a3bc8297907e7ce77a4d5a

- **LPL Financial's Liquidity and Succession solution has shown strong momentum**, with **27 deals closed to date** and capacity for **30 to 40 deals per year**, providing a significant new growth opportunity.  **[LPLA_3381577_7]**
- The company achieved a **record $20 billion in recruited assets** in Q1, prior to large institution onboarding, reflecting effective recruiting and a strong pipeline across all affiliation models.  **[LPLA_3381577_5]**
- LPL is expanding its presence in the large institution marketplace, including the acquisition of Atria Wealth Solutions and onboarding Prudential's wealth management business, which together will add approximately **$66 billion of assets** by early 2025.  **[LPLA_3381577_13]** **[LPLA_3381577_9]**

2bdad6dedcbf402e648dd1a610dabee840e2e1f997b46b37a2fbfbe22e945696

1. **Organic Growth and G&A Expenses**  
   **Q:** Will lower G&A growth slow down organic growth?  
   **A:** Despite moderating core G&A expenses, LPL Financial expects to sustain **high single-digit organic growth**. Investments are focused on improving value propositions and driving productivity, keeping growth momentum strong even with reduced expense growth. Core G&A growth is guided down from **15% in 2023** to a range of **6.25% to 3.4% in 2024**. **[LPLA_3371608_5]**

2. **Large Enterprise Channel and Prudential Deal**  
   **Q:** What's the outlook for large enterprise deals after Prudential?  
   **A:** LPL sees significant growth opportunities in the large enterprise channel, building on the **$85 billion** in assets already added from banks. The Prudential deal has spurred interest from insurance companies, expanding the potential market by an additional **$1.5 trillion**. LPL is confident in handling more deals without bandwidth issues, enhancing capabilities and efficiency with each onboarding. ** **[LPLA_3371608_7]** ,  **[LPLA_3371608_18]** **

3. **Cash Trends and January Update**  
   **Q:** Are cash sorting headwinds behind us?  
   **A:** Cash balances have stabilized since July, remaining steady through the second half of the year. In January, overall cash balances decreased by **$1.2 billion**, primarily due to seasonal advisory fees. Excluding this, cash activity saw a slight increase, indicating continued stability. **[LPLA_3371608_6]**

4. **Demand for Fixed Maturities and Reinvestments**  
   **Q:** How is demand for fixed maturities holding up?  
   **A:** Demand remains strong, with LPL placing **$2 billion** into new **5-year** fixed contracts at a **30 basis point spread** above the curve. They anticipate reinvesting the upcoming **$6.5 billion** in maturities at even higher rates, though acceleration opportunities are limited. **[LPLA_3371608_8]**

5. **M&A Environment**  
   **Q:** What M&A opportunities are you seeing now?  
   **A:** LPL continues to pursue M&A as a core strategy, focusing on acquiring broker-dealers and RIAs, adding capabilities, and addressing liquidity and succession needs. They are seeing increased opportunities as market conditions become more favorable and remain disciplined in evaluating potential deals. **[LPLA_3371608_10]**

6. **Adviser Movement and Retention**  
   **Q:** Can adviser movement increase, and how's retention?  
   **A:** Adviser movement remains flat at **5% to 5.5%**, below historical norms. LPL aims to accelerate movement by making transitions easier through service innovations. Retention is strong, expected to stay in the **98.5% to 99%** range, despite two January departures due to practice acquisitions for succession. ** **[LPLA_3371608_11]** ,  **[LPLA_3371608_13]** ,  **[LPLA_3371608_14]** **

7. **Annuities Sales Growth and DOL Impact**  
   **Q:** How is annuities growth affected by DOL proposals?  
   **A:** Annuities sales have increased due to higher interest rates and market volatility. While the DOL rule may create headwinds for brokerage business, LPL expects annuities to remain important for clients needing specific solutions, and they are prepared to adapt to regulatory changes while maintaining choice for advisers and clients. **[LPLA_3371608_13]**

8. **Core G&A Growth Range Factors**  
   **Q:** What determines where core G&A growth falls in guidance?  
   **A:** The core G&A growth within the guided range depends on the costs associated with supporting business growth, such as variable compensation and expenses related to ramping up operations. Higher growth may push expenses toward the high end of the range. **[LPLA_3371608_15]**

9. **Promotional Expense Outlook**  
   **Q:** How will underlying promotional expenses trend?  
   **A:** Underlying promotional expenses align with organic growth, conference spending, and onboarding costs for large enterprises. As recruiting and the number of advisers grow, promotional expenses may increase, but large one-time expenses like those for Prudential are not expected to recur in the near term. **[LPLA_3371608_17]**

10. **Scale Benefits in Enterprise Channel**  
    **Q:** How does growth in enterprise channel affect scale and leverage?  
    **A:** Scaling the enterprise channel enhances operating efficiency and leverage. As LPL brings on large clients like Prudential, they build capabilities that benefit existing and future clients, driving organic growth and achieving cost efficiencies through shared technology and services. **[LPLA_3371608_18]**

7ab0255af94cff93d3629fb0cabaa3f009bb53f37c9fb0a6dbede48abd625994

- **Organic net new assets growth in Q1 2024 was 5%, below the expected 7%**, due to the timing of onboarding recruits and the departure of two acquired practices, indicating potential challenges in sustaining growth.  **[LPLA_3381577_5]**
- **Promotional expenses are expected to increase by $80-$85 million** in the remainder of 2024 due to the onboarding of Prudential, potentially pressuring near-term profitability.  **[LPLA_3381577_20]**
- **Capacity constraints in the liquidity and succession solution limit deals to 30-40 per year**, which may restrict growth and scalability of this segment.  **[LPLA_3381577_7]**

1dd26d2ec69705473d31c9b7f5f2018577c674ba9348902f95c7ab411c9f2d25

1. **Regulatory Position on Cash Sweep Programs**  
   **Q:** How is LPL insulated from regulatory actions on cash sweeps?  
   **A:** Dan Arnold explains that LPL's cash sweep program differs from larger banks because they don't have an affiliated bank or proprietary mutual funds, avoiding conflicts of interest.  **[LPLA_3394360_11]**  LPL contracts with third-party banks, offering clients **10× the FDIC insurance limits** up to **$2.5 million for individuals** and **$5 million for joint accounts**.  **[LPLA_3394360_11]**  They provide easy access to money market funds with low entry points and no ticket charges in advisory accounts.  **[LPLA_3394360_11]**  Regarding regulatory positioning, LPL regularly reviews their duty of care obligations, control environment, and disclosures to ensure they meet all requirements.  **[LPLA_3394360_11]** 

2. **Potential Changes to Sweep Pricing**  
   **Q:** Under what scenarios might LPL change sweep pricing?  
   **A:** Dan Arnold states that LPL regularly reviews pricing strategically, focusing on differentiating in the market and aligning with advisor and client needs.  **[LPLA_3394360_12]**  While they currently have no plans to change sweep pricing, potential changes would be driven by the need to enhance value for advisors and clients.  **[LPLA_3394360_12]**  They feel confident in their regulatory positioning and have ongoing discussions with regulators.  **[LPLA_3394360_12]** 

3. **Industry Regulatory Changes**  
   **Q:** Are regulatory practices moving beyond disclosure-based standards?  
   **A:** Dan Arnold believes that regulatory principles remain stable, with a clear framework governing client relationships.  **[LPLA_3394360_13]**  He does not see signs that regulators are moving beyond established disclosure-based practices.  **[LPLA_3394360_13]** 

4. **OSJ Misalignment and Exits**  
   **Q:** Will other OSJs potentially exit due to misalignment?  
   **A:** Dan Arnold explains that LPL has strengthened alignment with OSJs, focusing on independence principles.  **[LPLA_3394360_16]**  Misalignment occurred when some OSJs shifted to an employee-based model, conflicting with LPL's independent contractor model.  **[LPLA_3394360_16]**  Going forward, they see little probability of other OSJs exiting due to these issues.  **[LPLA_3394360_16]** 

5. **Advisory Cash Levels**  
   **Q:** What is cash as a percentage of advisory assets?  
   **A:** Matthew Audette states that cash as a percentage of advisory AUM is around **3%**, slightly higher in non-centrally managed accounts.  **[LPLA_3394360_14]**  In centrally managed accounts, transactional cash is also about **3% of AUM**.  **[LPLA_3394360_9]** 

6. **OSJ Offboarding Impact on Cash**  
   **Q:** How will OSJ departures affect cash balances?  
   **A:** Matthew Audette notes that in July, sweep balances declined by **$700 million**, to **$43.3 billion**, with little impact from OSJ departures so far.  **[LPLA_3394360_15]**  Over the next 3–4 months, as the **$20 billion** from exiting OSJs flows out, they will clearly delineate the impact in reported results.  **[LPLA_3394360_15]** 

7. **Recruiting Momentum and Economics**  
   **Q:** How are recruiting economics and momentum progressing?  
   **A:** Dan Arnold states that recruiting momentum remains strong, with **$24 billion** in assets recruited in Q2 and **$93 billion** over the trailing 12 months.  **[LPLA_3394360_18]**  Underwriting returns at **3 to 4× EBITDA** have not changed.  **[LPLA_3394360_18]**  They see continued momentum into Q3, with committed large institutions representing **$66 billion** in assets.  **[LPLA_3394360_18]** 

8. **Promotional Expenses Increase**  
   **Q:** What's driving the increase in promotional expenses?  
   **A:** Matthew Audette explains that promotional expenses increased due to their largest conference in Q3 and onboarding costs for Prudential, totaling **$125 million** in integration costs and **$200 million** in technology.  **[LPLA_3394360_19]**  Expenses are expected to normalize after Q3.  **[LPLA_3394360_19]** 

9. **Annuity Demand Outlook**  
   **Q:** Is annuity demand nearing a normalization point?  
   **A:** Dan Arnold believes that annuity demand remains strong due to their relevance in retirement planning and current market conditions.  **[LPLA_3394360_17]**  He does not expect a significant change but sees it as a product choice influenced by rates.  **[LPLA_3394360_17]** 

10. **Fixed-Rate Maturity Strategy**  
    **Q:** Will LPL roll maturities into fixed-rate balances?  
    **A:** Matthew Audette states that LPL prefers to maintain fixed-rate balances toward the upper half of their **50% to 75%** target range.  **[LPLA_3394360_20]**  Given the peak rate environment, they plan to continue rolling maturities into fixed-rate contracts.  **[LPLA_3394360_20]** 

11. **Advisor Loan Growth**  
    **Q:** What's driving the growth in advisor loans?  
    **A:** Matthew Audette attributes the **12%** quarter-over-quarter increase in advisor loans to record levels of recruiting.  **[LPLA_3394360_21]**  Underwriting standards remain consistent, and the growth reflects higher recruiting volume.  **[LPLA_3394360_21]** 

168176e9a19c4bfb62b708cdecb8b23d88b8735bdd5f9d4fdf8216b5329d64ab

- **Strong Organic Growth and Recruiting Momentum:** LPL Financial reported **11% net new asset growth**, at the high end of their 7% to 13% target range, with **$31 billion** in recruited assets in Q3, including a **quarterly high of $19 billion** in assets prior to large enterprises, which is more than double a year ago.  **[LPLA_3362186_5]**  This demonstrates the effectiveness of their diversified affiliation models and the sustainability of their growth.
- **Low Adviser Attrition and Improving Win Rates:** LPL continues to see **low levels of adviser attrition at 1% to 1.5%** and improving win rates, despite industry-wide lower adviser movement.  **[LPLA_3362186_5]** **[LPLA_3362186_13]**  Their flexible affiliation models allow them to compete for all **300,000 advisers** that may move, positioning them well for future growth.
- **Expanding Services Portfolio Driving Additional Revenue Opportunities:** LPL is innovating and expanding their services portfolio, including the rollout of **CFO Essentials**, making advanced services accessible to a broader set of their over **22,000 advisers**.  **[LPLA_3362186_8]**  This expansion is expected to drive further utilization and organic growth, enhancing revenue opportunities.

17dcb9b4d8c172fb584e5729fe762f8f9a50270c0053c4c30e86c9761af507b7

- **Strong recruiting momentum continues**, with LPL Financial on track to exceed last year's record of **$13 billion** in recruited assets in Q1, indicating robust growth prospects.  **[LPLA_3371608_6]**
- **Significant growth opportunities** from new affiliation models targeting large addressable markets, including the **$11 trillion to $12 trillion** employee-based market and the RIA market, contributing to scaling contributions similar to traditional channels.  **[LPLA_3371608_12]**
- **Expanding enterprise channel pipeline**, with plans to onboard the retail wealth management business of Prudential Financial, and the capability to bring on large enterprises more efficiently, driving organic growth and **enhanced operating leverage**.  **[LPLA_3371608_7]** ,  **[LPLA_3371608_18]**

a524bcc77c1e5faa190a95734415ea5d1fc1c1509e538356618480da6f738451

1. **Recruited Assets and Organic Growth**  
   **Q:** Explain divergence in recruited assets vs. net new assets?  
   **A:** Recruited assets were up **57% year-over-year**  **[LPLA_3381577_5]** , outperforming net new assets due to the timing of onboarding, which impacted organic growth by roughly **1%**.  **[LPLA_3381577_5]**  Organic growth was **5%** this quarter, below the expected **7%**, partly because recruiting happened later in the quarter, providing a tailwind for Q2.  **[LPLA_3381577_5]**  The recruiting pipeline remains strong across all channels, supporting future growth.  **[LPLA_3381577_5]** 

2. **Liquidity and Succession Business Size**  
   **Q:** How significant is liquidity succession to growth targets?  
   **A:** The liquidity and succession business has closed **27 deals to date**  **[LPLA_3381577_7]** , with expectations to handle **30 to 40 deals per year**.  **[LPLA_3381577_7]**  Deals average **$10 million to $20 million**, deploying capital at **6 to 8x EBITDA** multiples.  **[LPLA_3381577_7]**  This business effectively doubles Return on Assets from about **30 basis points to 60 basis points**, offering compelling economics and strategic value.  **[LPLA_3381577_7]** 

3. **Recruiting Economics Amid Competition**  
   **Q:** Discuss recruiting economics amid competition?  
   **A:** Transition assistance rates have remained stable over the last year.  **[LPLA_3381577_6]**  While expenses increased due to higher recruited assets, the competitive landscape and priorities for advisors haven't significantly changed.  **[LPLA_3381577_6]**  The firm focuses on enhancing capabilities, technology, and service to attract advisors, which drives higher win rates despite competition.  **[LPLA_3381577_6]** 

4. **Capacity for Incremental M&A**  
   **Q:** What is capacity for M&A given recent deals?  
   **A:** The firm has built disciplined processes for onboarding and integrating acquisitions like Atria without impacting service quality.  **[LPLA_3381577_8]**  Enhanced efficiency allows for continued M&A activity alongside current integrations, supporting growth opportunities.  **[LPLA_3381577_8]** 

5. **Competitive Position in Bank Channel**  
   **Q:** How does Atria acquisition affect bank channel competition?  
   **A:** The Atria acquisition strengthens the firm's leadership in the bank channel, a **$1 trillion opportunity**.  **[LPLA_3381577_9]**  With a differentiated value proposition and operational efficiencies, the firm is well-positioned against competitors and continues to gain market share.  **[LPLA_3381577_9]** 

6. **Client Cash Levels and Reinvestment**  
   **Q:** Expectations for cash levels and reinvestment?  
   **A:** Client cash balances have stabilized at just above **3% of assets**  **[LPLA_3381577_14]** , indicating full deployment in the market. As fixed-rate contracts mature, the firm plans to renew them, keeping the mix of fixed-rate assets between **50% to 75%**.  **[LPLA_3381577_11]**  Upcoming maturities are expected to be reinvested at higher rates, moving from **200 basis points to mid-4% range**.  **[LPLA_3381577_11]** 

7. **G&A Growth Guidance Tracking**  
   **Q:** Factors affecting G&A growth guidance?  
   **A:** G&A expenses are tracking toward the low end of guidance, with Q1 annualized rate at that level.  **[LPLA_3381577_15]**  Expenses may vary within the guidance range due to levels of organic growth and associated variable costs, but the firm feels comfortable with the current trajectory.  **[LPLA_3381577_15]** 

8. **Impact of DOL Rule Changes**  
   **Q:** Thoughts on new DOL rule impact?  
   **A:** The final DOL rule better aligns with the SEC's Reg BI, which is positive for investors.  **[LPLA_3381577_16]**  With a one-year transition period for compliance, the firm is preparing its compliance program accordingly. Potential litigation could affect timelines and requirements, but the firm views the outcome as better than the original proposal.  **[LPLA_3381577_16]** 

9. **Client Cash Behavior Trends**  
   **Q:** What are current client cash behavior trends?  
   **A:** Clients are fully deployed with cash balances stabilizing around **3%**.  **[LPLA_3381577_14]**  Seasonal factors like fees and taxes affect cash levels, but balances are expected to remain stable unless market conditions change significantly.  **[LPLA_3381577_14]** 

10. **Promotional Expenses and Prudential Integration**  
    **Q:** Explain increase in promotional expenses?  
    **A:** Promotional expenses increased due to timing shifts in onboarding costs related to Prudential, with about **$17 million** incurred in Q1.  **[LPLA_3381577_20]**  An additional **$80 to $85 million** in onboarding costs will primarily occur this year.  **[LPLA_3381577_20]**  Expenses are associated with organic growth initiatives, conferences, and integration costs for acquisitions like Prudential.  **[LPLA_3381577_20]** 

e5c7bd9d6317fb2b2c47ea95801a0c13b02db89496b043c0af776e8c113439e2

LPL Financial Holdings Inc (LPLA)

Financials