10q10k10q10k.net

What changed in LPL Financial Holdings Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of LPL Financial Holdings Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+419 added−396 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-21)

Top changes in LPL Financial Holdings Inc.'s 2024 10-K

419 paragraphs added · 396 removed · 337 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

85 edited+14 added−11 removed80 unchanged
Biggest changeThe majority of our advisors are independent practitioners who are viewed as local providers of independent advice. Many of our advisors operate under their own business name, with LPL offering assistance with their branding, marketing and promotion and regulatory review.
Biggest changeMany of our advisors operate under their own business name, with LPL offering assistance with their branding, marketing and promotion and regulatory review. We believe we offer a compelling economic value proposition to independent advisors, which is a key factor in our ability to attract and retain advisors and their practices.
We expect to facilitate these productivity improvements by helping our advisors better manage their practices in an increasingly complex external environment, which we believe has the potential to result in the assets per advisor growing over time. Business services and planning and advice services are a source of organic growth as a larger share of advisors adopts these service solutions.
We expect to facilitate these productivity improvements by helping our advisors better manage their practices in an increasingly complex external environment, which we believe has the potential to result in assets per advisor growing over time. Business services and planning and advice services are a source of organic growth as a larger share of advisors adopts these service solutions.
Our Company’s senior leaders have an opportunity to receive a portion of their compensation in Company equity, and, subject to a cap, we match the contributions of all of our employees to our retirement savings plan to help support their long-term financial goals.
The Company’s senior leaders have an opportunity to receive a portion of their compensation in Company equity, and, subject to a cap, we match the contributions of all of our employees to our retirement savings plan to help support their long-term financial goals.
We also offer an employee stock purchase plan that enables eligible employees to acquire an ownership interest in our Company at a discount to prevailing market prices. We offer an array of benefits intended to meet the diverse needs of our employees and their eligible dependents.
We also offer an employee stock purchase plan that enables eligible employees to acquire an ownership interest in the Company at a discount to prevailing market prices. We offer an array of benefits intended to meet the diverse needs of our employees and their eligible dependents.
These financial firms operate in various channels and markets: • Within the independent broker-dealer channel, the industry is highly fragmented and consists primarily of regional firms that rely on third-party custodians and technology providers to support their operations. • Wirehouses tend to consist of large nationwide firms with multiple lines of business that have a focus on the highly competitive high-net-worth investor market. • Competition for advisors also includes regional firms that primarily focus on specific client niches or geographic areas. • Independent RIA firms, which are registered with the SEC or through their respective states’ investment advisory regulator and not through a broker-dealer, may choose from a number of third-party firms to provide custodial services.
These financial firms operate in various channels and markets: • Within the independent broker-dealer channel, the industry is highly fragmented and consists primarily of regional firms that rely on third-party custodians and technology providers to support their operations. • Wirehouses and large banks tend to consist of large nationwide firms with multiple lines of business that have a focus on the highly competitive high-net-worth investor market. • Competition for advisors also includes regional firms that primarily focus on specific client niches or geographic areas. • Independent RIA firms, which are registered with the SEC or through their respective states’ investment advisory regulator and not through a broker-dealer, may choose from a number of third-party firms to provide custodial services.
Retirement Plan Services Regulation Certain subsidiaries, including LPL Financial, LPL Employee Services, LLC, PTC, Fiduciary Trust Company of New Hampshire and LPLIA, are subject to ERISA, Section 4975 of the Code, and to regulations promulgated under ERISA or the Code, insofar as the subsidiaries provide services with respect to plan clients, or otherwise deal with plan clients, plan participants and retirement, health and educational accounts that are subject to ERISA or Section 4975 of the Code.
Retirement Plan Services Regulation Certain subsidiaries, including LPL Financial, LPL Enterprise, LPL Employee Services, LLC, PTC, Fiduciary Trust Company of New Hampshire and LPLIA, are subject to ERISA, Section 4975 of the Code, and to regulations promulgated under ERISA or the Code, insofar as the subsidiaries provide services with respect to plan clients, or otherwise deal with plan clients, plan participants and retirement, health and educational accounts that are subject to ERISA or Section 4975 of the Code.
In addition, the LPL Financial Foundation continues to support the LPL Care Fund, an employee-to-employee relief fund created to help employees facing unexpected and unavoidable financial hardships as a result of a natural disaster or epidemic by providing tax-free grants .
In addition, the LPL Financial Charitable Foundation continues to support the LPL Care Fund, an employee-to-employee relief fund created to help employees facing unexpected and unavoidable financial hardships as a result of a natural disaster or epidemic by providing tax-free grants .
LPL Financial is registered as an introducing broker-dealer with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”). LPL Financial is regulated by the SEC, FINRA, CFTC and NFA.
LPL Financial is registered as an introducing broker-dealer with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”). LPL Financial is regulated by the SEC, FINRA, CFTC and NFA. LPL Enterprise is an introducing broker-dealer registered with the SEC and a member of FINRA.
In addition, the DOL has proposed a “Retirement Security Rule” that would broaden the definition of fiduciary advice and modify the prohibited transaction exemptions in effect as of the date of this Annual Report that enable investment advice fiduciaries to receive compensation on transactions as a result of fiduciary recommendations to a plan covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), IRA or other account covered by Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”).
In addition, the DOL has finalized a “Retirement Security Rule” that would broaden the definition of fiduciary advice and modify the prohibited transaction exemptions in effect as of the date of this Annual Report that enable investment advice fiduciaries to receive compensation on transactions as a result of fiduciary recommendations to a plan covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), IRA or other account covered by Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”).
Our planning and advice services are digital and employee-powered solutions that help advisors and enterprises expand the breadth and depth of their advice in areas such as tax planning, paraplanning and private client support for high-net-worth relationships. The focus of planning and advice services is helping advisors increase marketplace differentiation while limiting additional complexity and risk.
Our planning and advice services are digital and employee-powered solutions that help advisors and institutions expand the breadth and depth of their advice in areas such as tax planning, paraplanning and private client support for high-net-worth relationships. The focus of planning and advice services is helping advisors increase marketplace differentiation while limiting additional complexity and risk.
We require all of our employees to complete courses in key regulatory areas, such as insider trading and anti-money laundering compliance, and we offer professional development opportunities through training sessions, on-demand learning and cross-departmental workshops, resulting in over 170,000 completed courses and workshops and approximately 200,000 development hours for our employees .
We require all of our employees to complete courses in key regulatory areas, such as insider trading and anti-money laundering compliance, and we offer professional development opportunities through training sessions, on-demand learning and cross-departmental workshops, resulting in over 200,000 completed courses and workshops and approximately 400,000 development hours for our employees.
Continuous improvement is a pillar of our culture, and we regularly solicit employee feedback on the effectiveness and quality of our programs, including our diversity and inclusion programs, and their level of engagement with our business. We use this feedback to improve our programs and processes and inform decisions about our business.
Continuous improvement is a pillar of our culture, and we regularly solicit employee feedback on the effectiveness and quality of our programs, including our inclusion and belonging programs, and their level of engagement with our business. We use this feedback to improve our programs and processes and inform decisions about our business.
These arrangements allow us to provide outsourced customized clearing, advisory platforms and technology solutions that enable the financial advisors at these insurance companies to offer a breadth of services to their client base in an efficient manner. 2 Table of Contents Our Value Proposition We are dedicated to making it easy for advisors to do what is best for their clients.
These arrangements allow us to provide outsourced customized clearing, advisory platforms and technology solutions that enable the financial advisors at these insurance companies to offer a breadth of services to their client base in an efficient manner. Our Value Proposition We are dedicated to making it easy for advisors to do what is best for their clients.
We believe many enterprises find the technology, infrastructure and regulatory requirements associated with delivering financial advice to be cost-prohibitive. The solutions we provide enable financial advisors at these enterprises to deliver their services on a cost-effective basis.
We believe many institutions find the technology, infrastructure and regulatory requirements associated with delivering financial advice to be cost-prohibitive. The solutions we provide enable financial advisors at these institutions to deliver their services on a cost-effective basis.
In addition, the DOL has proposed a “Retirement Security Rule” that would modify the Five-Part Test to broaden the definition of fiduciary advice and the prohibited transaction exemptions in effect as of the date of this Annual Report.
In addition, the DOL has finalized a “Retirement Security Rule” that would modify the Five-Part Test to broaden the definition of fiduciary advice and the prohibited transaction exemptions in effect as of the date of this Annual Report.
Attracting New Assets to Our Platform We intend to grow the assets served by our platform across traditional markets and through new affiliation models. Ongoing investment in and enhancements to our platform and support teams have led to an expanded pipeline.
Attracting New Assets to Our Platform We intend to grow the assets served by our platform across traditional markets and through new affiliation models. Ongoing investments in and enhancements to our platform and support teams have led to an expanded pipeline.
In general, an acquisition of 10% or more of our common stock, or another acquisition of “control” as defined in OCC regulations, may require OCC approval. These laws and regulations are designed to serve specific bank regulatory and supervisory purposes and are not meant for the protection of PTC, PTC Holdings, Inc., LPLFH or their stockholders.
In general, an acquisition of 10% or more of our common stock, or another acquisition of “control” as defined in OCC regulations, may require OCC 11 Table of Contents approval. These laws and regulations are designed to serve specific bank regulatory and supervisory purposes and are not meant for the protection of PTC, PTC Holdings, Inc., LPLFH or their stockholders.
Under our model, an advisor may provide a trust with investment management services, while administrative services for the trust are provided by PTC. We also offer retirement solutions for commission- and fee-based services that allow advisors to provide brokerage services, consultation and advice to retirement plan sponsors using LPL Financial.
Under our model, an advisor may provide a trust with investment management services, while administrative services for the trust are provided by PTC. We also offer retirement solutions for commission- and fee-based services that allow advisors to provide brokerage services, consultation and advice to retirement plan sponsors through LPL Financial and LPL Enterprise.
Advisors associated with Independent RIAs retain 100% of their advisory fees, and in return, we charge separate fees for custody, trading, administrative and support services. In addition, some financial advisors associated with Independent RIAs are registered representatives of LPL Financial and access our fully-integrated brokerage platform under standard terms.
Advisors associated with Independent RIAs retain 100% of their advisory fees, and 2 Table of Contents in return, we charge separate fees for custody, trading, administrative and support services. In addition, some financial advisors associated with Independent RIAs are registered representatives of LPL Financial and access our fully-integrated brokerage platform under standard terms.
Our Human Capital efforts focus on further developing our culture of service in concert with our mission statement: We take care of our advisors so they can take care of their clients . To that end, we seek employees who are committed to excellence, integrity and living our values.
Our Human Capital efforts focus on further developing our culture of service in concert with our mission statement: We take care of our advisors so they can 7 Table of Contents take care of their clients . To that end, we seek employees who are committed to excellence, integrity and living our values.
As the financial industry and regulatory environment evolve and become more complex, we have made a long-term commitment to enhancing our risk management and compliance structure, as well as our technology-based compliance and risk management tools, in order to further enhance the overall effectiveness and scalability of our control environment.
As the financial industry and regulatory environment evolve and become more complex, we have made a long-term commitment to enhancing our risk management and compliance structure, as well as our technology-based compliance and risk management tools, in order to support the overall effectiveness and scalability of our control environment.
For the year ended December 31, 2023, no single relationship with our independent advisor practices or enterprises accounted for more than 2% of our advisory and commission revenue, and no single advisor accounted for more than 1% of our advisory and commission revenue. • The largest variable component of our expense, advisor payout percentages, is directly linked to revenue generated by our advisors. • A portion of our revenue is not asset-based or correlated with the equity financial markets.
For the year ended December 31, 2024, no single relationship with our independent advisor practices or institutions accounted for more than 2% of our advisory and commission revenue, and no single advisor accounted for more than 1% of our advisory and commission revenue. • The largest variable component of our expense, advisor payout percentages, is directly linked to revenue generated by our advisors. • A portion of our revenue is not asset-based or correlated with the equity financial markets.
Our research team provides advice that is designed to empower our advisors to better serve their clients, including the creation of discretionary portfolios for which we serve as a portfolio manager, available through our turnkey advisory asset management platforms.
Our research team provides advice that is designed to empower our advisors to better serve their clients, including the creation of discretionary portfolios for which we serve as a portfolio manager, available through our centrally managed advisory asset management platforms.
We share market analysis and commentary on macro-economic events, manager research, capital markets assumptions, strategic and tactical asset allocation advice and individual equity guidance.
We share market analysis and commentary on macro-economic events, manager research, capital markets assumptions, strategic and tactical asset allocation advice and individual equity coverage.
Advisors licensed with LPL Financial as investment advisory representatives conduct fee-based business on our corporate RIA platform, and advisors licensed with LPL Financial as registered representatives conduct commission-based business on our brokerage platform.
Advisors licensed with LPL Financial as investment adviser representatives conduct fee-based business on our corporate RIA platform, and advisors licensed with LPL Financial as registered representatives conduct commission-based business on our brokerage platform.
Consultative Practice Management Programs and Training Our practice management programs are designed to help leaders and financial advisors in independent practices and enterprises enhance and grow their businesses.
Consultative Practice Management Programs and Training Our practice management programs are designed to help leaders and financial advisors in independent practices and institutions enhance and grow their businesses.
For example, because we do not have any proprietary manufactured financial products, we do not view firms that manufacture asset management products and other financial products as direct competitors. We provide comprehensive solutions to enterprises, such as regional banks, credit unions and insurance companies, that seek to provide a broad array of services for their clients.
For example, because we do not have any proprietary manufactured financial products of our own, we do not view firms that manufacture asset management products and other financial products as direct competitors. We provide comprehensive solutions to institutions, such as regional banks, credit unions and insurance companies, that seek to provide a broad array of services for their clients.
This new 10 Table of Contents interpretation, as well as other guidance issued by the DOL in connection with this interpretation, has been the subject of multiple litigations in federal district courts challenging the DOL’s authority to issue it.
This new interpretation, as well as other guidance issued by the DOL in connection with this interpretation, has been the subject of multiple litigations in federal district courts challenging the DOL’s authority to issue it.
Pursuant to the representative agreement, each advisor makes a series of representations, including that the advisor will disclose to all clients and prospective clients that the advisor is acting as LPL Financial’s investment advisory representative or registered representative, that all orders for securities will be placed through LPL Financial, that the advisor will sell only products that LPL Financial has approved and that the advisor will comply with LPL Financial policies and procedures as well as securities rules and regulations.
Pursuant to the representative agreement, each advisor makes a series of representations, including that the advisor will disclose to all clients and prospective clients that the advisor is acting as LPL Financial’s investment advisory representative or registered representative, that the advisor will sell only products that LPL Financial has approved and that the advisor will comply with LPL Financial policies and procedures as well as securities rules and regulations.
In furtherance of our commitment to cultivating diversity of thought and ideas within the organization, we sponsor and encourage all of our team members to participate in Employee Resource Groups to leverage the individual 8 Table of Contents talents and share the perspectives and experiences of our employees across all demographics.
In furtherance of our commitment to cultivating a diversity of thought and ideas within the organization, we sponsor and encourage all of our team members to participate in Employee Resource Groups to leverage the individual talents and share the perspectives and experiences of our employees across all demographics.
As of December 31, 2023, the total assets in our client cash programs, which are held within advisory and brokerage accounts, were $48.5 billion. Other Services We provide a number of additional tools and services that enable advisors to maintain and grow their practices. Through our subsidiary PTC, we provide custodial services to trusts for estates and families.
As of December 31, 2024, the total assets in our client cash programs, which are held within advisory and brokerage accounts, were $55.1 billion. Other Services We provide a number of additional tools and services that enable advisors to maintain and grow their practices. Through our subsidiary PTC, we provide custodial services to trusts for estates and families.
Human Capital Our success depends on our ability to attract, hire, retain and develop highly-skilled professionals in a variety of specialties, including finance, technology, compliance, business development, cybersecurity and management. Workforce As of December 31, 2023, we had approximately 8,400 full-time employees, all of whom are located in the U.S.
Human Capital Our success depends on our ability to attract, hire, retain and develop highly-skilled professionals in a variety of specialties, including finance, technology, compliance, business development, cybersecurity and management. Workforce As of December 31, 2024, we had approximately 9,000 full-time employees, all of whom are located in the U.S.
We also may incur substantial expenses, damage to our reputation or similar adverse consequences in connection with such actions, regardless of the outcome.
We 10 Table of Contents also may incur substantial expenses, damage to our reputation or similar adverse consequences in connection with such actions, regardless of the outcome.
We are committed to providing a workplace that is free from violence, harassment and other unsafe or disruptive conditions and require our personnel to attend regular training sessions and workshops on those topics.
We are committed to providing a workplace that is free from 8 Table of Contents violence, harassment and other unsafe or disruptive conditions and require our personnel to attend regular training sessions and workshops on those topics.
Broker-dealers are subject to rules and regulations covering all aspects of the securities business, including sales and trading practices, public offerings, publication of research reports, use and safekeeping of clients’ funds and securities, capital adequacy, recordkeeping and reporting, the conduct of directors, officers and employees, qualification and licensing of supervisory and sales personnel, marketing practices, supervisory and organizational procedures intended to ensure compliance with securities laws and to prevent improper trading on material nonpublic information, limitations on extensions of credit in securities transactions, clearance and settlement procedures, anti-money laundering, cybersecurity, credit risk management and rules designed to promote high standards of commercial honor and just and equitable principles of trade.
LPL Enterprise is regulated by the SEC, FINRA, CFTC and NFA. 9 Table of Contents Broker-dealers are subject to rules and regulations covering all aspects of the securities business, including sales and trading practices, public offerings, publication of research reports, use and safekeeping of clients’ funds and securities, capital adequacy, recordkeeping and reporting, the conduct of directors, officers and employees, qualification and licensing of supervisory and sales personnel, marketing practices, supervisory and organizational procedures intended to ensure compliance with securities laws and to prevent improper trading on material nonpublic information, limitations on extensions of credit in securities transactions, clearance and settlement procedures, anti-money laundering, cybersecurity, credit risk management and rules designed to promote high standards of commercial honor and just and equitable principles of trade.
Our more than 22,000 advisors average over 20 years in the industry, which generally allows us to focus on supporting and enhancing our advisors’ businesses without needing to provide basic training or subsidizing advisors who are new to the industry.
Our nearly 29,000 advisors average over 20 years in the industry, which generally allows us to focus on supporting and enhancing our advisors’ businesses without needing to provide basic training or subsidizing advisors who are new to the industry.
Our practice management and training services include: • personalized business consulting that helps eligible advisors and program leadership enhance the value and operational efficiency of their businesses; • advisory and brokerage consulting and financial planning to support advisors in growing their businesses through our broad range of products and fee-based offerings and wealth management services; • marketing strategies, including campaign templates, to enable advisors to build awareness of their services and capitalize on opportunities in their local markets; • our Liquidity & Succession solution to expand the options of advisors seeking to monetize their businesses or free themselves from entrepreneurial burdens through the sale of their practices; 3 Table of Contents • an advisor loan program for advisors looking to buy another practice; • transition services to help advisors establish independent practices and migrate client accounts to us; and • in-person and virtual training and educational programs on topics including technology, use of advisory platforms and business development.
Our practice management and training services include: • personalized business consulting that helps eligible advisors and program leadership enhance the value and operational efficiency of their businesses; • advisory and brokerage consulting and financial planning to support advisors in growing their businesses through our broad range of products and fee-based offerings and wealth management services; • marketing strategies, including campaign templates, to enable advisors to build awareness of their services and capitalize on opportunities in their local markets; • our Liquidity & Succession program, which offers expanded solutions to advisors seeking to monetize their businesses, free themselves from entrepreneurial burdens through the sale of their practices or simplify their businesses through partial book sales; • an advisor loan program for advisors looking to buy another practice; • transition services to help advisors establish independent practices and migrate client accounts to us; and • in-person and virtual training and educational programs on topics including technology, use of advisory platforms and business development.
Our Competitive Strengths Market Leadership Position and Scale We are the established leader in the independent advisor market, which is our core business focus. We use our scale and position as an industry leader to champion the independent business model and the rights of our advisors and their clients.
Our Competitive Strengths Market Leadership Position and Scale We are an established leader in the independent advisor market, which is our core business focus. We use our scale and position as an industry leader to champion the independent business model.
Under these requirements, LPL Financial is currently required to maintain minimum net capital that is in excess of or equal to the minimum net capital calculated and required pursuant to the Exchange Act’s net capital rule. The SEC, FINRA, CFTC and NFA impose rules that require notification when net capital falls below certain predefined criteria.
Under these requirements, our broker-dealer subsidiaries are currently required to maintain minimum net capital that is in excess of or equal to the minimum net capital calculated and required pursuant to the Exchange Act’s net capital rule. The SEC, FINRA, CFTC and NFA impose rules that require notification when net capital falls below certain predefined criteria.
We believe we are the market leader in the enterprise channel, providing support to over 3,600 financial advisors at approximately 1,100 enterprises nationwide. The core capabilities of these enterprises may not include investment and financial planning services, or they may find the technology, infrastructure and regulatory requirements of supporting such services to be cost-prohibitive.
We believe we are the market leader in the enterprise channel, providing support to over 6,900 financial advisors at approximately 1,200 institutions nationwide. The core capabilities of these institutions may not include investment and financial planning services, or they may find the technology, infrastructure and regulatory requirements of supporting such services to be cost-prohibitive.
As of December 31, 2023, the total brokerage assets in commission-based products were $618.2 billion. 4 Table of Contents Client Cash Programs Our client cash programs include two Federal Deposit Insurance Corporation (“FDIC”) insured bank sweep vehicles, a client cash account and a money market account, which enable our advisors to manage their clients’ cash balances.
As of December 31, 2024, the total brokerage assets in commission-based products were $783.7 billion. Client Cash Programs Our client cash programs include two Federal Deposit Insurance Corporation (“FDIC”) insured bank sweep vehicles, a client cash account and a money market account, which enable our advisors to manage their clients’ cash balances.
These advisors also agree not to engage in any outside business activity without prior approval from us and not to act in competition with us. LPL Financial also supports approximately 570 independent RIA firms that conduct their business through separate registered investment advisor firms (“Independent RIAs”) with approximately 6,300 advisors who conduct their advisory business through these separate entities.
These advisors also agree not to engage in any outside business activity without prior approval from us. LPL Financial also supports approximately 590 independent firms that conduct their business through separate registered investment advisors (“Independent RIAs”), with approximately 6,500 advisors who conduct their advisory business through these separate entities.
Our flexible business platform allows our advisors to choose the most appropriate business model to support their clients whether they conduct brokerage business, offer brokerage and/or fee-based services on our corporate RIA platform, or provide fee-based services through their own RIA.
Our flexible business platform allows our advisors to choose the most appropriate business model to support their clients whether they conduct brokerage business, offer fee-based services using one of our RIA platforms, or provide fee-based services through their own RIA.
Therefore, we are focused on attracting and retaining our employees. To reach a diverse pool of talent, we are continually in the market and take a multi-faceted approach to recruiting in pursuit of diverse, entrepreneurial and dedicated team members.
Recruiting As a Fortune 500 company focused on innovation and growth, talent drives the success of our company. Therefore, we are focused on attracting and retaining our employees. To reach a diverse pool of talent, we are continually in the market and take a multi-faceted approach to recruiting in pursuit of diverse, entrepreneurial and dedicated team members.
Investment Adviser Regulation As an investment adviser registered with the SEC, our subsidiary LPL Financial is subject to the requirements of the Advisers Act, and the regulations promulgated thereunder, including examination by the SEC’s staff.
Investment Adviser Regulation Our subsidiaries that are registered as investment advisers with the SEC, including LPL Financial and LPL Enterprise, are subject to the requirements of the Advisers Act, and the regulations promulgated thereunder, including examination by the SEC’s staff.
Trademarks Access Overlay ® , BlazePortfolio ® , BranchNet ® , CLIENTWORKS ® , Fortigent ® , LPL ® , LPL Career Match ® , LPL Financial (& Design) ® , Manager Access Network ® , Manager Access Select ® , OMP ® and SPONSORWORKS ® are our registered trademarks, and ADVISORYWORLD, CLIENTWORKS CONNECTED, ALLEN & COMPANY OF FLORIDA, LLC, and THE PRIVATE TRUST COMPANY, N.A.
Trademarks Access Overlay ® , Atria Wealth Solutions ® , BlazePortfolio ® , CLIENTWORKS ® , LPL ® , LPL Financial (& Design) ® , Manager Access Network ® , Manager Access Select ® , and OMP ® are our registered trademarks, and ADVISORYWORLD, CLIENTWORKS CONNECTED, ALLEN & COMPANY OF FLORIDA, LLC, and THE PRIVATE TRUST COMPANY, N.A.
Compliance Services We continue to make substantial investments in our compliance function to provide our advisors with a strong framework through which to understand and operate within regulatory guidelines, as well as guidelines that we establish. Protecting the best interests of investors and our advisors is imperative to us.
Compliance Services We continue to make substantial investments in our compliance function to provide our advisors with a strong framework through which to understand and operate within regulatory guidelines, as well as guidelines that we establish.
As of December 31, 2023, the total advisory assets under custody in these platforms, through both our corporate RIA and Independent RIA advisory platforms, were $735.8 billion. Commission-Based Products Commission-based products include those for which we and our advisors receive an upfront commission and, for certain products, a trailing commission.
As of December 31, 2024, the total advisory assets under custody in these platforms, including our corporate RIA, Independent RIA and LPL Enterprise advisory platforms, were $957.0 billion. Commission-Based Products Commission-based products include those for which we and our advisors receive an upfront commission and, for certain products, a trailing commission.
Our team of risk and compliance employees assists our advisors through: • training and advising advisors on new products, new regulatory guidelines, compliance and risk management tools, security policies and procedures and best practices; • advising on sales practice activities and facilitating the supervision of activities by branch managers; • conducting technology-enabled surveillance of trading activities and sales practices; • monitoring of registered investment advisory activities for advisors on our corporate RIA platform; and • inspecting branch offices and advising on how to strengthen compliance procedures.
Our team of risk and compliance employees assists our advisors through: • training and advising advisors on new products, new regulatory guidelines, compliance and risk management tools, security policies and procedures and best practices; • advising on sales practice activities and facilitating the supervision of activities by branch managers; 3 Table of Contents • conducting technology-enabled surveillance of trading activities and sales practices; • monitoring of registered investment adviser activities for advisors who are investment adviser representatives of LPL Financial or LPL Enterprise; and • inspecting branch offices and advising on how to strengthen compliance procedures.
Our health and welfare benefits include, among other things: medical coverage; dental and vision coverage; healthcare and dependent-care flexible spending accounts; Health Savings Accounts; accident and critical illness coverage; life and accidental death and dismemberment insurance; short-term and long-term disability insurance; and the LPL Live Well employee wellbeing program, which supports employees and their family members in their wellness journeys as well as offering targeted and focused programming for mental health, Type 2 Diabetes care and maternity management. 7 Table of Contents Recruiting As a Fortune 500 company focused on innovation and growth, talent drives the success of our company.
Our health and welfare benefits include, among other things: medical coverage; dental and vision coverage; healthcare and dependent-care flexible spending accounts; Health Savings Accounts; accident and critical illness coverage; life and accidental death and dismemberment insurance; short-term and long-term disability insurance; and the LPL Live Well employee wellbeing program, which supports employees and their family members in their wellness journeys as well as offering targeted and focused programming for mental health, Type 2 Diabetes care and maternity family-forming/support programs.
LPL Financial is also subject to the NFA’s financial requirements and is required to maintain net capital that is in excess of or equal to the greatest of the NFA’s minimum financial requirements.
Certain of our broker-dealer subsidiaries are also subject to the NFA’s financial requirements and are required to maintain net capital that is in excess of or equal to the greatest of the NFA’s minimum financial requirements.
Our scale enables us to benefit from the following dynamics: • Continual Reinvestment — We actively reinvest in our comprehensive technology platform and practice management support, which further improves the productivity of our advisors. • Economies of Scale — As one of the largest distributors of financial products in the U.S., we have been able to obtain attractive economics from product sponsors. • Payout Rates to Advisors — As one of the largest U.S. broker-dealers by number of advisors, we believe that we offer our advisors the highest average payout rates in our industry.
Our scale enables us to benefit from the following dynamics: • Continual Reinvestment — We actively reinvest in our comprehensive technology platform and practice management support, which further improves the productivity of our advisors and reduces the costs of serving them. • Economies of Scale — As one of the largest distributors of financial products in the U.S., we have been able to obtain attractive economics from product sponsors.
Finally, we have opened up a new market with our newest enterprise affiliation model resulting in strategic relationships with M&T Bank Corporation, BMO Harris Financial Advisors, CUNA Brokerage Services, Inc., People’s United Bank, Bancwest Investment Services and Commerce Financial Advisors.
Finally, we have opened up a new market with a recently developed institution affiliation model, which has resulted in strategic relationships with M&T Bank Corporation, BMO Financial Advisors, CUNA Brokerage Services, Inc., People’s United Bank, Bancwest Investment Services and Commerce Financial Advisors.
In order to achieve this vision, our strategy is to meet advisors and enterprises where they are in the evolution of their businesses, provide capabilities to help advisors differentiate and win investors, create an industry-leading service experience that delights advisors and enterprises and their clients, and help advisors and enterprises run the most successful businesses in the industry.
In order to achieve this vision, our strategy is to meet advisors and institutions where they are in the evolution of their businesses, expand the addressable market, provide flexible end-to-end solutions to help advisors differentiate and win investors, create an industry-leading service experience that delights advisors and institutions and their clients, and help advisors and institutions run high-performing businesses.
LPL Financial's recommendations to retail customers are subject to a standard of conduct specified by the SEC (“Reg BI”).
Our broker-dealer subsidiaries’ recommendations to retail customers are subject to a standard of conduct specified by the SEC (“Reg BI”).
The sales and administration of these products are facilitated through our technology solutions, which allow our advisors to access client accounts, product information, asset allocation models, investment recommendations and economic insight, as well as to perform trade execution.
Instead, we provide our advisors with curated access to a broad range of fee-based, commission, cash and money market products and services. The sales and administration of these products are facilitated through our technology solutions, which allow our advisors to access client accounts, product information, asset allocation models, investment recommendations and economic insight, as well as to perform trade execution.
The Company’s most significant wholly owned subsidiaries are described below: • LPL Holdings, Inc. is a direct subsidiary of LPL Financial Holdings Inc. and is an intermediate holding company of our business. • LPL Financial LLC (“LPL Financial”) is a clearing broker-dealer and an investment adviser that clears and settles customer transactions. • LPL Insurance Associates, Inc.
The Company’s most significant wholly owned subsidiaries are described below: • LPL Holdings, Inc. is a direct subsidiary of LPL Financial Holdings Inc. and is an intermediate holding company of our business. • LPL Financial LLC (“LPL Financial”) is a clearing broker-dealer and an investment adviser that clears and settles customer transactions. • LPL Enterprise, LLC (“LPL Enterprise”) is a limited product shelf introducing broker-dealer and registered investment advisor that supports a portion of the Company’s institutional businesses, providing brokerage and investment advisory services to the clients of those institutional businesses. • LPL Insurance Associates, Inc.
We are able to provide objective and unbiased investment research to our advisors and their clients without the conflict of proprietary products or investment banking services. Our Product and Solution Access We do not manufacture any financial products. Instead, we provide our advisors with curated access to a broad range of commission, fee-based, cash and money market products and services.
We are able to provide objective and unbiased investment research to our advisors and their clients without the conflict of proprietary products or investment banking services. 4 Table of Contents Our Product and Solution Access We do not manufacture any financial products.
Reg BI requires that, when making recommendations, broker-dealers act in the best interest of retail 9 Table of Contents customers without placing their own financial or other interests ahead of the customer’s and imposes obligations related to disclosure, duty of care, conflicts of interest and compliance.
Reg BI requires that, when making recommendations, broker-dealers act in the best interest of retail customers without placing their own financial or other interests ahead of the customer’s and imposes obligations related to disclosure, duty of care, conflicts of interest and compliance. Certain state securities and insurance regulators have also adopted, proposed or are considering adopting similar laws and regulations.
(“PTC”) provides trust administration, investment management oversight and, along with its affiliate Fiduciary Trust Company of New Hampshire, Individual Retirement Account (“IRA”) custodial services. • LPL Employee Services, LLC and its subsidiary, Allen & Company of Florida, LLC (“Allen & Company”), along with their affiliate, Financial Resources Group Investment Services, LLC (“FRGIS”), provide primary support for the Company’s employee advisor affiliation model.
(“PTC”) provides trust administration, investment management oversight and Individual Retirement Account (“IRA”) custodial services. • LPL Employee Services, LLC and its subsidiary, Allen & Company of Florida, LLC (“Allen & Company”), along with their affiliate, Financial Resources Group Investment Services, LLC, provide primary support for the Company’s employee advisor affiliation model. 1 Table of Contents Our Strategy At LPL, our mission is to take care of our advisors and institutions so they can take care of their clients.
Diversity, Equity and Inclusion Our diversity, equity and inclusion (“DEI”) efforts are overseen by our chief executive officer, chief human capital officer and chief diversity officer. In 2023, the management committee received quarterly updates on DEI-related issues.
Inclusion and Belonging Our inclusion and belonging efforts are overseen by our chief executive officer (“CEO”), and chief human resources officer. In 2024, the management committee received quarterly updates on culture-related issues.
LPL Financial, which is subject to net capital rules, has been and currently is in compliance with those rules and has net capital in excess of the minimum requirements. 11 Table of Contents Anti-Money Laundering and Sanctions Compliance The USA PATRIOT Act of 2001, which amended the Bank Secrecy Act, contains anti-money laundering and financial transparency laws and mandates the implementation of various regulations applicable to broker-dealers, futures commission merchants and other financial services companies.
Anti-Money Laundering and Sanctions Compliance The USA PATRIOT Act of 2001, which amended the Bank Secrecy Act, contains anti-money laundering and financial transparency laws and mandates the implementation of various regulations applicable to broker-dealers, futures commission merchants and other financial services companies.
The flexibility of our business model enables our advisors to select their preferred affiliation model and product mix as their business evolves and preferences change within the market or their client base all within an environment that allows for evolution with minimal interruption to their business and their clients.
The flexibility of our business model enables our advisors to select their preferred affiliation model and product mix as their business evolves and preferences change within the market or their client base all within an environment that allows for evolution with minimal interruption to their business and their clients. 6 Table of Contents In addition, our business model provides advisors with a multitude of customizable service and technology offerings that allow them to increase their efficiency, focus on their clients and grow their practice.
For these enterprises, we provide their financial advisors with the infrastructure and services they need to be successful, allowing the enterprises to focus more attention and capital on their core businesses. Finally, we provide support to approximately 3,800 additional financial advisors who are affiliated and licensed with insurance companies.
For these institutions, we provide their financial advisors with the infrastructure and services they need to be successful, allowing the institutions to focus more attention and capital on their core businesses.
Compliance with proposed conduct standards could increase the complexity and costs of our compliance or affect our revenue streams, including, in the case of the DOL proposal, our ability to rely on the current prohibited transaction exemptions.
The Retirement Security Rule was stayed in July 2024 pending litigation and is currently on appeal before the Fifth Circuit Court of Appeals. Compliance with proposed conduct standards could increase the complexity and costs of our compliance or affect our revenue streams, including, in the case of the DOL proposal, our ability to rely on the current prohibited transaction exemptions.
We make meaningful investments to support the growth, productivity and efficiency of advisors across a broad spectrum of models as their practices evolve. Our focus is working alongside advisors to navigate complex environments in order to create the best outcomes for their clients. We believe we offer a compelling value proposition to independent financial advisors and enterprises.
Our focus is working alongside advisors to navigate complex environments in order to create the best outcomes for their clients. We believe we offer a compelling value proposition to independent financial advisors and institutions.
(“LPLIA”) operates as a brokerage general agency that offers life and disability insurance products and services. • AW Subsidiary, Inc. is a holding company for AdvisoryWorld and Blaze Portfolio Systems LLC (“Blaze”). AdvisoryWorld offers technology products, including proposal generation, investment analytics and portfolio modeling, to both the Company’s advisors and external clients in the wealth management industry.
The Company expects to complete the conversion of assets from these acquired broker-dealers and investment advisors in 2025. • AW Subsidiary, Inc. is a holding company for AdvisoryWorld and Blaze Portfolio Systems LLC (“Blaze”). AdvisoryWorld offers technology products, including proposal generation, investment analytics and portfolio modeling, to both the Company’s advisors and external clients in the wealth management industry.
We offer proposal generation, investment analytics and portfolio modeling capabilities to both our advisors and external clients in the wealth management industry and provide an advisor-facing trading and portfolio rebalancing platform.
We offer proposal generation, investment analytics and portfolio modeling capabilities, and provide an advisor-facing trading and portfolio rebalancing platform.
Service and fee revenue is generated from advisor and retail investor services, including insurance, licensing, business services and planning and advice services, IRA custodian and other client account fees. Service and fee revenue from business services is based on recurring subscription fees. We charge separate fees to RIAs for technology, clearing, administrative, oversight and custody services, which may vary.
Service and fee revenue is generated from advisor and retail investor services, including insurance, licensing, business services and planning and advice services, IRA custodian and other client account fees. Service and fee 5 Table of Contents revenue from business services is based on recurring subscription fees.
The combination of our ability to reinvest in our business and maintain highly competitive payout rates has enabled us to attract and retain advisors.
The combination of our ability to reinvest in our business and maintain highly competitive payout rates has enabled us to attract and retain advisors. This, in turn, has driven our growth and led to a continuous cycle of reinvestment that reinforces our established scale advantage.
Most recently, we announced an agreement with Prudential to transition the brokerage and investment advisory assets of Prudential Advisors, Prudential’s retail wealth management business, from its current third-party custodian to the Company’s Institution Services platform in the second half of 2024, subject to receipt of regulatory approval and other conditions.
Most recently, in November 2024, we completed our integration with Prudential to transition the brokerage and investment advisory assets of Prudential Advisors, Prudential’s retail wealth management business, from its current third-party custodian to the Company’s Institution Services platform. Related investments in our institutional platform have generated interest from new clients.
They build long-term relationships with their clients in communities across the United States by guiding them through the complexities of investment decisions, retirement solutions, financial planning and wealth management. Our services are designed to support the evolution of our advisors’ businesses over time and to adapt as our advisors’ needs change.
Our advisors are a community of diverse financial services professionals who collectively support approximately 10.0 million client accounts. They build long-term relationships with their clients in communities across the United States by guiding them through the complexities of investment decisions, retirement solutions, financial planning and wealth management.
Any new laws or regulations applicable to our business, any changes to existing laws or regulations, or any changes to the interpretations or enforcement of those laws or regulations may affect our operations and/or financial condition.
Compliance with all applicable laws and regulations, only some of which are described below, involves a significant investment in time and resources. Any new laws or regulations applicable to our business, any changes to existing laws or regulations, or any changes to the interpretations or enforcement of those laws or regulations may affect our operations and/or financial condition.
Business Services and Planning and Advice Services We provide business services to advisors in areas critical to the operation of their practices, such as marketing, accounting and transaction support. Our business services portfolio includes professional services and business optimizer offerings.
For example, the LPL Services Group provides business support to advisors in areas critical to the operation of their practices, such as marketing, accounting and transaction support.
Most of our independent financial advisors are business owners who, unlike their captive counterparts, also benefit from building equity value in their own businesses.
Generally, advisors in independent channels receive a greater share of advisory fees and brokerage commissions than advisors in captive channels — typically 80-100% compared to 30-50% for captive channels. Most of our independent financial advisors are business owners who, unlike their captive counterparts, also benefit from building equity value in their own businesses.
Regulation The financial services industry is subject to extensive regulation by U.S. federal, state and international government agencies as well as various self-regulatory organizations. We seek to participate in the development of significant rules and regulations that govern our industry.
In addition, we maintain relationships with community partners with the goal of broadening the pool of talented applicants so that we can truly reach the best candidates. Regulation The financial services industry is subject to extensive regulation by U.S. federal, state and international government agencies as well as various self-regulatory organizations.
Our Board of Directors, its compensation and human resources committee and its nominating and governance committee, which oversees our environmental, social and governance program, also received multiple updates on our progress in this area. At LPL, we believe that well-being is more than just physical safety and that our employees should feel welcome and supported as who they are.
Our Board of Directors (the “Board”), its compensation and human resources committee and its nominating and governance committee, which oversees our environmental, social and governance program, also received multiple updates on our progress in this area.
Related investments in our enterprise platform have generated interest from new enterprise clients. 6 Table of Contents Competition We compete with a variety of financial firms to attract and retain experienced and productive advisors.
Competition We compete with a variety of financial firms to attract and retain experienced and productive advisors.
We have been investing in our compliance functions to monitor our adherence to the numerous legal and regulatory requirements applicable to our business. Compliance with all applicable laws and regulations, only some of which are described below, involves a significant investment in time and resources.
We seek to participate in the development of significant rules and regulations that govern our industry. We have been investing in our compliance functions to monitor our adherence to the numerous legal and regulatory requirements applicable to our business.
In addition, we make meaningful investments in technology and services to support the growth, productivity and efficiency of advisors across a broad spectrum of business models as their practices evolve. Our advisors are a community of diverse financial services professionals who support approximately 8.3 million client accounts.
We work alongside advisors to navigate complex market and regulatory environments and strive to empower them to create the best outcomes for investors. In addition, we make meaningful investments in technology and services to support the growth, productivity and efficiency of advisors across a broad spectrum of business models as their practices evolve.

… 30 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

84 edited+15 added−10 removed180 unchanged
Biggest changeWe rely on our advisors and employees to comply with our policies and procedures to safeguard confidential data, but disloyal or negligent insiders pose risks. The failure of our advisors and employees to comply with such policies and procedures, either intentionally or unintentionally, could result in the loss or wrongful use of their clients’ confidential information or other sensitive information.
Biggest changeThe failure of our advisors and employees to comply with such policies and procedures, either intentionally or unintentionally, could result in the loss or wrongful use of their clients’ confidential information or other sensitive information, as well as result in aspects of our technology systems malfunctioning, being disabled or failing to work as designed.
We continue our efforts to safeguard the data entrusted to us in accordance with applicable law and our internal data protection policies, including taking steps to reduce the potential for the improper use or disclosure of personal information.
We continue our efforts to safeguard the personal information entrusted to us in accordance with applicable law and our internal data protection policies, including taking steps to reduce the potential for the improper use or disclosure of personal information.
The market price of our common stock may fluctuate substantially due to the following factors (in addition to the other risk factors described in this Item 1A ): • actual or anticipated fluctuations in our results of operations, including with regard to interest rates or revenue associated with our client cash programs; • variance in our financial performance from the expectations of equity research analysts; • conditions and trends in the markets we serve; • announcements of significant new services or products by us or our competitors; • additions or changes to key personnel; • the commencement or outcome of litigation or arbitration proceedings; • the commencement or outcome of regulatory actions, including settlements with the SEC, FINRA, DOL or state securities regulators; • changes in market valuation or earnings of our competitors; • the trading volume of our common stock; • future sales of our equity securities; • changes in the estimation of the future size and growth rate of our markets; • legislation or regulatory policies, practices or actions, including developments related to the “best interest” and “fiduciary” standards of care; • political developments; and • general economic conditions.
The market price of our common stock may fluctuate substantially due to the following factors (in addition to the other risk factors described in this Item 1A ): • actual or anticipated fluctuations in our results of operations, including with regard to interest rates or revenue associated with our client cash programs; • variance in our financial performance from the expectations of equity research analysts; • conditions and trends in the markets we serve; • announcements of significant new services or products by us or our competitors; • additions or changes to key personnel; • the commencement or outcome of litigation or arbitration proceedings; • the commencement or outcome of regulatory actions, including settlements with the SEC, FINRA, DOL or state securities regulators; • changes in market valuation or earnings of our competitors; • the trading volume of our common stock; • future sales of our equity securities; • changes in the estimation of the future size and growth rate of our markets; • legislation or regulatory policies, practices or actions, including developments related to the “best interest” and “fiduciary” standards of care; • political developments, including elections and appointments; and • general economic conditions.
Further, any actual or perceived breach or cybersecurity attack directed at other financial institutions or financial services companies, whether or not we are targeted, could lead to a general loss of customer confidence in the use of technology to conduct financial transactions, which could negatively impact us, including the market perception of the effectiveness of our security measures and technology infrastructure.
Further, any actual or perceived data breach or cybersecurity attack directed at other financial institutions or financial services companies, whether or not we are targeted, could lead to a general loss of customer confidence in the use of technology to conduct financial transactions, which could negatively impact us, including the market perception of the effectiveness of our security measures and technology infrastructure.
Material risks that may adversely affect our business, operations and financial results include, but are not limited to, the following: Risks Related to Our Business and Industry • We depend on our ability to attract and retain experienced and productive advisors, and we are subject to competition in all aspects of our business. • Our financial condition and results of operations may be adversely affected by market fluctuations and other economic factors. • Significant interest rate changes could affect our profitability and financial condition. • Any damage to our reputation could harm our business and lead to a loss of revenue and net income. • Our business is subject to risks related to litigation, arbitration claims and regulatory actions. • There are risks inherent in the independent broker-dealer business model. • We rely on third-party service providers, including off-shore providers, to perform technology, processing and support functions, and our operations are dependent on financial intermediaries that we do not control. • Lack of liquidity or access to capital could impair our business and financial condition. • Our business could be materially adversely affected as a result of the risks associated with acquisitions, investments, and strategic relationships. • Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks. • We face competition in attracting and retaining key talent. • The securities settlement process exposes us to risks related to adverse movements in price. • Our indebtedness could adversely affect our financial condition and may limit our ability to use debt to fund future capital needs. • Restrictions under our Credit Agreement may prevent us from taking actions that we believe would be in the best interest of our business. • Provisions of our Credit Agreement and certain of the Indentures could discourage an acquisition of us by a third-party. • Our insurance coverage may be expensive and we may exceed our limits of insurance coverage. • Poor service or performance of the financial products that we offer or competitive pressures on pricing of such services or products may cause clients of our advisors to withdraw their assets on short notice. • A loss of our marketing relationships with manufacturers of financial products could harm our relationship with our advisors and, in turn, their clients. • Changes in U.S. federal income tax law could make some of the products distributed by our advisors less attractive to clients.
Material risks that may adversely affect our business, operations and financial results include, but are not limited to, the following: Risks Related to Our Business and Industry • We depend on our ability to attract and retain experienced and productive advisors, and we are subject to competition in all aspects of our business. • Our financial condition and results of operations may be adversely affected by market fluctuations and other economic factors. • Significant interest rate changes could affect our profitability and financial condition. • Any damage to our reputation could harm our business and lead to a loss of revenue and net income. • Our business is subject to risks related to litigation, arbitration claims and regulatory actions. • There are risks inherent in the independent broker-dealer business model. • We rely on third-party service providers, including off-shore providers, to perform technology, processing and support functions, and our operations are dependent on financial intermediaries that we do not control. • Lack of liquidity or access to capital could impair our business and financial condition. • Our business could be materially adversely affected as a result of the risks associated with acquisitions, investments, and strategic relationships. • Our risk management policies and procedures may not be effective in fully mitigating our risk exposure in all environments or against all types of risks. • We face competition in attracting and retaining key talent. • The securities settlement process exposes us to risks related to adverse movements in price. • Our indebtedness could adversely affect our financial condition and may limit our ability to use debt to fund future capital needs. • Restrictions under our Credit Agreement may prevent us from taking actions that we believe would be in the best interest of our business. • Provisions of our Credit Agreement and certain of the Indentures could discourage an acquisition of us by a third-party. • Our insurance coverage may be expensive, and losses we incur may exceed the limits of our insurance coverage, or may not be covered at all. • Poor service or performance of the financial products that we offer or competitive pressures on pricing of such services or products may cause clients of our advisors to withdraw their assets on short notice. • A loss of our marketing relationships with manufacturers of financial products could harm our relationship with our advisors and, in turn, their clients. • Changes in U.S. federal income tax law could make some of the products distributed by our advisors less attractive to clients.
Many aspects of our business are subject to comprehensive legal requirements concerning the collection, use and sharing of personal information, including client and employee information. This includes rules adopted pursuant to the Gramm-Leach-Bliley Act and an ever-increasing number of state laws and regulations, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act.
Many aspects of our business are subject to comprehensive legal requirements concerning the collection, use and sharing of personal information, including advisor, client and employee information. This includes rules adopted pursuant to the Gramm-Leach-Bliley Act and an ever-increasing number of state laws and regulations, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act.
If one or more of these events occur, they could jeopardize our own, our advisors’ or their clients’, or our counterparties’ confidential and other proprietary information processed, stored in and transmitted through our computer systems and networks, or otherwise cause interruptions or malfunctions in our own, our advisors’ or their clients’, our counterparties’, or third parties’ operations.
If one or more of these Security Events occur, they could jeopardize our own, our advisors’ or their clients’, or our counterparties’ confidential and other proprietary information processed, stored in and transmitted through our computer systems and networks, or otherwise cause interruptions or malfunctions in our own, our advisors’ or their clients’, our counterparties’, or third parties’ operations.
We are not able to protect against these events completely given the rapid evolution of new vulnerabilities, the complex and distributed nature of our systems, our interdependence on the systems of other companies and the increased sophistication of potential attack vectors and methods against our systems.
We are not able to protect against these Security Events completely given the rapid evolution of new vulnerabilities, the complex and distributed nature of our systems, our interdependence on the systems of other companies and the increased sophistication of potential attack vectors and methods against our systems.
Our profitability could be affected by rules and regulations that impact the business and financial communities generally and, in particular, our advisors and their clients, including changes to the interpretation or enforcement of laws governing standards of care applicable to investment advice and recommendations, taxation, the classification of our independent advisors as independent contractors rather than our employees, trading, electronic commerce, privacy, data protection and anti-money laundering.
Our profitability could be affected by rules and regulations that impact the business and financial communities generally and, in particular, our advisors and their clients, including changes to the interpretation or enforcement of laws governing standards of care applicable to investment advice and recommendations, taxation, the classification of our independent advisors as independent contractors rather than our employees, trading, electronic communication, privacy, data protection and anti-money laundering.
If any person, including any of our employees or advisors, negligently disregards or intentionally breaches our established controls with respect to confidential client data, or otherwise mismanages or misappropriates that data, we could also be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions.
If any person, including any of our employees or advisors, negligently disregards or intentionally breaches our established controls with respect to confidential client data or other confidential information, or otherwise mismanages or misappropriates that data or information, we could also be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions.
Cyber-attacks can be designed to collect information, manipulate, destroy or corrupt data, applications, or accounts and to disable the functioning or use of applications or technology assets.
Cyber-attacks can be designed to collect information, manipulate, destroy or corrupt data, applications, accounts, or to disable the functioning or use of applications or technology assets.
Upon the occurrence of certain transactions constituting a change of control, all indebtedness under our Credit Agreement may be accelerated and become due and payable and, under certain of the Indentures, noteholders will have the right to require us to repurchase our senior unsecured notes (the “Notes”) issued under such Indentures at a purchase price equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to but not including the purchase date.
Upon the occurrence of certain transactions constituting a change of control, all indebtedness under our Credit Agreement may be accelerated and become due and payable and, under certain of the Indentures, noteholders will have the right to require us to repurchase the Notes issued under such Indentures at a purchase price equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to but not including the purchase date.
There also may be real or perceived social harm, unfairness or other outcomes that undermine public confidence in the use and deployment of AI and machine learning. Any of the foregoing may result in harm to our business, results of operations or reputation.
There also may be real or perceived social harm, unfairness, or other outcomes that undermine public confidence in the use and deployment of AI. Any of the foregoing may result in harm to our business, results of operations, or reputation.
In particular, advisors work in a wide variety of environments, and although we require our advisors to maintain certain 25 Table of Contents minimum security levels and adopt certain security procedures by policy, we cannot ensure the universal or consistent compliance with these policies across all of our advisors, or that our policy will be adequate to address the evolving threat environment.
In particular, advisors work in a wide variety of environments, and although we require our advisors to maintain certain minimum security levels and adopt certain security procedures by policy, we cannot ensure the universal or consistent compliance with these policies across all of our advisors, or that our policy will be adequate to address the evolving threat environment.
Such activity could, among other things: • damage our reputation; • allow competitors or hackers access to our proprietary business information; • subject us to liability for a failure to safeguard client data; • result in the termination of relationships with our advisors; • subject us to regulatory sanctions or obligations, based on state law or the authority of the SEC and FINRA to enforce regulations regarding business continuity planning or cybersecurity; • subject us to litigation by consumers, advisors or other business partners that may suffer damages as a result of such activity; • result in inaccurate financial data reporting; and • require significant capital and operating expenditures to investigate and remediate a breach.
Such activity could, among other things: • damage our reputation; • allow competitors or hackers access to our proprietary business information; • disrupt the normal operations of our services and technology; • subject us to liability for a failure to safeguard client data; • result in the termination of relationships with our advisors; • subject us to regulatory sanctions or obligations, based on state law or the authority of the SEC and FINRA to enforce regulations regarding business continuity planning or cybersecurity; • subject us to litigation by consumers, advisors or other business partners that may suffer damages as a result of such activity; • result in inaccurate financial data reporting; and • require significant capital and operating expenditures to investigate and remediate a breach.
Certain elements of the Dodd-Frank Act remain subject to implementing regulations that are yet to be adopted by the applicable regulatory agencies. Compliance with these provisions could require us to review our product and service 23 Table of Contents offerings for potential changes and would likely result in increased compliance costs.
Certain elements of the Dodd-Frank Act remain subject to implementing regulations that are yet to be adopted by the applicable regulatory agencies. Compliance with these provisions could require us to review our product and service offerings for potential changes and would likely result in increased compliance costs.
The development, adoption and application of generative AI technologies are still in their early stages, and ineffective or inadequate AI development or deployment practices by third-party developers or vendors could result in unintended consequences. For example, AI algorithms that we use may be flawed or may be based on datasets that are biased or insufficient.
The development, adoption, and application of AI technologies are still in their early stages, and ineffective or inadequate AI governance, development or deployment practices by us or by third-party developers or vendors could result in unintended consequences. For example, AI algorithms that we use may be flawed or may be based on datasets that are biased or insufficient.
Section 4975 of the Code prohibits certain transactions involving “plans” (as defined in Section 24 Table of Contents 4975(e)(1)), which include, for example, IRAs and certain Keogh plans and other qualified savings accounts, and service providers, including fiduciaries (as defined in Section 4975(e)(3)), to such plans. Section 4975 also imposes excise taxes for violations of these prohibitions.
Section 4975 of the Code prohibits certain transactions involving “plans” (as defined in Section 4975(e)(1)), which include, for example, IRAs and certain Keogh plans and other qualified savings accounts, and service providers, including fiduciaries (as defined in Section 4975(e)(3)), to such plans. Section 4975 also imposes excise taxes for violations of these prohibitions.
The decrease in revenue that could result from such an event could have a material adverse effect on our business. A loss of our marketing relationships with manufacturers of financial products could harm our relationship with our advisors and, in turn, their clients. Our curated product platform offers no proprietary financial products.
The decrease in revenue that could result from such an event could have a material adverse effect on our business. 21 Table of Contents A loss of our marketing relationships with manufacturers of financial products could harm our relationship with our advisors and, in turn, their clients. Our curated product platform offers no proprietary financial products.
In addition, the equity markets in general have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. These broad market and industry factors may materially harm the market price of our common stock irrespective of our operating 29 Table of Contents performance.
In addition, the equity markets in general have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. These broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance.
There cannot be any assurance that we will have sufficient resources to adequately update and expand our information technology systems or capabilities, or offer our services on the personal and mobile computing devices that may be preferred by our advisors and/or their clients, nor can there be any assurance that any upgrade or expansion efforts will be sufficiently timely, successful, secure and accepted by our current and prospective 28 Table of Contents advisors or their clients.
There cannot be any assurance that we will have sufficient resources to adequately update and expand our information technology systems or capabilities, or offer our services on the personal and mobile computing devices that may be preferred by our advisors and/or their clients, nor can there be any assurance that any upgrade or expansion efforts will be sufficiently timely, successful, secure and accepted by our current and prospective advisors or their clients.
The legal and regulatory landscape surrounding AI and machine learning technologies is rapidly evolving and remains uncertain, including in the areas of intellectual property, cybersecurity, privacy and data protection. For example, there is uncertainty around the validity and enforceability of intellectual property rights related to use, development and deployment of AI and machine learning.
The legal and regulatory landscape surrounding AI is rapidly evolving and remains uncertain, including in the areas of intellectual property, cybersecurity, privacy and data protection. For example, there is uncertainty around the validity and enforceability of intellectual property rights related to use, development and deployment of AI.
The primary SRO of LPL Financial’s broker-dealer activity is FINRA, and the primary regulator of LPL Financial’s investment advisory activity is the SEC. LPL Financial is also subject to state laws, including state “blue sky” laws, and the rules of the Municipal Securities Rulemaking Board for its municipal securities activities.
The primary SRO of LPL Financial’s and LPL Enterprise’s broker-dealer activity is FINRA, and the primary regulator of LPL Financial’s and LPL Enterprise’s investment advisory activity is the SEC. LPL Financial and LPL Enterprise are also subject to state laws, including state “blue sky” laws, and the rules of the Municipal Securities Rulemaking Board for its municipal securities activities.
Our Board declared quarterly cash dividends on our outstanding common stock in 2023 and has authorized us to repurchase shares of the Company’s issued and outstanding shares of common stock.
Our Board declared quarterly cash dividends on our outstanding common stock in 2024 and has authorized us to repurchase shares of the Company’s issued and outstanding shares of common stock.
The CFTC has designated the NFA as LPL Financial’s primary regulator for futures and commodities trading activities. The SEC, FINRA, DOL, CFTC, NFA, OCC, various securities and futures exchanges and other United States and state-level governmental or regulatory authorities continuously review legislative and regulatory initiatives and may adopt new or revised laws, regulations or interpretations.
The CFTC has designated the NFA as LPL Financial’s primary regulator for futures and commodities trading activities. The SEC, FINRA, DOL, CFTC, NFA, OCC, various securities and futures exchanges and other United States and state-level governmental or regulatory authorities continuously review legislative and regulatory initiatives and may 22 Table of Contents adopt new or revised laws, regulations or interpretations.
It could also require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes.
It could also require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and 19 Table of Contents other general corporate purposes.
As malicious cyber activity escalates, including activity that originates outside of the United States, the risks we face relating to transmission of data and our use of service providers outside of our network, as well as the storing or processing of data within our network, intensify.
As malicious cyber activity becomes more complex and escalates, including activity that originates outside of the United States, the risks we face relating to transmission of data and our use of service providers outside of our network, as well as the storing or processing of data within our network, intensify.
Our Credit Agreement and the Indentures governing our Notes permit us to incur additional indebtedness. Under our Credit Agreement we have the right to request additional commitments for new term loans, new revolving credit commitments and increases to then-existing term loans and revolving credit commitments subject to certain limitations.
Our Credit Agreement and the Indentures governing our senior unsecured notes (the “Notes”) permit us to incur additional indebtedness. Under our Credit Agreement we have the right to request additional commitments for new term loans, new revolving credit commitments and increases to then-existing term loans and revolving credit commitments subject to certain limitations.
These incidents could involve operational disruptions, notification costs, ransom payments and reputational harm, investigations, litigation and fines with regulators, and increases in insurance premiums as well as litigation, financial disputes and reputational harm with current and potential advisors and advisors’ clients.
These Security Events could involve operational disruptions, notification costs, ransom payments and reputational harm, investigations, litigation and fines with regulators, and increases in insurance premiums as well as litigation, financial disputes and reputational harm with current and potential advisors and advisors’ clients.
In addition, any latency, disruption or failure in our AI and machine learning systems or infrastructure could result in delays or errors in our products and services. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs.
In addition, any latency, disruption, or failure in our AI and related systems or infrastructure could result in delays or errors in our products and services. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs.
While we maintain cyber liability insurance, this insurance does not cover certain types of potential losses and, for covered losses, may not be sufficient in amount to protect us against all such losses.
While we maintain cyber liability 27 Table of Contents insurance, this insurance does not cover certain types of potential losses and, for covered losses, may not be sufficient in amount to protect us against all such losses.
Failure to comply with these obligations could result in legal liability, censures, penalties and fines, disgorgement of profits, restitution to customers, remediation, the issuance of cease-and-desist orders, or injunctive or other equitable relief against us, which individually or in the aggregate could negatively impact our financial results or adversely affect our ability to attract or retain financial advisors and institutions.
Failure to comply with these obligations could result in damage to our reputation and legal liability, censures, penalties and fines, disgorgement of profits, restitution to customers, remediation, the issuance of cease-and-desist orders, or injunctive or other equitable relief against us, which individually or in the aggregate could negatively impact our financial results or adversely affect our ability to attract 28 Table of Contents or retain financial advisors and institutions.
More generally, our failure to upgrade our systems successfully could have a material adverse effect on our business, financial condition and results of operations, as well as our ability to achieve our growth objectives.
More generally, our failure to upgrade our systems successfully could have a material adverse effect on our business, financial condition and results of operations, as well as our 25 Table of Contents ability to achieve our growth objectives.
We are subject to various regulatory requirements, which, if not complied with, could result in the restriction of the conduct or growth of our business. The business activities that we may conduct are limited by various regulatory agencies. Our membership agreement with FINRA may be amended by application to include additional business activities.
We are subject to various regulatory requirements, which, if not complied with, could result in the restriction of the conduct or growth of our business. The business activities that we may conduct are limited by various regulatory agencies. Our membership agreement with FINRA may be amended by application to include additional business activities, as it was in 2024.
Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to us. If our indebtedness is in default for any reason, our business could be materially and adversely affected.
Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms that are acceptable to us. If our indebtedness is in default for any 20 Table of Contents reason, our business could be materially and adversely affected.
These changes may also affect the array of products and services we offer to clients and the compensation that we and our advisors receive in connection with such products and services.
These changes may also affect the array of 23 Table of Contents products and services we offer to clients and the compensation that we and our advisors receive in connection with such products and services.
The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could limit or impair their ability to pay dividends or other distributions to us. In addition, FINRA regulations restrict dividends in excess of 10% of a member firm’s excess net capital without FINRA’s prior approval.
The deterioration of the earnings from, or other available assets of, our subsidiaries for any reason could limit or impair their ability to pay dividends or other distributions to LPL Financial Holdings Inc.. In addition, FINRA regulations restrict dividends in excess of 10% of a member firm’s excess net capital without FINRA’s prior approval.
Such determinations will depend upon a number of factors that the Board deems relevant, including future earnings, the success of our business activities, capital requirements, alternative uses of capital, general economic, financial and business conditions, and the future prospects of our own business.
Such determinations will depend upon a number of factors that the Board deems relevant, including future earnings, 30 Table of Contents the success of our business activities, capital requirements, alternative uses of capital, general economic, financial and business conditions, and the future prospects of our business.
Certain provisions of our Credit Agreement and the Indentures could make it more difficult or more expensive for a third-party to acquire us, and any of our future debt agreements may contain similar provisions.
Provisions of our Credit Agreement and certain of the Indentures could discourage an acquisition of us by a third-party. Certain provisions of our Credit Agreement and the Indentures could make it more difficult or more expensive for a third-party to acquire us, and any of our future debt agreements may contain similar provisions.
If our systems, policies and procedures are not effective, or if we are not successful in capturing risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that could have a material adverse effect on our business and financial condition.
If our systems, policies and procedures are not effective, or if we are not successful in identifying, monitoring, and managing the risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that could have a material adverse effect on our business and financial condition.
During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, all of which would further increase the costs and consequences of such an attack.
During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, all of which would further increase the costs and consequences of such a Security Event.
We may be required to expend significant additional resources to modify our protective measures, to investigate and remediate vulnerabilities or other exposures, to make required notifications, or to update our technologies, websites and web-based applications to comply with industry and regulatory standards, but we may not have adequate personnel, financial or other resources to fully meet these threats and evolving standards.
We may be required to expend significant additional resources to modify our protective measures, to investigate and remediate vulnerabilities or other exposures, to make required notifications, to restore our systems and fully recover from a Security Event, or to update our technologies, websites and web-based applications to comply with industry and regulatory standards, but we may not have adequate personnel, financial or other resources to fully meet these threats and evolving standards.
For more information about the potential limits of our insurance coverage, including our self-insurance coverage, see “ Our insurance coverage may be expensive and we may exceed our limits of insurance coverage ” above. Regulatory developments could adversely affect our business by increasing our costs or making our business less profitable.
For more information about the potential limits of our insurance coverage, including our self-insurance coverage, see “ Our insurance coverage may be expensive, and losses we incur may exceed the limits of our coverage, or may not be covered at all ” above. Regulatory developments could adversely affect our business by increasing our costs or making our business less profitable.
From time to time, we have been subjected to and are currently subject to legal and regulatory proceedings arising out of our business operations, including lawsuits, arbitration claims, governmental subpoenas and regulatory, governmental and self-regulatory organization (“SRO”) inquiries, investigations and enforcement proceedings, as well as other actions and claims.
As is common in our industry, we have been subjected to and are currently subject to legal and regulatory proceedings arising out of our business operations, including lawsuits, arbitration claims, governmental subpoenas and regulatory, governmental and self-regulatory organization (“SRO”) inquiries, investigations and enforcement proceedings, as well as other actions and claims.
Our risk management policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risks. We have adopted policies and procedures to identify, monitor and manage our risk.
Our risk management policies and procedures may not be effective in fully mitigating our risk exposure in all environments or against all types of risks. We have adopted policies, procedures and an overarching policy management framework to identify, monitor and manage our risks.
Although we take protective measures and endeavor to strengthen the security of these systems as circumstances warrant, our computer systems, software and networks are to some degree vulnerable to unauthorized access, human error, computer viruses, denial-of-service attacks, malicious code, spam attacks, phishing, ransomware or other forms of social engineering and other events that could impact the security, reliability, confidentiality, integrity and availability of our systems.
Although we take protective measures and endeavor to strengthen the security and resiliency of these systems, our computer systems, software and networks are vulnerable to information breaches, unauthorized access, human error, computer viruses, denial-of-service attacks, malicious code, spam attacks, phishing, ransomware or other forms of social engineering and other events that could impact the security, reliability, confidentiality, integrity and availability of our systems (collectively, “Security Events”).
Because our holding companies are not registered broker-dealers, they are not subject to the Net Capital Rule.
Because our holding companies are not registered broker- 24 Table of Contents dealers, they are not subject to the Net Capital Rule.
Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant operational costs and may limit our ability to develop, deploy or use AI and machine learning technologies. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action or brand and reputational harm.
Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant operational costs and may limit our ability to use, develop, or deploy AI. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action or brand and reputational harm. Our information technology systems may be vulnerable to security risks.
Future data security incidents involving individual and regulatory notifications could lead to litigation involving other financial institutions, class actions, regulatory investigations or other harm. 27 Table of Contents Data security incidents within the financial services industry are increasing, and threat actors continue to find novel ways to attack security environments.
Future Security Events involving individual and regulatory notifications could lead to litigation involving other financial institutions, class actions, regulatory investigations or other harm. Security Events within the financial services industry are increasing, and threat actors continue to find novel ways to attack technology platforms and services.
In some cases, however, that information may not be available, accurate, complete or up-to-date. Also, because many of our advisors work in decentralized offices, additional risk management challenges exist, including with regard to advisor office technology, vendors and information security practices.
In some cases, however, that information may not be available, accurate, complete or up-to-date. Also, because many of our advisors work in decentralized or branch offices, additional risk management challenges exist, including advisor office technology, vendors and third party-providers, supervision and oversight, business continuity, information security practices, and training and awareness.
At December 31, 2023, we had total indebtedness of $3.7 billion , of which $1.3 billion i s subject to floating interest rates. Our level of indebtedness could increase our vulnerability to general adverse economic and industry conditions.
At December 31, 2024, we had total indebtedness of $5.5 billion, of which $2.1 billion is subject to floating interest rates. Our level of indebtedness could increase our vulnerability to general adverse economic and industry conditions.
We have self-insurance for certain potential liabilities through a wholly-owned captive insurance subsidiary. While we endeavor to self-insure and purchase coverage that is appropriate based on our assessment of our risk, we are unable to predict with certainty the frequency, nature or magnitude of claims for direct or consequential damages.
While we endeavor to self-insure and purchase coverage that is appropriate based on our assessment of our risk, we are unable to predict with certainty the frequency, nature or magnitude of claims for direct or consequential damages.
We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet our debt service and other obligations. We have no direct operations and derive all of our cash flow from our subsidiaries.
We are a holding company and rely on dividends, distributions and other payments, advances and transfers of funds from our subsidiaries to meet our debt service and other obligations. LPL Financial Holdings Inc. has no direct operations and derives all of its cash flow from its direct and indirect subsidiaries.
Any such increase could require us to increase our costs, including information technology costs, in order to maintain our compliance and risk management obligations, or strain our existing policies and procedures as we evolve to support a larger advisor population.
In addition, our existing systems, policies and procedures, and staffing levels may be insufficient to support a significant increase in our advisor population. Any such increase could require us to increase our costs, in order to maintain our risk management and compliance obligations, or strain our existing policies and procedures as we evolve to support a larger advisor population.
In addition, vulnerabilities of our external service providers or within our software supply chain could pose security risks to client information.
In addition, vulnerabilities of our external service providers or within our software supply chain could pose security risks to the confidential information of advisors and their clients.
All of these and other potential risks may serve as a diversion of our management’s attention or other resources from other business concerns, and any of these factors could have a material adverse effect on our business.
All of these and other potential risks could disrupt our existing business, as well as the businesses we seek to acquire, and could serve as a diversion of our management’s attention or other resources from other business concerns, and any of these factors could have a material adverse effect on our business.
We currently and may in the future use, develop, and incorporate within our technology platform and services, systems and tools that incorporate artificial intelligence (“AI”) and machine learning, including generative AI. As with many innovations, AI and machine learning present risks and challenges that could adversely impact our business.
We currently, and may in the future, use, develop, and incorporate systems and tools that leverage artificial intelligence and other machine learning and large language models, including generative artificial intelligence (collectively, “AI”), within our technology platform and services. AI presents risks and challenges that could adversely impact our business.
Similar laws are in force in Colorado, Connecticut, Utah, and Virginia, and other such laws will go into force over the next few years.
Similar laws are in force in several other states, and other such laws will go into force over the next few years.
A potential acquirer may not have sufficient financial resources to purchase our outstanding indebtedness in connection with a change of control. Our insurance coverage may be expensive and we may exceed our limits of insurance coverage. We are subject to claims in the ordinary course of business. These claims may involve substantial amounts of money and involve significant defense costs.
A potential acquirer may not have sufficient financial resources to purchase our outstanding indebtedness in connection with a change of control. Our insurance coverage may be expensive, and losses we incur may exceed the limits of our insurance coverage, or may not be covered at all. We are subject to claims in the ordinary course of business.
In addition, complying with these covenants may also cause us to take actions that are not favorable to holders of our common stock and may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions. 20 Table of Contents Provisions of our Credit Agreement and certain of the Indentures could discourage an acquisition of us by a third-party.
In addition, complying with these covenants may also cause us to take actions that are not favorable to holders of our common stock and may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.
To the extent third parties, such as product sponsors, also retain similarity sensitive information about our advisors or their clients, their systems may face similar vulnerabilities.
To the extent third parties, such as product sponsors, also retain similarly sensitive information about our advisors, their clients or our employees, their systems may face similar vulnerabilities that could result in Security Events for us.
We also rely upon software and data feeds from various third parties. Although we have a third party management program and conduct due diligence before sharing sensitive data with third-party vendors, this due diligence may not uncover administrative, technical or electronic gaps or flaws in their processes or systems.
Although we have a third party risk management program and conduct due diligence regarding cybersecurity and data protection practices before integrating our systems or sharing sensitive data with third-party vendors, this due diligence may not uncover administrative, technical or electronic gaps or flaws in their processes or systems.
These alternative measures may not be successful or feasible. Our Credit Agreement restricts our ability to sell assets. Even if we could consummate those sales, the proceeds that we realize from them may not be adequate to meet any debt service obligations then due.
Even if we could consummate those sales, the proceeds that we realize from them may not be adequate to meet any debt service obligations then due.
We cannot be certain that our systems and networks will not be subject to successful attacks, despite the measures we have taken and may take in the future to address and mitigate cybersecurity, privacy and technology risks. Additionally, in the course of operations, we share sensitive proprietary information and personal data with vendors, third parties and other financial institutions.
We cannot be certain that our systems and networks will not be subject to successful attacks, despite the measures we have taken and may take in the future to address and mitigate cybersecurity, privacy and technology risks.
The risks related to transmitting data and using service providers outside of and storing or processing data within our network are increasing based on escalating and malicious cyber activity, including activity that originates outside of the United States from criminal elements and hostile nation-states.
The risks related to transmitting data and using service providers outside of and storing or processing data within our network are increasing based on escalating and complex malicious cyber activity, including activity that originates outside of the United States from criminal elements and hostile nation-states. 26 Table of Contents Cybersecurity requires ongoing investment and diligence against evolving threats and is subject to federal and state regulation relating to the protection of confidential information.
In the past we have experienced limited breaches of information security with our vendors, which have led to notification costs and reputational harm with regulators, current and potential advisors, and advisors’ clients, and we may experience similar or more significant events in the future.
In the past, we and third parties on whose systems we rely have experienced Security Events that have resulted in the temporary interruption of our operations, breach notification costs and reputational harm with regulators, current and potential advisors, and advisors’ clients, and we may experience similar or more significant events in the future.
If our business continuity and disaster recovery plans and procedures, or those of our third-party service providers, were disrupted or unsuccessful in the event of a catastrophe, we could experience a material adverse interruption of our operations.
If our business continuity and disaster recovery plans and procedures, or those of our third-party service providers, were disrupted or unsuccessful in the event of a catastrophe, we could experience a material adverse interruption of our operations. 29 Table of Contents Risks Related to Ownership of Our Common Stock The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for our investors.
In addition, our level of indebtedness may limit our flexibility in planning for changes in our business and the industry in which we operate and limit our ability to borrow additional funds.
In addition, our level of indebtedness may limit our flexibility in planning for changes in our business and the industry in which we operate and limit our ability to borrow additional funds. With interest rate increases, our interest expense has increased because borrowings under our Credit Agreement are based on variable interest rates.
We may have a 18 Table of Contents lack of experience in new markets, products or technologies brought on by the acquisition, and we may have an initial dependence on unfamiliar supply or distribution partners. An acquisition may create an impairment of relationships with customers or suppliers of the acquired business or our advisors or suppliers.
For example, we may have a lack of experience in new markets, products or technologies brought on by the acquisition, we may have an initial dependence on unfamiliar supply or distribution partners, or the resources necessary to integrate an acquired business may exceed our expectations or the resources we have available.
We have sponsorship agreements with some manufacturers of fixed and variable annuities, mutual funds and exchange-traded funds that, subject to the survival of certain terms and conditions, may be 21 Table of Contents terminated by the manufacturer upon notice.
To help our advisors meet their clients’ needs with suitable investment options, we have relationships with many of the industry-leading providers of financial and insurance products. We have sponsorship agreements with manufacturers of fixed and variable annuities, mutual funds and exchange-traded funds that, subject to the survival of certain terms and conditions, may be terminated by the manufacturer upon notice.
As part of our normal operations, we maintain and transmit confidential information about clients of our advisors, our advisors and our employees, as well as proprietary information relating to our business operations.
The secure and reliable transmission of confidential information, including financial account information and personally identifiable information, over public networks is a critical element of our operations. As part of our normal operations, we maintain and transmit confidential information about clients of our advisors, our advisors and our employees, as well as proprietary information relating to our business operations.
We will also be required to effectively and efficiently govern, manage and ensure timely enhancements to our systems, including in their design, architecture and interconnections as well as their organizational and technical protections. The SEC has proposed new cybersecurity regulations for investment advisers, and other new regulations may be promulgated by relevant federal and state authorities at any time.
We will also be required to effectively and efficiently govern, manage and ensure timely enhancements to our systems, including in their design, architecture and interconnections as well as their organizational and technical protections.
In addition, compliance with regulatory expectations may become increasingly complex as more state regulatory authorities issue or amend regulations, which sometimes conflict, governing handling of confidential information by companies within their jurisdiction. Several states have promulgated cybersecurity requirements that impact our compliance obligations.
The SEC has adopted new cybersecurity regulations for broker-dealers and investment advisers, and other new regulations may be promulgated by relevant federal and state authorities at any time. In addition, compliance with regulatory expectations may become increasingly complex as more state regulatory authorities issue or amend regulations, which sometimes conflict, governing handling of confidential information by companies within their jurisdiction.
However, a credit rating downgrade to a below investment grade rating could cause currently suspended restrictive covenants and guarantees under certain of our Indentures to automatically be reinstated. Any such downgrade would negatively impact our ability to obtain comparable rates and terms on any future refinancing of our debt and could restrict our ability to incur additional indebtedness.
Any such downgrade would negatively impact our ability to obtain comparable rates and terms on any future refinancing of our debt and could restrict our ability to incur additional indebtedness.
These transactions are accompanied by risks. For instance, an acquisition could have a negative effect on our financial and strategic position and reputation, or the acquired business could fail to further our strategic or financial goals. We can provide no assurances that advisors who join LPL Financial through acquisitions or investments in advisor practices will remain at LPL Financial.
These transactions are accompanied by risks. For instance, an acquisition could have a negative effect on our financial and strategic position and reputation, the synergies expected to result from a business combination could fail to materialize, or the acquired business could fail to further our strategic or financial goals.
In light of the diversity of our advisors’ security environments and the increasing sophistication of malicious actors, an attack could occur and persist for an extended period of time without detection. We expect that any investigation of a cyber-attack could take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information.
In light of the diversity of our advisors’ security environments and the increasing sophistication of malicious actors, a Security Event could occur and persist for an extended period of time without detection.
With interest rate increases, our interest expense has increased because borrowings under our Credit Agreement are based on variable interest rates. 19 Table of Contents If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to sell assets, seek additional capital or seek to restructure or refinance our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to sell assets, seek additional capital or seek to restructure or refinance our indebtedness. These alternative measures may not be successful or feasible. Our Credit Agreement restricts our ability to sell assets.
We have not yet reached a settlement in principle with the SEC, and any settlement agreement remains subject to negotiation of the civil monetary penalty and definitive documentation. For more information, see Note 14 - Commitments and Contingencies within the notes to the consolidated financial statements in this Annual Report on Form 10-K.
For more information, see Note 14 - Commitments and Contingencies within the notes to the consolidated financial statements in this Annual Report on Form 10-K.
Compliance with these regulations also could be costly and disruptive to our operations, and we cannot provide assurance that the impact of these regulations would not, either individually or collectively, be material to our business. 26 Table of Contents Our application service provider systems maintain and process confidential data on behalf of advisors and their clients, some of which is critical to our advisors’ business operations.
Several states have promulgated cybersecurity requirements that impact our compliance obligations. Compliance with these regulations also could be costly and disruptive to our operations, and we cannot provide assurance that the impact of these regulations would not, either individually or collectively, be material to our business.
Moreover, we may not be able to successfully integrate acquired businesses into ours, and therefore we may not be able to realize the intended benefits from an acquisition.
We can provide no assurances that advisors who join LPL Financial through acquisitions or investments in advisor practices will remain at LPL Financial. Moreover, we may not be able to successfully integrate acquired businesses 18 Table of Contents into ours, and therefore we may not be able to realize the intended benefits from an acquisition.

… 29 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−1 removed10 unchanged
Biggest changeThe Board has delegated oversight of the Program to the ARC, including oversight of the Company’s cyber- and technology-related risks and the steps management has taken to identify, assess, monitor, and manage those risks.
Biggest changeThe current chief information security officer has over 20 years of experience in information security. The Board, which includes a director with cybersecurity expertise, has delegated responsibility for primary oversight of the Program to the ARC, including oversight of the Company’s cyber- and technology-related risks and the steps management has taken to identify, assess, monitor, and manage those risks.
This risk assessment process is used to inform the Company’s strategic planning process, and to develop action plans to appropriately address and manage risk. It is also used to focus our Board and its committees on the most significant risks to our Company.
This risk assessment process is used to inform the Company’s strategic planning process, and to develop action plans to appropriately address and manage risk. It is also used to focus our Board and its committees on the most significant risks to the Company.
Each of the Board and the ARC receive staggered periodic reports on the Program’s effectiveness and progress on at least an annual basis. The assessment, identification and management of cybersecurity-related risks are integrated into the Company’s overall Enterprise Risk Management (“ERM”) process. Cybersecurity risk is included among the significant residual risks identified during the Company’s assessment of business risk.
Each of the Board and the ARC receive periodic reports on the Program’s effectiveness and progress on at least an annual basis. The assessment, identification and management of cybersecurity-related risks are integrated into the Company’s overall Enterprise Risk Management (“ERM”) process. Cybersecurity risk is included among the significant residual risks identified during the Company’s assessment of business risk.
Cybersecurity Governance The Program is situated within the Company’s information security department, which is comprised of multiple teams, including security operations, security architecture and engineering, technology governance, mergers and acquisitions information security, and advisor security. The information security department is led by the chief information security officer, who has primary responsibility for managing the Program.
Cybersecurity Governance The Program is situated within the Company’s information security department, which is composed of multiple teams, including security operations, security architecture and engineering, technology governance, mergers and acquisitions information security, and advisor security. The information security department is led by the chief information security officer, who has primary responsibility for managing the Program.
Engagement of Third Parties We engage third-party subject matter experts and consultants to conduct evaluations of our security controls, including, but not limited to, penetration testing, maturity assessments or consulting on our response to emerging threats. Results of these evaluations are used to help determine priorities and initiatives to improve the overall Program.
Engagement of Third Parties We engage third-party subject matter experts and consultants to conduct evaluations of our security controls, including, but not limited to, penetration testing, maturity assessments or consulting on our response to emerging threats. Results of these evaluations are used to help determine priorities and initiatives to improve the overall 31 Table of Contents Program.
To improve preparedness for a cybersecurity 30 Table of Contents incident, we conduct tabletop exercises at least annually. These exercises are conducted by internal personnel and with assistance from third-party experts, as needed.
To improve preparedness for a cybersecurity incident, we conduct tabletop exercises at least annually. These exercises are conducted by internal personnel and with assistance from third-party experts, as needed.
Removed
The current chief information security officer has over 20 years of experience in information security, including a lead auditor certification from the International Organization for Standardization, an international standard for information security management systems.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 2. Properties A summary of our significant locations at December 31, 2023 is shown in the following table: Location Approximate Square Footage Lease Expiration Fort Mill, South Carolina 461,000 2036 San Diego, California 420,000 2029 Austin, Texas 57,000 2029 We also lease smaller administrative and operational offices in various locations throughout the United States.
Biggest changeItem 2. Properties A summary of our significant locations at December 31, 2024 is shown in the following table: Location Approximate Square Footage Lease Expiration Fort Mill, South Carolina 562,000 2036 San Diego, California 420,000 2029 Austin, Texas 57,000 2029 Tempe, Arizona 44,000 2031 We also lease smaller administrative and operational offices in various locations throughout the United States.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−1 removed0 unchanged
Biggest changeLegal Proceedings From time to time, we have been subjected to and are currently subject to legal and regulatory proceedings arising out of our business operations, including lawsuits, arbitration claims and inquiries, investigations and enforcement proceedings initiated by the SEC, FINRA and state securities regulators, as well as other actions and claims. 31 Table of Contents For a discussion of legal proceedings, see Note 14 - Commitments and Contingencies within the notes to the consolidated financial statements and Part I, “Item 1A.
Biggest changeItem 3. Legal Proceedings From time to time, we have been subjected to and are currently subject to legal and regulatory proceedings arising out of our business operations, including lawsuits, arbitration claims and inquiries, investigations and enforcement proceedings initiated by the SEC, FINRA and state securities regulators, as well as other actions and claims.
Removed
Risk Factors” in this Annual Report on Form 10-K.
Added
For a discussion of legal proceedings, see Note 14 - Commitments and Contingencies within the notes to the consolidated financial statements and Part I, “Item 1A. Risk Factors” in this Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

19 edited+9 added−10 removed8 unchanged
Biggest changeIn addition, he oversaw the LPL Services Group from May 2022 until February 2023. Prior to joining LPL Financial, Mr. Audette served as executive vice president and chief financial officer of E*TRADE Financial Corporation. During his 16 years with E*TRADE, he was a key contributor in the growth of the franchise, leading a variety of corporate transactions and capital activities.
Biggest changeAudette joined LPL Financial in 2015 as chief financial officer and oversaw the LPL Services Group from May 2022 until February 2023 and was the head of business operations from February 2023 through October 2024. Prior to joining LPL Financial, Mr. Audette served as executive vice president and chief financial officer of E*TRADE Financial Corporation.
Gates has served as managing director, chief technology & information officer of LPL Financial since July 2021. In this role he is responsible for managing all aspects of the Company’s technology and systems applications. He leads an information technology organization responsible for delivering technology solutions and market-leading platforms that enable positive, compelling experiences for our advisors, enterprises and employees. Mr.
Gates has served as managing director, chief technology & information officer of LPL Financial since July 2021. In this role he is responsible for managing all aspects of the Company’s technology and systems applications. He leads an information technology organization responsible for delivering technology solutions and market-leading platforms that enable positive, compelling experiences for our advisors, institutions and employees. Mr.
Brown served as supervising attorney for Morgan Stanley Smith Barney, and spent 10 years in a variety of roles at J.P. Morgan 33 Table of Contents Chase in their Investment Management and Investment Banking divisions. Ms. Brown received a B.A. in economics and French from New York University and a J.D. from Fordham University School of Law.
Brown served as supervising attorney for Morgan Stanley Smith Barney, and spent 10 years in a variety of roles at J.P. Morgan Chase in their Investment Management and Investment Banking divisions. Ms. Brown received a B.A. in economics and French from New York University and a J.D. from Fordham University School of Law.
Prior to joining LPL Financial, Mr. Steinmeier served as managing director, head of digital strategy and platforms for UBS Wealth Management Americas from September 2017 to August 2018 and as managing director, head of the Emerging Affluent Segment and Wealth Advice Center from August 2012 to September 2017. Prior to UBS, Mr.
Steinmeier served as managing director, head of digital strategy and platforms for UBS Wealth Management Americas from September 2017 to August 2018 and as managing director, head of the Emerging Affluent Segment and Wealth Advice Center from August 2012 to September 2017. Prior to UBS, Mr.
Prior to Proterra, Ms. Dadyar worked at GE for over 24 years, including as the executive Human Resources leader for GE Gas Power and GE Capital Americas, global executive director of Human Resources for GE Working Capital Solutions, and senior Human Resources director of GE Media, Communications and Entertainment. Ms.
Dadyar worked at GE for over 24 years, including as the executive Human Resources leader for GE Gas Power and GE Capital Americas, global executive director of Human Resources for GE Working Capital Solutions, and senior Human Resources director of GE Media, Communications and Entertainment. Ms.
Item 4. Mine Safety Disclosures Not applicable. 32 Table of Contents Information about our Executive Officers The following table provides certain information about each of the Company’s executive officers as of the date this Annual Report on Form 10-K has been filed with the SEC: Name Age Position Dan H. Arnold 59 President and Chief Executive Officer Matthew J.
Item 4. Mine Safety Disclosures Not applicable. 32 Table of Contents Information about our Executive Officers The following table provides certain information about each of the Company’s executive officers as of the date this Annual Report on Form 10-K has been filed with the SEC: Name Age Position Richard Steinmeier 51 Chief Executive Officer Matthew J.
Gates earned his B.S. in biomedical engineering from Vanderbilt University and has successfully completed multiple leadership, continuing education and certification programs from several organizations. Aneri Jambusaria – Managing Director, LPL Services Group Ms. Jambusaria has served as managing director, LPL Services Group since February 2023.
Gates earned his B.S. in biomedical engineering from Vanderbilt University and has successfully completed multiple leadership, continuing education and certification programs from several organizations. Aneri Jambusaria – Managing Director, Wealth Management Ms. Jambusaria has served as managing director, wealth management since December 2024.
She is responsible for overseeing human resources, talent development, corporate real estate, total rewards and talent acquisition, advisor and employee learning and development, culture and engagement, and diversity, equity, inclusion and belonging. Ms. Dadyar joined LPL Financial in January 2024 from Proterra Inc., where she served as the chief people officer from October 2022 to December 2023.
Dadyar has served as managing director, chief human resources officer of LPL Financial since January 2024. She is responsible for overseeing human resources, including talent development, corporate real estate, total rewards and talent acquisition, advisor and employee learning and development, culture, engagement and inclusion. Ms.
During her nine years at Fidelity, she helped shape strategy for business lines while gaining a strong understanding of wealth management and the products, solutions and technologies that serve investors. Before Fidelity, she worked as a senior consultant for Deloitte’s financial services practice. Ms.
Prior to joining LPL Financial, Ms. Jambusaria held various positions at Fidelity Investments, most recently as head of the Planning Office for Enterprise Strategy and Planning. During her nine years at Fidelity, she helped shape strategy for business lines while gaining a strong understanding of wealth management and the products, solutions and technologies that serve investors.
She holds a Six Sigma Black Belt and is a Fellow with the Leadership Council on Legal Diversity. Sara Dadyar — Managing Director, Chief Human Capital Officer Ms. Dadyar has served as managing director, chief human capital officer of LPL Financial since January 2024.
She holds a Six Sigma Black Belt and is a Fellow with the Leadership Council on Legal Diversity. 33 Table of Contents Marc Cohen – Managing Director, Business Strategy & Innovation Mr. Cohen has served as managing director, business strategy & innovation since December 2024.
Audette has served as our chief financial officer since 2015 and head of business operations since February 2023, with responsibility for the Company’s financial, risk, compliance and client operations functions. He leads the Company’s financial planning and analysis, treasury, controllership, tax, internal audit, corporate development and investor relations functions.
In this role, he is responsible for the Company’s financial, risk, compliance, service and supervision, and client operations functions. As chief financial officer, he leads the Company’s financial planning and analysis, treasury, controllership, tax, internal audit, corporate development and investor relations groups. Mr.
She is responsible for company-wide legal, regulatory and government relations matters and has a leading role in LPL Financial’s ongoing focus on enhancing the corporate risk profile. Ms. Brown has more than 25 years of experience in the financial services, technology and retail industries, leading high-performing legal teams for large corporations.
Brown has more than 25 years of experience in the financial services, technology and retail industries, leading high-performing legal teams for large corporations.
The client success organization is a client-centered, cross-functional team responsible for fueling the sustained success and satisfaction of the Company’s advisors and enterprises. Under this organization, the relationship management, marketing and communications, service and supervision teams focus on providing an integrated and consistent experience across clients’ primary touchpoints with LPL. Mr.
The client success organization is a client-centered, cross-functional team responsible for fueling the sustained success and satisfaction of the Company’s advisors and institutions. Under this organization, the relationship/field management, liquidity and succession, client insights and experience, and business design and execution teams focus on defining and maximizing the success of the Company’s clients. Mr.
Steinmeier earned a B.S. in economics from the Wharton School at the University of Pennsylvania and an M.B.A. from Stanford University. PART II
Steinmeier earned a B.S. in economics from the Wharton School at the University of Pennsylvania and an M.B.A. from Stanford University. Matthew J. Audette — President and Chief Financial Officer Mr. Audette has served as our chief financial officer since 2015 and president since October 2024.
Audette 49 Chief Financial Officer and Head of Business Operations Althea Brown 47 Managing Director, Chief Legal Officer Sara Dadyar 50 Managing Director, Chief Human Capital Officer Matthew Enyedi 50 Managing Director, Client Success Greg Gates 46 Managing Director, Chief Technology & Information Officer Aneri Jambusaria 40 Managing Director, LPL Services Group Kabir Sethi 53 Managing Director, Chief Product Officer Richard Steinmeier 50 Managing Director, Divisional President, Business Development Executive Officers Dan H.
Audette 50 President and Chief Financial Officer Althea Brown 48 Managing Director, Chief Legal Officer and Corporate Secretary Marc Cohen 38 Managing Director, Business Strategy & Innovation Sara Dadyar 51 Managing Director, Chief Human Resources Officer Matthew Enyedi 51 Managing Director, Client Success Greg Gates 47 Managing Director, Chief Technology & Information Officer Aneri Jambusaria 41 Managing Director, Wealth Management Executive Officers Richard Steinmeier — Chief Executive Officer Mr.
Richard Steinmeier — Managing Director, Divisional President, Business Development Mr. Steinmeier has served as managing director and divisional president, business development of LPL Financial since August 2018. In this role, he has responsibility for recruiting new advisors and enterprises to LPL Financial and to existing advisor practices, as well as exploring new markets and merger and acquisition opportunities.
In these roles, he had responsibility for recruiting new advisors and institutions to LPL Financial and to existing advisor practices, as well as exploring new markets and merger and acquisition opportunities. Prior to joining LPL Financial, Mr.
Jambusaria joined LPL Financial in 2020 as executive vice president, strategy and new ventures and transitioned into an expanded role in 2021 to lead the LPL Services Group. Prior to joining LPL Financial, Ms. Jambusaria held various positions at Fidelity Investments, most recently as head of the Planning Office for Enterprise Strategy and Planning.
Jambusaria joined LPL Financial in 2020 as executive vice president, strategy and new ventures and transitioned into an expanded role in 2021 to lead the LPL Services Group, including serving as managing director, LPL Services Group from February 2023 to March 2024 and managing director, business & wealth solutions from March 2024 to December 2024.
Mr. Audette began his career in the financial services practice at KPMG. Mr. Audette earned a B.S. in accounting from Virginia Polytechnic Institute and State University, popularly known as Virginia Tech. Althea Brown — Managing Director, Chief Legal Officer Ms. Brown has served as managing director, chief legal officer since September 2023.
During his 16 years with E*TRADE, he was a key contributor in the growth of the franchise, leading a variety of corporate transactions and capital activities. Mr. Audette began his career in financial services at KPMG. Mr. Audette earned a B.S. in accounting from Virginia Polytechnic Institute and State University, popularly known as Virginia Tech.
Jambusaria earned her B.S. in economics from the Wharton School at the University of Pennsylvania and her M.B.A. from Northwestern University’s Kellogg School of Management. 34 Table of Contents Kabir Sethi — Managing Director, Chief Product Officer Mr. Sethi has served as managing director, chief product officer of LPL Financial since May 2022.
Before Fidelity, she worked as a senior consultant for Deloitte’s financial services practice. Ms. Jambusaria earned her B.S. in economics from the Wharton School at the University of Pennsylvania and her M.B.A. from Northwestern University’s Kellogg School of Management. PART II
Removed
Arnold — President and Chief Executive Officer Mr. Arnold has served as our chief executive officer since January 2017. He has served as our president since March 2015 with responsibility for our primary client-facing functions and long-term strategy for growth. Mr.
Added
Steinmeier has served as our chief executive officer since October 2024. Prior to being appointed as our chief executive officer, Mr. Steinmeier served as managing director, chief growth officer from May 2024 to October 2024 and as managing director and divisional president, business development of LPL Financial from August 2018 to May 2024.
Removed
Arnold served as our chief financial officer from June 2012 to March 2015 and was responsible for formulating financial policy, leading our capital management efforts and ensuring the effectiveness of the organization’s financial functions.
Added
Althea Brown — Managing Director, Chief Legal Officer and Corporate Secretary Ms. Brown has served as managing director, chief legal officer since September 2023.
Removed
Prior to 2012, he was managing director, head of strategy, with responsibility for long-term strategic planning for the firm, product and platform development and strategic investments, including acquisitions. He has also served as divisional president of our Institution Services. Mr. Arnold joined our Company in January 2007 following our acquisition of UVEST Financial Services Group, Inc.
Added
She is responsible for leading the firm’s corporate law and government relations, litigation and regulatory affairs, legal operations and legal technology She is also responsible for leading the teams that support the LPL Financial Charitable Foundation and community impact initiatives. Ms.
Removed
Prior to joining us, Mr. Arnold worked at UVEST for 13 years serving most recently as president and chief operating officer. Mr. Arnold earned a B.S. in electrical engineering from Auburn University and holds an M.B.A. in finance from Georgia State University. Matthew J. Audette — Chief Financial Officer and Head of Business Operations Mr.
Added
In this role, he is responsible for uniting strategy and innovation functions to continuously elevate the client experience. This organization includes the development of the firm’s corporate strategy including business line and affiliation strategy for independent advisors, large enterprises and institutional channels, as well as LPL Business Services and the Emerging Solutions lab. Mr.
Removed
In addition, he oversees the teams responsible for delivering operational speed and transparency, along with continued strong compliance and risk management, to the Company’s advisors and enterprises. Since joining LPL Financial in 2015 as chief financial officer, Mr. Audette has led corporate acquisitions, debt transactions, the client deposit portfolio, expense management and capital allocation.
Added
Cohen joined LPL Financial in 2018 to help lead the firm’s development of new advisor affiliation models, expanding its attractiveness to wirehouse breakaways and RIAs. From there, his role evolved to run corporate strategy and further develop creative and innovative ways for the Company to partner with advisors throughout their lifecycle, including the firm’s Liquidity & Succession offering.
Removed
In this role, she is responsible for the development and delivery of LPL Financial’s portfolio of business services, planning and advice services, and value-added consultation functions, which address key challenges advisors and enterprises face in serving investors and operating their businesses. Ms.
Added
Prior to joining LPL Financial, Mr. Cohen was already developing deep relationships in the industry from his early career roles as an intern through to becoming chief operating officer at MarketCounsel. Mr. Cohen earned a B.Accy. in Accountancy from The George Washington University. Sara Dadyar — Managing Director, Chief Human Resources Officer Ms.
Removed
He is responsible for LPL Financial’s technology platforms and wealth management offerings, ensuring the delivery of innovative products to advisors and clients.
Added
Dadyar joined LPL Financial in January 2024 from Proterra Inc., where she served as the chief people officer from October 2022 to December 2023. Prior to Proterra, Ms.
Removed
In this role, he provides strategic leadership and direction to the wealth management solutions, investment research, investor product experience, advisor technology products, and data and analytics teams, who are focused on delivering wealth solutions and digital capabilities for our advisors and enterprises, to enable them to continue driving growth and productivity in all areas of their businesses.
Added
In this role, she leads the wealth management organization, which is responsible for delivering a portfolio of solutions that enable advisors and institutions to offer a differentiated end-to-end wealth management experience for their clients.
Removed
Prior to joining LPL Financial, Mr. Sethi spent 18 years at Merrill Lynch, at which he held several leadership positions, including managing director in Bank of America’s Global Wealth & Investment Management division.
Added
The 34 Table of Contents wealth management organization is committed to building the core of the advisor value proposition with capabilities spanning investment, advisory, banking and lending, trading, trust, insurance and financial planning to enable the most successful wealth practices in the industry. Ms.
Removed
He also served as head of Digital for Merrill Lynch Wealth Management and was responsible for digital platforms, including the financial advisor experience, wealth planning, and social media. Mr. Sethi earned a B.A. in economics from St. Stephen’s College at Delhi University, an M.I.B. from Columbia University, and an M.B.A. from Indian Institute of Management.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed6 unchanged
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans The table below sets forth information on compensation plans under which our equity securities are authorized for issuance as of December 31, 2023: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 546,820 $ 54.81 12,796,123 36 Table of Contents Purchases of Equity Securities by the Issuer The table below sets forth information regarding share repurchases, reported on a trade date basis, during the three months ended December 31, 2023: Period Total number of shares purchased Weighted-average price paid per share Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program (millions) (1) October 1, 2023 through October 31, 2023 50,145 $ 223.28 50,145 $ 1,113.8 November 1, 2023 through November 30, 2023 569,041 $ 223.36 569,041 $ 986.7 December 1, 2023 through December 31, 2023 394,277 $ 219.96 394,277 $ 900.0 Total 1,013,463 1,013,463 (1) On September 21, 2022, the Board authorized a $2.1 billion increase to the amount available for repurchases of the Company’s issued and outstanding common shares, with $2.0 billion available for repurchases beginning in 2023.
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans The table below sets forth information on compensation plans under which our equity securities are authorized for issuance as of December 31, 2024: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 135,510 $ 61.08 12,513,365 36 Table of Contents Purchases of Equity Securities by the Issuer The table below sets forth information regarding share repurchases, reported on a trade date basis, during the three months ended December 31, 2024: Period Total number of shares purchased Weighted-average price paid per share Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program (millions) (1) October 1, 2024 through October 31, 2024 — $ — — $ 830.0 November 1, 2024 through November 30, 2024 149,729 $ 317.70 149,729 $ 782.4 December 1, 2024 through December 31, 2024 159,487 $ 328.78 159,487 $ 730.0 Total 309,216 309,216 (1) On September 21, 2022, the Board authorized a $2.1 billion increase to the amount available for repurchases of the Company’s issued and outstanding common shares, with $2.0 billion available for repurchases beginning in 2023.
Financial Services Index for the five-year period ended December 31, 2023. The graph assumes a $100 investment at the closing price on December 31, 2018 and reinvestment of the dividends on the respective dividend payment dates without commissions. This graph does not forecast future performance of the Company’s stock.
Financial Services Index for the five-year period ended December 31, 2024. The graph assumes a $100 investment at the closing price on December 31, 2019 and reinvestment of the dividends on the respective dividend payment dates without commissions. This graph does not forecast future performance of the Company’s stock.
As of that date, there were 871 common stockholders of record based on information provided by our transfer agent.
As of that date, there were 791 common stockholders of record based on information provided by our transfer agent.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “LPLA.” The closing sale price as of February 16, 2024 was $257.66 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “LPLA.” The closing sale price as of February 14, 2025 was $373.98 per share.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

6 edited+2 added−2 removed3 unchanged
Biggest changeCorporate Cash: A component of cash and equivalents that includes the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company’s Credit Agreement, which include LPL Financial LLC and The Private Trust Company, N.A., in excess of the capital requirements of the Company’s Credit Agreement, which, in the case of LPL Financial LLC is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with the Uniform Net Capital Rule, and (3) cash and equivalents held at non-regulated subsidiaries.
Biggest changeCorporate Cash: A component of cash and equivalents that includes the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company’s Credit Agreement, which include LPL Financial LLC, LPL Enterprise, LLC, The Private Trust Company, N.A. and certain of Atria Wealth Solutions, Inc.’s introducing broker-dealer subsidiaries, in excess of the capital requirements of the Company’s Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries. 37 Table of Contents Credit Agreement: The Company’s amended and restated credit agreement.
Core G&A: A non-GAAP financial measure defined as total expense excluding the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; brokerage, clearing and exchange; amortization of other intangibles; market fluctuations on employee deferred compensation; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs.
Core G&A: A non-GAAP financial measure defined as total expense excluding the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; brokerage, clearing and exchange; amortization of other intangibles; market fluctuations on employee deferred compensation; losses on extinguishment of debt; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs.
FINRA: The Financial Industry Regulatory Authority. GAAP: Accounting principles generally accepted in the United States of America. Gross profit: A non-GAAP financial measure defined as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation. Indentures: The indentures governing the Company’s senior unsecured notes.
GAAP: Accounting principles generally accepted in the United States of America. Gross Profit: A non-GAAP financial measure defined as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation. Indentures: The indentures governing the Company’s senior unsecured notes.
Dodd-Frank Act: The Dodd-Frank Wall Street Reform and Consumer Protection Act. DOL: The United States Department of Labor. 37 Table of Contents EBITDA: A non-GAAP financial measure defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles. ERISA: The Employee Retirement Income Security Act of 1974.
Dodd-Frank Act: The Dodd-Frank Wall Street Reform and Consumer Protection Act. DOL: The United States Department of Labor. EBITDA: A non-GAAP financial measure defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles. ERISA: The Employee Retirement Income Security Act of 1974. FINRA: The Financial Industry Regulatory Authority.
Item 6. Reserved GLOSSARY OF TERMS Adjusted EPS: A non-GAAP financial measure defined as Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the applicable period.
Adjusted EB ITDA: A non-GAAP financial measure defined as EBITDA plus acquisition costs, certain regulatory charges, losses on extinguishment of debt and amounts related to the departure of the Company’s former CEO. Adjusted EPS: A non-GAAP financial measure defined as Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the applicable period.
Adjusted Net Income: A non-GAAP financial measure defined as net income plus the after-tax impact of amortization of other intangibles, acquisition costs and a regulatory charge related to an investigation of the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal devices or messaging platforms that have not been approved by the Company.
Adjusted Net Income: A non-GAAP financial measure defined as net income plus the after-tax impact of amortization of other intangibles, acquisition costs, certain regulatory charges, losses on extinguishment of debt and amounts related to the departure of the Company’s former CEO. Basis Point: One basis point equals 1/100th of 1%. CEO: Chief Executive Officer. CFO : Chief Financial Officer.
Removed
Basis Point: One basis point equals 1/100th of 1%. CFTC: The Commodity Futures Trading Commission.
Added
Item 6. Reserved GLOSSARY OF TERMS Acquisition Costs: Expenses that include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisitions.
Removed
Credit Agreement: The Company’s amended and restated credit agreement.
Added
CFTC: The Commodity Futures Trading Commission. CODM: Chief Operating Decision Maker.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

118 edited+34 added−24 removed75 unchanged
Biggest changeOur key operating, business and financial metrics are as follows: As of and for the Years Ended December 31, Operating Metrics (dollars in billions) (1) 2023 2022 Advisory and Brokerage Assets (2) Advisory assets $ 735.8 $ 583.1 Brokerage assets 618.2 527.7 Total Advisory and Brokerage Assets $ 1,354.1 $ 1,110.8 Advisory as a % of total Advisory and Brokerage Assets 54.3 % 52.5 % Net New Assets (3) Net new advisory assets $ 76.0 $ 52.4 Net new brokerage assets 28.1 43.5 Total Net New Assets $ 104.1 $ 95.9 Organic Net New Assets Organic net new advisory assets $ 75.0 $ 52.4 Organic net new brokerage assets 25.4 43.5 Total Organic Net New Assets $ 100.4 $ 95.9 Organic advisory net new assets annualized growth (4) 12.9 % 8.1 % Total organic net new assets annualized growth (4) 9.0 % 7.9 % Client Cash Balances Insured cash account sweep $ 34.5 $ 46.8 Deposit cash account sweep 9.3 11.5 Total Bank Sweep 43.8 58.4 Money market sweep 2.4 3.0 Total Client Cash Sweep Held by Third Parties 46.2 61.4 Client cash account 2.3 2.7 Total Client Cash Balances $ 48.5 $ 64.1 Client Cash Balances as a % of Total Assets 3.6% 5.8% 40 Table of Contents As of and for the Years Ended December 31, 2023 2022 Net buy (sell) activity (5) $ 137.6 $ 61.6 Business and Financial Metrics (dollars in millions) Advisors 22,660 21,275 Average total assets per advisor (6) $ 59.8 $ 52.2 Share repurchases $ 1,100.1 $ 325.0 Dividends $ 92.2 $ 79.8 Leverage ratio (7) 1.63 1.39 Years Ended December 31, Financial Metrics (dollars in millions, except per share data) 2023 2022 Total revenue $ 10,052.8 $ 8,600.8 Net income $ 1,066.3 $ 845.7 Earnings per share (“EPS”), diluted $ 13.69 $ 10.40 Non-GAAP Financial Metrics (dollars in millions, except per share data) Adjusted EPS (8) $ 15.72 $ 11.52 Gross profit (9) $ 4,027.0 $ 3,189.9 EBITDA (10) $ 1,985.8 $ 1,525.3 Core G&A (11) $ 1,369.4 $ 1,191.9 ____________________ (1) Totals may not foot due to rounding.
Biggest changeOur key operating, business and financial metrics are as follows: As of and for the Years Ended December 31, Operating Metrics (dollars in billions) (1) 2024 2023 Advisory and Brokerage Assets (2) Advisory assets $ 957.0 $ 735.8 Brokerage assets 783.7 618.2 Total Advisory and Brokerage Assets $ 1,740.7 $ 1,354.1 Advisory as a % of total Advisory and Brokerage Assets 55.0 % 54.3 % Net New Assets (3) Net new advisory assets $ 137.8 $ 76.0 Net new brokerage assets 97.8 28.1 Total Net New Assets $ 235.6 $ 104.1 Organic Net New Assets Organic net new advisory assets $ 115.3 $ 75.0 Organic net new brokerage assets 25.5 25.4 Total Organic Net New Assets $ 140.7 $ 100.4 40 Table of Contents As of and for the Years Ended December 31, 2024 2023 Organic advisory net new assets annualized growth (4) 15.7 % 12.9 % Total organic net new assets annualized growth (4) 10.4 % 9.0 % Client Cash Balances Insured cash account sweep $ 38.3 $ 34.5 Deposit cash account sweep 10.7 9.3 Total Bank Sweep 49.0 43.8 Money market sweep 4.3 2.4 Total Client Cash Sweep Held by Third Parties 53.3 46.2 Client cash account (5) 1.8 2.0 Total Client Cash Balances $ 55.1 $ 48.2 Client Cash Balances as a % of Total Assets 3.2% 3.6% Net buy (sell) activity (6) $ 153.1 $ 137.6 Business and Financial Metrics (dollars in millions) Advisors 28,888 22,660 Average total assets per advisor (7) $ 60.3 $ 59.8 Share repurchases $ 170.0 $ 1,100.1 Dividends $ 89.7 $ 92.2 Leverage ratio (8) 1.89 1.63 Years Ended December 31, Financial Metrics (dollars in millions, except per share data) 2024 2023 Total revenue $ 12,385.1 $ 10,052.8 Net income $ 1,058.6 $ 1,066.3 Earnings per share (“EPS”), diluted $ 14.03 $ 13.69 Non-GAAP Financial Metrics (dollars in millions, except per share data) Adjusted EPS (9) $ 16.51 $ 15.72 Gross profit (10) $ 4,501.3 $ 4,027.0 Adjusted EBITDA (11) $ 2,224.4 $ 2,073.9 Core G&A (12) $ 1,515.5 $ 1,369.4 ____________________ (1) Totals may not foot due to rounding.
In recent years, and during the period presented in this Annual Report on Form 10-K, we have observed the SEC, FINRA, DOL and state regulators broaden the scope, frequency and depth of their examinations and inquiries to include greater emphasis on the quality, consistency and oversight of our compliance systems and programs.
Business” of this Annual Report on Form 10-K. In recent years, and during the period presented in this Annual Report on Form 10-K, we have observed the SEC, FINRA, DOL and state regulators broaden the scope, frequency and depth of their examinations and inquiries to include greater emphasis on the quality, consistency and oversight of our compliance systems and programs.
Expense Advisory and Commission Advisory and commission expense consists of the following: payout amounts that are earned by and paid out to advisors and enterprises based on advisory and commission revenue earned on each client’s account, production-based bonuses earned by advisors and enterprises based on the levels of advisory and commission revenue they produce, compensation and benefits paid to employee advisors, share-based compensation expense from equity awards granted to advisors and enterprises based on the fair value of the awards at grant date and the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to our advisors.
Expense Advisory and Commission Advisory and commission expense consists of the following: payout amounts that are earned by and paid out to advisors and institutions based on advisory and commission revenue earned on each client’s account, production-based bonuses earned by advisors and institutions based on the levels of advisory and commission revenue they produce, compensation and benefits paid to employee advisors, share-based compensation expense from equity awards granted to advisors and institutions based on the fair value of the awards at grant date and the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to our advisors.
Sales-based commission revenue, which occurs when 46 Table of Contents clients trade securities or purchase various types of investment products, primarily represents gross commissions generated by our advisors and can vary from period to period based on the overall economic environment, number of trading days in the reporting period and investment activity of our advisors’ clients.
Sales-based commission revenue, which occurs when 47 Table of Contents clients trade securities or purchase various types of investment products, primarily represents gross commissions generated by our advisors and can vary from period to period based on the overall economic environment, number of trading days in the reporting period and investment activity of our advisors’ clients.
We also generate asset-based revenue through our insured bank sweep vehicles, money market account balances and the access we provide to a variety of product providers with the following product lines: • Alternative Investments • Retirement Plan Products • Annuities • Separately Managed Accounts • Exchange Traded Products • Structured Products • Insurance Based Products • Unit Investment Trusts • Mutual Funds 38 Table of Contents Under our self-clearing platform, we custody the majority of client assets invested in these financial products, for which we provide statements, transaction processing and ongoing account management.
We also generate asset-based revenue through our insured bank sweep vehicles, money market account balances and the access we provide to a variety of product providers with the following product lines: • Alternative Investments • Retirement Plan Products • Annuities • Separately Managed Accounts • Exchange Traded Products • Structured Products • Insurance Based Products • Unit Investment Trusts • Mutual Funds Under our self-clearing platform, we custody the majority of client assets invested in these financial products, for which we provide statements, transaction processing and ongoing account management.
In addition, each broker-dealer subsidiary’s ability to pay dividends would be restricted if its net capital would be less than 5% of aggregate customer debit balances. 52 Table of Contents LPL Financial also acts as an introducing broker-dealer for commodities and futures.
In addition, each broker-dealer subsidiary’s ability to pay dividends would be restricted if its net capital would be less than 5% of aggregate customer debit balances. 53 Table of Contents LPL Financial also acts as an introducing broker-dealer for commodities and futures.
Credit Agreement EBITDA, a non-GAAP financial measure, is defined by the Credit Agreement as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions .
Credit Agreement EBITDA, a non-GAAP financial measure, is 41 Table of Contents defined by the Credit Agreement as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions .
We serve independent financial advisors and enterprises, providing them with the technology solutions, brokerage and advisory platforms, clearing services, compliance services, consultative practice management programs and training, business services and planning and advice services, and in-house research they need to run successful businesses.
We serve independent financial advisors and institutions, providing them with the technology solutions, brokerage and advisory platforms, clearing services, compliance services, consultative practice management programs and training, business services and planning and advice services, and in-house research they need to run successful businesses.
Dividends from and excess capital generated by LPL Financial are primarily generated through our cash flow from operations. Subject to regulatory approval or notification, capital generated by regulated subsidiaries can be distributed to the Parent to the extent the capital levels exceed regulatory requirements and internal capital thresholds.
Dividends from and excess capital generated by LPL Financial are primarily generated through our cash flow from operations. Subject to regulatory approval or notification, capital generated by regulated subsidiaries can be distributed to the Parent to the extent the capital levels exceed regulatory requirements, Credit Agreement requirements, and internal capital thresholds.
Risk Oversight Committee of LPL Financial The ROC, a management committee chaired by the chief risk officer, oversees our risk management activities, including those of our subsidiaries. The chief risk officer of LPL Financial serves as chair of the ROC, which generally meets once every two months, with additional ad hoc meetings as necessary.
Risk Oversight Committee of LPL Financial The ROC, a management committee chaired by the chief risk officer, oversees our risk management activities, including those of our subsidiaries. The ROC, which generally meets once every two months, with additional ad hoc meetings as necessary.
Advisory revenue collected on our corporate RIA advisory platform is proposed by the advisor and agreed to by the client and was approximately 1% of the underlying assets for the year ended December 31, 2023.
Advisory revenue collected on our corporate RIA advisory platform is proposed by the advisor and agreed to by the client and was approximately 1% of the underlying assets for the year ended December 31, 2024.
Risk Factors” for more information about the risks associated with significant interest rate changes and the potential related effects on our profitability and financial condition. 44 Table of Contents Results of Operations A discussion of changes in our results of operations during the year ended December 31, 2022 compared to the year ended December 31, 2021 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
Risk Factors” for more information about the risks associated with significant interest rate changes and the potential related effects on our profitability and financial condition. 45 Table of Contents Results of Operations A discussion of changes in our results of operations during the year ended December 31, 2023 compared to the year ended December 31, 2022 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
The members of the ROC include certain Managing Directors of LPL Financial, as well as other members of LPL Financial’s senior management team who serve as ex-officio members and represent key control areas of the Company.
The members of the ROC include certain Managing Directors of LPL Financial, as well as other members of LPL Financial’s senior management team who serve as ex-officio/non-voting members and represent key control areas of the Company.
For additional information, see Note 4 - Acquisitions and Note 9 - Goodwill and Other Intangibles, Net within the notes to the consolidated financial statements. Goodwill and Other Intangibles, Net Management also applies judgment when testing for impairment of goodwill and other indefinite-lived intangible assets, including estimating fair values.
For additional information, see Note 4 - Acquisitions and Note 9 - Goodwill and Other Intangibles, Net within the notes to the consolidated financial statements. 59 Table of Contents Goodwill and Other Intangibles, Net Management also applies judgment when testing for impairment of goodwill and other indefinite-lived intangible assets, including estimating fair values.
(the “Parent”), the direct holding company of our operating subsidiaries, considers its primary sources of liquidity to be dividends from and excess capital generated by LPL Financial, as well as capacity for additional borrowing under its $2.0 billion secured revolving credit facility, which it has the ability to borrow against for working capital and general corporate purposes.
(the “Parent”), the direct holding company of our operating subsidiaries, considers its primary sources of liquidity to be dividends from and excess capital generated by LPL Financial, as well as capacity for additional borrowing under its $2.25 billion unsecured revolving credit facility, which it has the ability to borrow against for working capital and general corporate purposes.
Other expense depends in part on the size and timing of resolving regulatory matters and the availability of self-insurance coverage, which in turn depend in part on the amount and timing of resolving historical claims.
Other expense depends in part on the size and timing of resolving regulatory matters and the availability of self-insurance coverage, which depends in part on the amount and timing of resolving historical claims.
See Note 15 - Stockholders’ Equity , within the notes to the consolidated financial statements for additional information regarding our dividends. 51 Table of Contents LPL Financial Liquidity LPL Financial relies primarily on client payables to fund margin lending. LPL Financial maintains additional liquidity through external lines of credit totaling $1.2 billion at December 31, 2023.
See Note 15 - Stockholders’ Equity , within the notes to the consolidated financial statements for additional information regarding our dividends. 52 Table of Contents LPL Financial Liquidity LPL Financial relies primarily on client payables to fund margin lending. LPL Financial maintains additional liquidity through external lines of credit totaling $1.2 billion at December 31, 2024.
Risk Governance Structure Audit and Risk Committee of the Board The ARC oversees and monitors, among other things, the Company’s enterprise risk management (except for risks assigned to other committees of the Board or retained by the Board), and is responsible for reviewing and assessing the Company’s processes to manage and control risk.
Audit and Risk Committee of the Board The ARC oversees and monitors, among other things, the Company’s enterprise risk management (except for risks assigned to other committees of the Board or retained by the Board), and is responsible for reviewing and assessing our processes to manage and control risk.
Internal Audit Department As the third line of defense, the Internal Audit department provides independent and objective assurance of the effectiveness of the Company’s governance, risk management and internal controls by conducting risk assessments and audits designed to identify and cover important risk categories.
They assess the effectiveness of our risk management and internal controls. Internal Audit Department As the third line of defense, the Internal Audit department provides independent and objective assurance of the effectiveness of the Company’s governance, risk management, and internal controls by conducting risk assessments and audits designed to identify and cover important risk categories.
Recently Issued Accounting Pronouncements Refer to Note 2 - Summary of Significant Accounting Policies, within the notes to the consolidated financial statements for a discussion of recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to us. 58 Table of Contents
Recently Issued Accounting Pronouncements Refer to Note 2 - Summary of Significant Accounting Policies, within the notes to the consolidated financial statements for a discussion of recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to us.
(4) Represents interest payments under our Credit Agreement, which include a variable interest payment for our senior secured credit facilities and a fixed interest payment for our senior unsecured notes. Variable interest payments assume the applicable interest rates at December 31, 2023 remain unchanged.
(4) Represents interest payments under our Credit Agreement, which include a variable interest payment for our senior unsecured credit facilities and a fixed interest payment for our senior unsecured notes. Variable interest payments assume the applicable interest rates at December 31, 2024 remain unchanged.
LPL Financial also maintains a line of credit with the Parent. External Liquidity Sources The following table presents amounts outstanding and available under our external lines of credit at December 31, 2023 (in millions): Description Borrower Maturity Date Outstanding Available Senior secured, revolving credit facility LPL Holdings, Inc.
LPL Financial also maintains a line of credit with the Parent. External Liquidity Sources The following table presents amounts outstanding and available under our external lines of credit at December 31, 2024 (in millions): Description Borrower Maturity Date Outstanding Available Senior unsecured, revolving credit facility LPL Holdings, Inc.
As of December 31, 2023, the earliest principal maturity date for our corporate debt with outstanding balances is in 2026 and our revolving credit facilities and uncommitted lines of credit mature between 2024 and 2026.
As of December 31, 2024, the earliest principal maturity date for our corporate debt with outstanding balances is in 2026 and our revolving credit facilities and uncommitted lines of credit mature between 2025 and 2029.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 21, 2024.
(12) See the “Liquidity and Capital Resources” section for additional information about Corporate Cash.
(13) See the “Liquidity and Capital Resources” section for additional information about Corporate Cash.
The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items, acquisition costs and a regulatory charge that management does not believe impact the Company’s ongoing operations.
The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items, acquisition costs and certain other charges that management does not believe impact the Company’s ongoing operations.
Promotional (ongoing) for the years ended December 31, 2023 and December 31, 2022 excludes $3.6 million and $2.3 million, respectively, of expenses incurred as a result of acquisitions, which are included in the acquisition costs line item.
Promotional (ongoing) for the years ended December 31, 2024 and December 31, 2023 excludes $7.0 million and $3.6 million, respectively, of expenses incurred as a result of acquisitions, which are included in the acquisition costs line item.
The following table summarizes activity impacting advisory assets for the periods presented (in billions): Years Ended December 31, 2023 2022 Beginning balance at January 1 $ 583.1 $ 643.2 Net new advisory assets (1) 76.0 52.4 Market impact (2) 76.7 (112.5) Ending balance at December 31 $ 735.8 $ 583.1 ____________________ (1) Net new advisory assets consist of total client deposits into custodied advisory accounts less total client withdrawals from custodied advisory accounts, plus dividends, plus interest, minus advisory fees.
The following table summarizes activity impacting advisory assets for the periods presented (in billions): Years Ended December 31, 2024 2023 Beginning balance at January 1 $ 735.8 $ 583.1 Net new advisory assets (1) 137.8 76.0 Market impact (2) 83.4 76.7 Ending balance at December 31 $ 957.0 $ 735.8 ____________________ (1) Net new advisory assets consist of total client deposits into custodied advisory accounts less total client withdrawals from custodied advisory accounts, plus dividends, plus interest, minus advisory fees.
Advisory revenue increased during the year ended December 31, 2023 as compared to the same period in 2022. The increase during the year ended December 31, 2023 was driven by continued organic growth, which increased advisory asset balances during the period, and a positive market impact as compared to the prior period.
Advisory revenue increased during the year ended December 31, 2024 as compared to the same period in 2023. The increase during the year ended December 31, 2024 was primarily driven by continued organic growth, which increased advisory asset balances during the period, and an increase in the market impact as compared to the prior period.
Our Sources of Revenue Our revenue is derived primarily from fees and commissions from products and advisory services offered by our advisors to their clients, a substantial portion of which we pay out to our advisors, as well as fees we receive from our advisors for the use of our technology, custody, clearing, trust and reporting platforms.
Business” for information related to our business activities. 38 Table of Contents Our Sources of Revenue Our revenue is derived primarily from fees and commissions from products and advisory services offered by our advisors to their clients, a substantial portion of which we pay out to our advisors, as well as fees we receive from our advisors for the use of our technology, custody, clearing, trust and reporting platforms.
March 2026 $ 280 $ 1,720 Broker-dealer revolving credit facility LPL Financial LLC July 2024 $ — $ 1,000 Unsecured, uncommitted lines of credit LPL Financial LLC None $ — $ 75 Unsecured, uncommitted lines of credit LPL Financial LLC September 2024 $ — $ 50 Secured, uncommitted lines of credit LPL Financial LLC March 2025 $ — $ 75 Secured, uncommitted lines of credit LPL Financial LLC None $ — unspecified Secured, uncommitted lines of credit LPL Financial LLC None $ — unspecified Capital Resources The Company seeks to manage capital levels in support of its business strategy of generating and effectively deploying capital for the benefit of our stockholders.
May 2029 $ 1,047 $ 1,203 Broker-dealer revolving credit facility LPL Financial LLC May 2025 $ — $ 1,000 Unsecured, uncommitted lines of credit LPL Financial LLC None $ — $ 75 Unsecured, uncommitted lines of credit LPL Financial LLC September 2025 $ — $ 50 Secured, uncommitted lines of credit LPL Financial LLC March 2025 $ — $ 75 Secured, uncommitted lines of credit LPL Financial LLC None $ — unspecified Secured, uncommitted lines of credit LPL Financial LLC None $ — unspecified Capital Resources The Company seeks to manage capital levels in support of its business strategy of generating and effectively deploying capital for the benefit of our stockholders.
The following table summarizes activity impacting brokerage assets for the periods presented (in billions): Years Ended December 31, 2023 2022 Beginning balance at January 1 $ 527.7 $ 563.2 Net new brokerage assets (1) 28.1 43.5 Market impact (2) 62.4 (79.0) Ending balance at December 31 $ 618.2 $ 527.7 ____________________ (1) Net new brokerage assets consist of total client deposits into brokerage accounts less total client withdrawals from brokerage accounts, plus dividends, plus interest.
The following table summarizes activity impacting brokerage assets for the periods presented (in billions): Years Ended December 31, 2024 2023 Beginning balance at January 1 $ 618.2 $ 527.7 Net new brokerage assets (1) 97.8 28.1 Market impact (2) 67.7 62.4 Ending balance at December 31 $ 783.7 $ 618.2 ____________________ (1) Net new brokerage assets consist of total client deposits into brokerage accounts less total client withdrawals from brokerage accounts, plus dividends, plus interest.
Asset Trends Total advisory and brokerage assets served were $1.4 trillion at December 31, 2023, compared to $1.1 trillion at December 31, 2022. Total net new assets were $104.1 billion for the year ended December 31, 2023, compared to $95.9 billion for the same period in 2022.
Asset Trends Total advisory and brokerage assets served were $1.7 trillion at December 31, 2024, compared to $1.4 trillion at December 31, 2023. Total net new assets were $235.6 billion for the year ended December 31, 2024, compared to $104.1 billion for the same period in 2023.
The required ratios under our financial covenants and actual ratios were as follows: December 31, 2023 Financial Ratio Covenant Requirement Actual Ratio Leverage Ratio (Maximum) 4.0 1.63 Interest Coverage (Minimum) 3.0 12.54 Certain restrictive covenants under certain of our Indentures are currently suspended.
The required ratios under our financial covenants and actual ratios were as follows: December 31, 2024 Financial Ratio Covenant Requirement Actual Ratio Leverage Ratio (Maximum) 4.0 1.89 Interest Coverage (Minimum) 3.0 10.09 Certain restrictive covenants under certain of our Indentures are currently suspended.
Depreciation and amortization expense for the year ended December 31, 2023 increased by $47.2 million compared to 2022, primarily due to our continued investment in technology to support the integrations, enhance our advisor platform and experience, and support onboarding of enterprises.
Depreciation and amortization expense for the year ended December 31, 2024 increased by $61.5 million compared to 2023, primarily due to our continued investment in technology to support the integrations, enhance our advisor platform and experience, and support onboarding of institutions.
(13) The Company recorded a $40.0 million regulatory charge for the year ended December 31, 2023 related to an investigation of the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal 43 Table of Contents devices or messaging platforms that have not been approved by the Company applicable to broker-dealer firms and investment advisors.
The Company recorded a $40.0 million regulatory charge for the year ended December 31, 2023 related to an investigation of the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal devices or messaging platforms that have not been approved by the Company.
During the years ended December 31, 2023 and 2022, LPL Financial paid dividends of $710.0 million and $1.1 billion to the Parent, respectively.
During the years ended December 31, 2024 and 2023, LPL Financial paid dividends of $460.0 million and $710.0 million to the Parent, respectively.
The following table sets forth our payout rate, which is a statistical or operating measure, for the periods presented: Years Ended December 31, 2023 2022 Change Payout rate 86.97 % 87.32 % (35) bps Our payo ut rate decreased fo r the year ended December 31, 2023 compared to 2022, primarily due to the effect of acquisitions during the year and changes in product mix.
The following table sets forth our payout rate, which is a statistical or operating measure, for the periods presented: Years Ended December 31, 2024 2023 Change Payout rate 87.34 % 86.97 % 37 bps Our payo ut r ate increased fo r the year ended December 31, 2024 compared to 2023, primar ily due to the effect of acquisitions during the year and changes in product mix.
We enable them to provide personalized financial guidance to millions of American families seeking wealth management, retirement planning, financial planning and asset management solutions. Please consult Part I, “Item 1. Business” for information related to our business activities.
We enable them to provide personalized financial guidance to millions of American families seeking wealth management, retirement planning, financial planning and asset management solutions. Please consult Part I, “Item 1.
Interest Expense on Borrowings Interest expense on borrowings includes the interest associated with the Company’s senior notes, senior secured Term Loan B (“Term Loan B”) and revolving credit facilities; amortization of debt issuance costs; and fees associated with the Company’s revolving lines of credit.
Interest Expense on Borrowings Interest expense on borrowings includes the interest associated with the Company’s Notes, Term Loan A, Term Loan B (together with our Term Loan A, the “Term Loans”) and revolving credit facilities; amortization of debt issuance costs; and fees associated with the Company’s revolving lines of credit.
Below is a calculation of gross profit for the periods presented (in millions): Years Ended December 31, Gross Profit 2023 2022 Total revenue $ 10,052.8 $ 8,600.8 Advisory and commission expense 5,915.8 5,324.8 Brokerage, clearing and exchange expense 106.0 86.1 Employee deferred compensation (16) 4.1 — Gross Profit (†) $ 4,027.0 $ 3,189.9 ____________________ (†) Totals may not foot due to rounding.
Below is a calculation of gross profit for the periods presented (in millions): Years Ended December 31, Gross Profit 2024 2023 Total revenue $ 12,385.1 $ 10,052.8 Advisory and commission expense 7,751.0 5,915.8 Brokerage, clearing and exchange expense 127.9 106.0 Employee deferred compensation 4.8 4.1 Gross Profit (18)(†) $ 4,501.3 $ 4,027.0 ____________________ (†) Totals may not foot due to rounding.
Interest Income, net We earn interest income primarily from client margin loans, client cash account (“CCA”) balances segregated under federal or other regulations and advisor repayable loans.
Interest Income, net Interest income is primarily generated from bank deposits, client margin loans, client cash account (“CCA”) balances segregated under federal or other regulations and advisor repayable loans.
Certain of the Company’s acquisitions include contingent consideration, which may result in the transfer of additional cash consideration to the sellers if certain asset or revenue growth is achieved in the years following an acquisition.
Contingent Consideration Certain of the Company’s acquisitions include contingent consideration, which may result in the transfer of additional cash consideration to the sellers if certain milestones are achieved in the years following an acquisition.
EBITDA is not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP.
EBITDA and adjusted EBITDA are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP.
Other Expense Other expense includes the costs of the investigation, settlement and resolution of regulatory matters (including customer restitution and remediation), licensing fees, insurance, broker-dealer regulator fees, travel-related expenses and other miscellaneous expenses.
Other Expense Other expense includes the costs of the investigation, settlement and resolution of regulatory matters (including customer restitution and remediation), licensing fees, insurance, broker-dealer regulatory fees, travel-related expenses, fair value adjustments to contingent consideration liabilities, and other miscellaneous expenses.
The increase in sales-based commission revenue in 2023 compared to 2022 was primarily driven by an increase in sales of annuities and fixed income securities as a result of the higher interest rate environment, partially offset by a decrease in sales of mutual funds and equities.
The increase in sales-based commission revenue in 2024 compared to 2023 was primarily driven by an increase in sales of annuities and fixed income securities as a result of the higher interest rate environment for most of the year, as well as increases in sales of mutual funds and equities.
The following table presents the net capital position of the Company’s primary broker-dealer subsidiary (in thousands): December 31, 2023 LPL Financial LLC Net capital $ 205,314 Less: required net capital 16,678 Excess net capital $ 188,636 Payment by our broker-dealer subsidiaries of dividends greater than 10% of their respective excess net capital during any 35-day rolling period requires approval from FINRA.
The following table presents the net capital position of the Company’s primary broker-dealer subsidiary (in thousands): December 31, 2024 LPL Financial LLC Net capital $ 443,742 Less: required net capital 19,426 Excess net capital $ 424,316 Payment by our broker-dealer subsidiaries of dividends greater than 10% of their respective excess net capital during any 35-day rolling period requires approval from FINRA.
Promotional expense for the year ended December 31, 2023 increased by $119.2 million compared to 2022, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention.
Promotional expense for the year ended December 31, 2024 increased by $130.1 million compared to 2023, primarily due to increases in large bank integration labor and increases in recruited assets and advisors that led to higher costs to support transition assistance and retention.
Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in millions, except per share data): Years Ended December 31, 2023 2022 Adjusted Net Income / Adjusted EPS Reconciliation Amount Per Share Amount Per Share Net income / earnings per diluted share $ 1,066.3 $ 13.69 $ 845.7 $ 10.40 Regulatory charge (13) 40.0 0.51 — — Amortization of other intangibles 107.2 1.38 87.6 1.08 Acquisition costs (14) 48.1 0.62 36.2 0.44 Tax benefit (37.4) (0.48) (32.7) (0.40) Adjusted Net Income / Adjusted EPS (†) $ 1,224.1 $ 15.72 $ 936.7 $ 11.52 Weighted-average shares outstanding, diluted 77.9 81.3 ____________________ (†) Totals may not foot due to rounding. 42 Table of Contents (9) Gross profit is a non-GAAP financial measure defined as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation.
Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in millions, except per share data): Years Ended December 31, 2024 2023 Adjusted Net Income / Adjusted EPS Reconciliation Amount Per Share Amount Per Share Net income / earnings per diluted share $ 1,058.6 $ 14.03 $ 1,066.3 $ 13.69 Regulatory charge (15) 18.0 0.24 40.0 0.51 Amortization of other intangibles 135.2 1.79 107.2 1.38 Acquisition costs (17) 105.9 1.40 48.1 0.62 Departure of former CEO (18) (14.4) (0.19) — — Loss on extinguishment of debt 4.0 0.05 — — Tax benefit (62.1) (0.82) (37.4) (0.48) Adjusted Net Income / Adjusted EPS (†) $ 1,245.3 $ 16.51 $ 1,224.1 $ 15.72 Weighted-average shares outstanding, diluted 75.4 77.9 ____________________ (†) Totals may not foot due to rounding. 42 Table of Contents (10) Gross profit is a non-GAAP financial measure defined as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation.
The summarized financial information below should be read in conjunction with the Company’s consolidated financial statements contained herein as the summarized financial information for the Obligor Group may not be indicative of results of operations or financial position of the Issuer or LPLFH had they operated as independent entities.
The summarized financial information below should be read in conjunction with the Company’s consolidated financial statements contained herein as the summarized financial information for the Obligor Group may not be indicative of results of operations or financial position of the Issuer or LPLFH had they operated as independent entities. 54 Table of Contents The following tables present the summarized financial information for the periods presented (in thousands): LPL Holdings, Inc. & LPL Financial Holdings Inc.
For example, we regularly review the structure and fees of our products and services, including related disclosures, in the context of the changing regulatory environment and competitive landscape for advisory and brokerage accounts. Significant Events Entered into a definitive purchase agreement to acquire Atria Wealth Solutions, Inc.
For example, we regularly review the structure and fees of our products and services, including related disclosures, in the context of the changing regulatory environment and competitive landscape for advisory and brokerage accounts. Significant Events Closed on the acquisition of Atria Wealth Solutions, Inc.
Participation in the ROC by senior officers is intended to ensure that the ROC covers the key risk areas of the Company, including its subsidiaries, and that the ROC thoroughly reviews significant matters relating to risk priorities, policies, control procedures and related exceptions, certain new and complex products and business arrangements, transactions with significant risk elements and identified emerging risks.
Participation in the ROC by senior officers is intended to ensure that the ROC covers the key risk areas of the Company, including its subsidiaries. The ROC thoroughly reviews significant matters relating to risk priorities, policies, control procedures and related exceptions.
Combined Summarized Statements of Financial Condition December 31, 2023 December 31, 2022 Cash and equivalents $ 26,587 $ 448,180 Other receivables, net 2,793 10,926 Property and equipment, net 154,920 165,649 Goodwill 1,251,908 1,251,908 Other intangibles, net 95,461 123,435 Receivables from non-guarantor subsidiaries 153,377 86,069 Other assets 1,017,289 705,048 Corporate debt and other borrowings, net 3,734,111 2,717,444 Accounts payable and accrued liabilities 53,817 32,060 Payables to non-guarantor subsidiaries 76,683 67,135 Other liabilities 986,274 839,479 53 Table of Contents Debt and Related Covenants The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: • incur additional indebtedness or issue disqualified stock or preferred stock; • declare dividends, or other distributions to stockholders; • repurchase equity interests; • redeem indebtedness that is subordinated in right of payment to certain debt instruments; • make investments or acquisitions; • create liens; • sell assets; • guarantee indebtedness; • engage in certain transactions with affiliates; • enter into agreements that restrict dividends or other payments from subsidiaries; and • consolidate, merge or transfer all or substantially all of our assets.
Combined Summarized Statements of Financial Condition December 31, 2024 December 31, 2023 Cash and equivalents $ 39,782 $ 26,587 Other receivables, net 15,032 2,793 Property and equipment, net 161,845 154,920 Goodwill 1,251,908 1,251,908 Other intangibles, net 67,486 95,461 Receivables from non-guarantor subsidiaries 148,855 153,377 Other assets 1,333,061 1,017,289 Corporate debt and other borrowings, net 5,494,724 3,734,111 Accounts payable and accrued liabilities 66,818 53,817 Payables to non-guarantor subsidiaries 101,400 76,683 Other liabilities 1,247,792 986,274 Debt and Related Covenants The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: • incur additional indebtedness or issue disqualified stock or preferred stock; • declare dividends, or other distributions to stockholders; • repurchase equity interests; • redeem indebtedness that is subordinated in right of payment to certain debt instruments; • make investments or acquisitions; • create liens; • sell assets; • guarantee indebtedness; • engage in certain transactions with affiliates; • enter into agreements that restrict dividends or other payments from subsidiaries; and • consolidate, merge or transfer all or substantially all of our assets.
(2) Consists of total advisory and brokerage assets under custody at the Company’s primary broker-dealer subsidiary, LPL Financial. Please consult the “ Results of Operations” section for a tabular presentation of advisory and brokerage assets.
(2) Consists of total advisory and brokerage assets under custody at the Company’s primary broker-dealer subsidiary, LPL Financial, as well as assets under custody of a third-party custodian related to Atria’s seven introducing broker-dealer subsidiaries. Please consult the “ Results of Operations” section for a tabular presentation of advisory and brokerage assets.
Below are reconciliations of corporate debt and other borrowings to Credit Agreement net debt as of the dates below and net income to EBITDA and Credit Agreement EBITDA for the periods presented (in millions): December 31, Credit Agreement Net Debt Reconciliation 2023 2022 Corporate debt and other borrowings $ 3,757.2 $ 2,737.9 Corporate Cash (12) (183.7) (459.4) Credit Agreement Net Debt (†) $ 3,573.5 $ 2,278.5 Years Ended December 31, EBITDA and Credit Agreement EBITDA Reconciliation 2023 2022 Net income $ 1,066.3 $ 845.7 Interest expense on borrowings 186.8 126.2 Provision for income taxes 378.5 266.0 Depreciation and amortization 247.0 199.8 Amortization of other intangibles 107.2 87.6 EBITDA (†) $ 1,985.8 $ 1,525.3 Credit Agreement Adjustments: Acquisition costs and other (13)(14) $ 110.2 $ 50.7 Employee share-based compensation 66.0 50.1 M&A accretion (15) 30.3 10.6 Advisor share-based compensation 2.6 2.5 Credit Agreement EBITDA (†) $ 2,194.8 $ 1,639.1 December 31, 2023 2022 Leverage Ratio 1.63 1.39 ____________________ (†) Totals may not foot due to rounding.
Below are reconciliations of corporate debt and other borrowings to Credit Agreement net debt as of the dates below and net income to EBITDA and Credit Agreement EBITDA for the periods presented (in millions): December 31, Credit Agreement Net Debt Reconciliation 2024 2023 Corporate debt and other borrowings $ 5,517.0 $ 3,757.2 Corporate Cash (13) (479.4) (183.7) Credit Agreement Net Debt (†) $ 5,037.6 $ 3,573.5 Years Ended December 31, EBITDA and Credit Agreement EBITDA Reconciliation 2024 2023 Net income $ 1,058.6 $ 1,066.3 Interest expense on borrowings 274.2 186.8 Provision for income taxes 334.3 378.5 Depreciation and amortization 308.5 247.0 Amortization of other intangibles 135.2 107.2 EBITDA (†) $ 2,110.8 $ 1,985.8 Credit Agreement Adjustments: Acquisition costs and other (14)(15) $ 223.6 $ 110.2 Employee share-based compensation 89.0 66.0 M&A accretion (16) 235.0 30.3 Advisor share-based compensation 2.6 2.6 Loss on extinguishment of debt 4.0 — Credit Agreement EBITDA (†) $ 2,665.0 $ 2,194.8 December 31, 2024 2023 Leverage Ratio 1.89 1.63 ____________________ (†) Totals may not foot due to rounding.
Transaction revenue for the year ended December 31, 2023 increased by $18.7 million compared to 2022, primarily due to increases in the number of transactions and transaction charges for fixed income products, partially offset by a decrease in charges for managed assets.
Transaction revenue for the year ended December 31, 2024 increased by $36.3 million compared to 2023, primarily due to increases in the volume of transactions for structured products, partially offset by a decrease in charges for managed assets.
Compensation and Human Resources Committee of the Board In addition to its other responsibilities, the Compensation and Human Resources Committee of the Board assesses whether our compensation arrangements encourage inappropriate risk-taking, and whether risks arising from our compensation arrangements are reasonably likely to have a material adverse effect on the Company.
The ARC reports to the Board on a regular basis and coordinates with the Board and other Board committees with respect to the oversight of risk management and risk assessment guidelines. 57 Table of Contents Compensation and Human Resources Committee of the Board In addition to its other responsibilities, the Compensation and Human Resources Committee of the Board assesses whether our compensation arrangements encourage inappropriate risk-taking, and whether risks arising from our compensation arrangements are reasonably likely to have a material adverse effect on the Company.
Net new advisory assets were $76.0 billion for the year ended December 31, 2023, compared to $52.4 billion in 2022. Advisory assets were $735.8 billion, or 54.3% of total advisory and brokerage assets served, at December 31, 2023, up 26% from $583.1 billion at December 31, 2022.
Net new advisory assets were $137.8 billion for the year ended December 31, 2024, compared to $76.0 billion in 2023. Advisory assets were $957.0 billion, or 55.0% of total advisory and brokerage assets served, at December 31, 2024, up 30% from $735.8 billion at December 31, 2023.
See Note 4 - Acquisitions and Note 14 - Commitments and Contingencies , within the notes to the consolidated financial statements for further detail. 49 Table of Contents Provision for Income Taxes Our effective income tax rate was 26.2% and 23.9% for the years ended December 31, 2023 and 2022, respectively.
See Note 4 - Acquisitions, Note 11 - Corporate Debt and Other Borrowings, Net , and Note 14 - Commitments and Contingencies , within the notes to the consolidated financial statements for further detail. Provision for Income Taxes Our effective income tax rate was 24.0% and 26.2% for the years ended December 31, 2024 and 2023, respectively.
The following table summarizes the composition of advisory assets for the periods presented (in billions): December 31, 2023 2022 $ Change % Change Corporate advisory assets $ 496.5 $ 389.1 $ 107.4 28 % Independent RIA advisory assets 239.3 194.0 45.3 23 % Total advisory assets $ 735.8 $ 583.1 $ 152.7 26 % Net new advisory assets are generated throughout the quarter, therefore, the full impact of net new advisory assets to advisory revenue is not realized in the same period.
The following table summarizes the composition of advisory assets for the periods presented (in billions): December 31, 2024 2023 $ Change % Change Corporate advisory assets $ 678.3 $ 496.5 $ 181.8 37 % Independent RIA advisory assets 278.7 239.3 39.4 16 % Total advisory assets $ 957.0 $ 735.8 $ 221.2 30 % Net new advisory assets are generated throughout the quarter, therefore, the full impact of net new advisory assets to advisory revenue is not realized in the same period.
Interest income, net for the year ended December 31, 2023 increased compared to 2022, primarily due to increases in interest earned on bank deposits, short-term U.S. treasury bills and margin loans, partially offset by an increase in interest paid on CCA balances.
Interest income, net for the year ended December 31, 2024 increased compared to 2023, primarily due to increases in average daily balances of bank deposits, short-term U.S. treasury bills and margin loans.
Below is a reconciliation of the Company’s total expense to core G&A for the periods presented (in millions): Years Ended December 31, Core G&A Reconciliation 2023 2022 Total expense $ 8,608.1 $ 7,489.2 Advisory and commission (5,915.8 ) (5,324.8 ) Depreciation and amortization (247.0 ) (199.8 ) Interest expense on borrowings (186.8 ) (126.2 ) Amortization of other intangibles (107.2 ) (87.6 ) Brokerage, clearing and exchange (106.0 ) (86.1 ) Employee deferred compensation (16) (4.1 ) — Total G&A (†) 2,041.2 1,664.7 Promotional (ongoing) (14)(17) (486.3 ) (353.9 ) Regulatory charges (13) (71.3 ) (32.6 ) Employee share-based compensation (66.0 ) (50.1 ) Acquisition costs (14) (48.1 ) (36.2 ) Core G&A (†) $ 1,369.4 $ 1,191.9 ____________________ (†) Totals may not foot due to rounding.
Below is a reconciliation of the Company’s total expense to core G&A for the periods presented (in millions): Years Ended December 31, Core G&A Reconciliation 2024 2023 Total expense $ 10,992.2 $ 8,608.1 Advisory and commission (7,751.0 ) (5,915.8 ) Depreciation and amortization (308.5 ) (247.0 ) Interest expense on borrowings (274.2 ) (186.8 ) Amortization of other intangibles (135.2 ) (107.2 ) Brokerage, clearing and exchange (127.9 ) (106.0 ) Employee deferred compensation (4.8 ) (4.1 ) Loss on extinguishment of debt (4.0 ) — Total G&A (†) 2,386.5 2,041.2 Promotional (ongoing) (17)(19) (628.9 ) (486.3 ) Regulatory charges (15) (47.3 ) (71.3 ) Employee share-based compensation (89.0 ) (66.0 ) Acquisition costs (17) (105.9 ) (48.1 ) Core G&A (†) $ 1,515.5 $ 1,369.4 ____________________ (†) Totals may not foot due to rounding.
Brokerage, clearing and exchange expense for the year ended December 31, 2023 increased by $19.9 million compared to 2022, primarily due to an increase in the volume of trades and expenses for quote services.
These fees fluctuate largely in line with the volume of sales and trading activity. Brokerage, clearing and exchange expense for the year ended December 31, 2024 increased by $22.0 million compared to 2023, primarily due to an increase in the volume of trades and expenses for quote services.
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP, which requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
Operational risk is reviewed, monitored and challenged by the Operational Risk Oversight Committee, which is a subcommittee of the ROC. 58 Table of Contents Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with GAAP, which requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
Combined Summarized Statements of Income Year Ended December 31, 2023 Revenues (1) $ 105,631 Revenues from non-guarantor subsidiaries 21,340 Advisory and commission expense (1) 104,987 Interest expense on borrowings 182,559 Expenses from non-guarantor subsidiaries 14,034 Loss before provision for income taxes (251,223) Net loss (185,794) ____________________ (1) Revenues primarily include unrealized gains and losses on assets held in the non-qualified deferred compensation plan offered to advisors and employees, while advisory and commission expense includes the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to advisors.
Combined Summarized Statements of Income Year Ended December 31, 2024 Revenues (1) $ 107,153 Revenues from non-guarantor subsidiaries 16,246 Advisory and commission expense (1) 103,333 Interest expense on borrowings 270,278 Expenses from non-guarantor subsidiaries 22,800 Loss before provision for income taxes (354,528) Net loss (269,956) ____________________ (1) Revenues primarily include unrealized gains and losses on assets held in the non-qualified deferred compensation plan offered to advisors and employees, while advisory and commission expense includes the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to advisors.
The responsibilities of such subcommittees include, for example, oversight of operational risk; oversight of the approval of new and complex investment products offered to advisors’ clients; oversight of the firm’s technology; and issues and trends related to advisor compliance.
The responsibilities of such subcommittees include, for example, oversight of operational risk; oversight of the approval of new and complex investment products offered to advisors’ clients; oversight of our technology; and issues and trends related to advisor compliance. Regulatory and Compliance Risk The regulatory environment in which we operate is discussed in detail within Part I, “Item 1.
Management maintains a set of liquidity sources and monitors certain business trends and market metrics closely in an effort to ensure we have sufficient liquidity.
Our liquidity needs at LPL Financial are driven primarily by the level and volatility of our client activity. Management maintains a set of liquidity sources and monitors certain business trends and market metrics closely in an effort to ensure we have sufficient liquidity.
(17) Promotional (ongoing) for the years ended December 31, 2023 and December 31, 2022 includes $30.7 million and $16.1 million, respectively, of support costs related to full-time employees that are classified within compensation and benefits expense in the consolidated statements of income.
See Note 16 - Share-Based Compensation, Employee Incentives and Benefit Plans, within the notes to the consolidated financial statements for additional information. 44 Table of Contents (19) Promotional (ongoing) for the years ended December 31, 2024 and December 31, 2023 includes $46.6 million and $30.7 million, respectively, of support costs related to full-time employees that are classified within compensation and benefits expense in the consolidated statements of income.
The Credit Agreement defines Credit Agreement EBITDA as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions.
The Credit Agreement defines Credit Agreement EBITDA as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions. 55 Table of Contents As of December 31, 2024, we were in compliance with our Credit Agreement financial covenants, which include a maximum Consolidated Total Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement) or “Leverage Ratio” and a minimum Consolidated EBITDA to Consolidated Interest Expense Ratio (as defined in the Credit Agreement) or “Interest Coverage.” The breach of these financial covenants would be subject to certain equity cure rights.
Common Stock Dividends The payment, timing and amount of any dividends are subject to approval by the Board, as well as certain limits under our Credit Agreement. The Board approved an increase to the quarterly cash dividend to $0.30 per share beginning in the first quarter of 2023.
Common Stock Dividends The payment, timing and amount of any dividends are subject to approval by LPLFH’s Board, as well as certain limits under our Credit Agreement.
(6) Calculated based on the end of period total advisory and brokerage assets divided by the end of period advisor count. 41 Table of Contents (7) The leverage ratio is a financial metric from our Credit Agreement and is calculated by dividing Credit Agreement net debt, which equals consolidated total debt less Corporate Cash, by Credit Agreement EBITDA.
(8) The leverage ratio is a financial metric from our Credit Agreement and is calculated by dividing Credit Agreement net debt, which equals consolidated total debt less Corporate Cash, by Credit Agreement EBITDA.
Bureau of Economic Analysis, the U.S. economy grew 2.5% in 2023, and at an annualized pace of 3.3% in the fourth quarter of 2023 after growing at an annualized pace of 4.9% in the third quarter of 2023.
Bureau of Economic Analysis, the U.S. economy grew 2.8% in 2024, and at an annualized pace of 2.3% in the fourth quarter of 2024 after growing at an annualized pace of 3.1% in the third quarter of 2024. The U.S. economy added approximately 511,000 jobs in the fourth quarter of 2024, up from 477,000 in the third quarter.
Internal Audit reports directly to the ARC, which provides oversight of Internal Audit’s activities and approves its annual plan. The Internal Audit department reports to the ARC at least quarterly. 56 Table of Contents Operational Risk Operational Risk is reviewed, monitored and challenged by the Operational Risk Oversight Committee (the “OROC”), which is a subcommittee of the ROC.
Internal Audit reports directly to the ARC, which provides oversight of Internal Audit’s activities and approves its annual plan. The Internal Audit department reports to the ARC at least quarterly.
The following discussion presents an analysis of our results of operations for the years ended December 31, 2023 and 2022 (in thousands): Years Ended December 31, 2023 2022 % Change REVENUE Advisory $ 4,135,681 $ 3,875,154 7 % Commission: Trailing 1,299,840 1,292,358 1 % Sales-based 1,252,783 1,033,806 21 % Total commission 2,552,623 2,326,164 10 % Asset-based: Client cash 1,509,869 953,624 58 % Other asset-based 867,860 806,649 8 % Total asset-based 2,377,729 1,760,273 35 % Service and fee 508,437 467,381 9 % Transaction 199,939 181,260 10 % Interest income, net 159,415 77,126 107 % Other 119,024 (86,533) n/m Total revenue 10,052,848 8,600,825 17 % EXPENSE Advisory and commission 5,915,807 5,324,827 11 % Compensation and benefits 979,681 820,736 19 % Promotional 459,233 339,994 35 % Occupancy and equipment 248,620 219,798 13 % Depreciation and amortization 246,994 199,817 24 % Interest expense on borrowings 186,804 126,234 48 % Amortization of other intangibles 107,211 87,560 22 % Brokerage, clearing and exchange 105,984 86,063 23 % Communications and data processing 75,717 67,687 12 % Professional services 72,583 72,519 — % Other 209,439 143,937 46 % Total expense 8,608,073 7,489,172 15 % INCOME BEFORE PROVISION FOR INCOME TAXES 1,444,775 1,111,653 30 % PROVISION FOR INCOME TAXES 378,525 265,951 42 % NET INCOME $ 1,066,250 $ 845,702 26 % 45 Table of Contents Revenue Advisory Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate RIA advisory platform and is based on a percentage of the market value of the eligible assets in the clients’ advisory accounts.
The following discussion presents an analysis of our results of operations for the years ended December 31, 2024 and 2023 (in thousands): Years Ended December 31, 2024 2023 % Change REVENUE Advisory $ 5,461,858 $ 4,135,681 32 % Commission: Sales-based 1,763,232 1,252,783 41 % Trailing 1,542,255 1,299,840 19 % Total commission 3,305,487 2,552,623 29 % Asset-based: Client cash 1,426,528 1,509,869 (6 %) Other asset-based 1,071,170 867,860 23 % Total asset-based 2,497,698 2,377,729 5 % Service and fee 552,020 508,437 9 % Transaction 236,274 199,939 18 % Interest income, net 187,606 159,415 18 % Other 144,164 119,024 21 % Total revenue 12,385,107 10,052,848 23 % EXPENSE Advisory and commission 7,751,006 5,915,807 31 % Compensation and benefits 1,136,717 979,681 16 % Promotional 589,339 459,233 28 % Depreciation and amortization 308,527 246,994 25 % Occupancy and equipment 281,210 248,620 13 % Interest expense on borrowings 274,181 186,804 47 % Amortization of other intangibles 135,234 107,211 26 % Brokerage, clearing and exchange 127,941 105,984 21 % Professional services 93,729 72,583 29 % Communications and data processing 75,838 75,717 — % Other 218,493 209,439 4 % Total expense 10,992,215 8,608,073 28 % INCOME BEFORE PROVISION FOR INCOME TAXES 1,392,892 1,444,775 (4 %) PROVISION FOR INCOME TAXES 334,276 378,525 (12 %) NET INCOME $ 1,058,616 $ 1,066,250 (1 %) 46 Table of Contents Revenue Advisory Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate RIA advisory platform and is based on a percentage of the market value of the eligible assets in the clients’ advisory accounts.
The subcommittees meet regularly and are responsible for keeping the ROC informed and escalating issues in accordance with the Company’s escalation protocols.
Subcommittees of the Risk Oversight Committee The ROC has established multiple subcommittees to support effective supervision of our risk exposures and processes. The subcommittees meet regularly and are responsible for keeping the ROC informed and escalating issues in accordance with the Company’s escalation protocols.
Other revenue for the year ended December 31, 2023 increased by $205.6 million compared to 2022, primarily due to unrealized gains on assets held in our advisor non-qualified deferred compensation plan, which are based on the market performance of the underlying investment allocations chosen by advisors in the plan, and a related increase in dividend income on assets held in our advisor non-qualified deferred compensation plan.
This increase was partially offset by a net decrease in realized and unrealized gains on assets held in our advisor non-qualified deferred compensation plan, which are based on the market performance of the underlying investment allocations chosen by advisors in the plan, and a related increase in dividend income on assets held in our advisor non-qualified deferred compensation plan.
Service and Fee Service and fee revenue is generated from advisor and retail investor services, including technology, insurance, conferences, licensing, business services and planning and advice services, IRA custodian and other client account fees. We charge separate fees to RIAs on our Independent RIA advisory platform for technology, clearing, administrative, oversight and custody services, which may vary.
Service and Fee Service and fee revenue is generated from advisor and retail investor services, including technology, insurance, conferences, licensing, business services and planning and advice services, IRA custodian and other client account fees.
We believe liquidity is of critical importance to the Company and, in particular, to LPL Financial, our primary broker-dealer subsidiary. The objective of our policies is to ensure that we can meet our strategic, operational and regulatory liquidity and capital requirements under both normal operating conditions and under periods of stress in the financial markets.
The objective of our policies is to ensure that we can meet our strategic, operational and regulatory liquidity and capital requirements under both normal operating conditions and under periods of stress in the financial markets. Liquidity Our liquidity needs are primarily driven by capital requirements at LPL Financial, interest due on our corporate debt and other capital returns to stockholders.
Net new brokerage assets were $28.1 billion for the year ended December 31, 2023, compared to $43.5 billion in 2022.
Net new brokerage assets were $97.8 billion for the year ended December 31, 2024, compared to $28.1 billion in 2023. Brokerage assets were $783.7 billion at December 31, 2024, up 27% from $618.2 billion at December 31, 2023.
See Note 14 - Commitments and Contingencies , within the notes to the consolidated financial statements for further detail. (14) Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisition.
(17) Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of acquisitions.

… 96 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+7 added−0 removed18 unchanged
Biggest changeWhile our senior secured term loan is subject to increases in interest rates, we do not believe that a short-term change in interest rates would have a material impact on our net income given revenue generated by our client cash balances, which is generally subject to the same, but off-setting, interest rate risk. 59 Table of Contents The following table summarizes the impact of increasing interest rates on our interest expense from the variable portion of our debt outstanding, calculated using the projected average outstanding balance over the subsequent twelve-month period (in thousands): Outstanding Balance at December 31, 2023 Annual Impact of an Interest Rate ( † ) Increase of 10 Basis 25 Basis 50 Basis 100 Basis Corporate Debt and Other Borrowings Points Points Points Points Term Loan B $ 1,027,200 $ 1,023 $ 2,558 $ 5,116 $ 10,232 Revolving Credit Facility 280,000 280 700 1,400 2,800 Variable-Rate Debt Outstanding $ 1,307,200 $ 1,303 $ 3,258 $ 6,516 $ 13,032 ____________________ (†) Our interest rate for our Term Loan B is locked in for one, two, three, six or twelve months as allowed under the Credit Agreement.
Biggest changeThe following table summarizes the impact of increasing interest rates on our interest expense from the variable portion of our debt outstanding, calculated using the projected average outstanding balance over the subsequent twelve-month period (in thousands): Outstanding Balance at December 31, 2024 Annual Impact of an Interest Rate ( † ) Increase of 10 Basis 25 Basis 50 Basis 100 Basis Corporate Debt and Other Borrowings Points Points Points Points Term Loan A $ 1,020,000 $ 1,020 $ 2,550 $ 5,100 $ 10,200 Revolving Credit Facility 1,047,000 1,047 2,618 5,235 10,470 Variable-Rate Debt Outstanding $ 2,067,000 $ 2,067 $ 5,168 $ 10,335 $ 20,670 ____________________ (†) Our interest rate for our Term Loan A is locked in for one, two, three, six or twelve months as allowed under the Credit Agreement.
Our FDIC insured sweep vehicles include an (1) ICA for individuals, trusts, sole proprietorships and entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts and other organizations and (2) an insured deposit cash account (“DCA”) for advisory individual retirement accounts.
Our FDIC insured sweep vehicles include an (1) insured cash account (“ICA”) for individuals, trusts, sole proprietorships and entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts and other organizations and (2) an insured deposit cash account (“DCA”) for advisory individual retirement accounts.
See Note 5 - Fair Value Measurements within the notes to the consolidated financial statements for information regarding the fair value of trading securities, securities sold, but not yet purchased and other assets associated with our client facilitation activities. Interest Rate Risk We are exposed to risk associated with changes in interest rates.
See Note 5 - Fair Value 61 Table of Contents Measurements within the notes to the consolidated financial statements for information regarding the fair value of trading securities, securities sold, but not yet purchased and other assets associated with our client facilitation activities. Interest Rate Risk We are exposed to risk associated with changes in interest rates.
By meeting promptly around the time of Federal Open Market Committee meetings, or for other market or non-market reasons, the RSC considers financial risk of the deposit sweep vehicles relative to other products into which clients may move cash balances.
By meeting promptly around the time of Federal Open Market Committee meetings, or for other market or non-market reasons, the RSC considers financial risk of the deposit sweep vehicles relative to other products into which clients may move cash balances. 62 Table of Contents
We seek to limit this risk through review of the underlying business and the use of limits established by senior management taking into consideration factors including current market conditions, the financial strength of the counterparty, the size of the position or commitment, the expected duration of the position or commitment and other positions or commitments outstanding. 61 Table of Contents
We seek to limit this risk through review of the underlying business and the use of our risk appetite limits established by senior management taking into consideration factors including current market conditions, the financial strength of the counterparty, the size of the position or commitment, the expected duration of the position or commitment and other positions or commitments outstanding.
We are subject to credit risk from certain loans extended to advisors and enterprises when we extend loans with repayment terms to facilitate advisors’ and enterprises’ transition to our platform or to fund business development activities.
We are subject to credit risk from certain loans extended to advisors and institutions when we extend loans with repayment terms to facilitate advisors’ and institutions’ transition to our platform or to fund business development activities.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market Risk We maintain trading securities and securities sold, but not yet purchased in order to facilitate client transactions, to meet a portion of our clearing deposit requirements at various clearing organizations, to track the performance of our research models and in connection with our dividend reinvestment program.
Market Risk We maintain trading securities and securities sold, but not yet purchased in order to facilitate client transactions, to meet a portion of our clearing deposit requirements at various clearing organizations, to track the performance of our research models and in connection with our dividend reinvestment program.
As of December 31, 2023, the fair value of our trading securities was $76.1 million, and securities sold, but not yet purchased were not material. The fair value of market risk sensitive instruments entered into for other than trading purposes included within other assets was $858.6 million as of December 31, 2023.
As of December 31, 2024, the fair value of our trading securities was $42.3 million, and securities sold, but not yet purchased were not material. The fair value of market risk sensitive instruments entered into for other than trading purposes included within other assets was $1.1 billion as of December 31, 2024.
As of December 31, 2023, $1.3 billion of our outstanding debt was subject to floating interest rate risk.
As of December 31, 2024, $2.1 billion of our outstanding debt was subject to floating interest rate risk.
Our losses on margin accounts were not material during the years ended December 31, 2023 and 2022. We monitor exposure to industry sectors and individual securities and perform analyses on a regular basis in connection with our margin lending activities.
Our losses on margin accounts were not material during the years ended December 31, 2024 and 2023. We monitor exposure to industry sectors and individual securities and perform analyses on a regular basis in connection with our margin lending activities. We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions.
We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions. 60 Table of Contents We are subject to concentration risk if we extend large loans to or have large commitments with a single counterparty, borrower or group of similar counterparties or borrowers, or if we accept a concentrated position as collateral for a margin loan.
We are subject to concentration risk if we extend large loans to or have large commitments with a single counterparty, borrower or group of similar counterparties or borrowers, or if we accept a concentrated position as collateral for a margin loan.
Our credit exposure in these transactions consists primarily of margin accounts, through which we extend credit to advisors’ clients collateralized by securities in the clients’ accounts.
Credit risk also arises when collateral posted with LPL Financial by clients to support margin lending or derivative trading is insufficient to meet clients’ contractual obligations to LPL Financial. Our credit exposure in these transactions consists primarily of margin accounts, through which we extend credit to advisors’ clients collateralized by securities in the clients’ accounts.
We are also subject to credit risk when a forgivable loan to an advisor or enterprise converts to repayable upon advisor or enterprise termination or change in agreed upon terms. Credit risk also arises when collateral posted with LPL Financial by clients to support margin lending or derivative trading is insufficient to meet clients’ contractual obligations to LPL Financial.
We are also subject to credit risk 60 Table of Contents when a forgivable loan to an advisor or institution converts to repayable upon advisor or institution termination or change in agreed upon terms.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Liquidity Risk Liquidity risk refers to the potential inability to meet, in a timely and cost-effective manner, contractual and contingent financial obligations either on or off-balance sheet, as they come due.
Added
Our primary liquidity needs are driven by transaction settlement, custody requirements, interest on corporate debt, strategic acquisitions, and capital returned to shareholders, among other liquidity needs. We meet our liquidity needs primarily from working capital and cash generated by client activity as well as external financing.
Added
A reduction in our liquidity position could reduce client confidence in us, which could result in the loss of client assets and accounts.
Added
In addition, if our broker-dealer subsidiaries fail to meet regulatory capital guidelines or are unable to obtain regulatory approval, when required, to declare a dividend, regulators could limit the subsidiaries’ ability to pay dividends or limit their operations, which could reduce our liquidity and adversely affect our ability to repay debt, pay dividends on our common stock, or repurchase shares.
Added
In addition, we may need to provide additional funding to such subsidiaries. Potential conditions that could negatively impact our liquidity position include but are not limited to illiquid or volatile markets, diminished access to debt or capital markets, unforeseen cash or capital requirements, regulatory penalties or fines, settlements, customer restitution or other remediation costs, or adverse legal settlements or judgments.
Added
Each liquidity risk is assessed individually, considering its potential impact on the business, stakeholders, and reputation to establish appropriate risk mitigation measures. We have monitoring programs and controls to monitor, review, challenge, and discuss key liquidity issues that may have impact on the Company.
Added
While our term loan is subject to increases in interest rates, we do not believe that a short-term change in interest rates would have a material impact on our net income given revenue generated by our client cash balances, which is generally subject to the same, but off-setting, interest rate risk.

Other LPLA 10-K year-over-year comparisons