LPLA - Earnings call transcript Q2 2024 | LPL Financial Holdings Inc.

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Operator

Good afternoon, and thank you for joining the Second Quarter 2024 Earnings Conference Call for LPL Financial Holdings Inc.

Joining the call today are President and Chief Executive Officer, Dan Arnold; and Chief Financial Officer and Head of Business Operations, Matt Audette. Dan and Matt will offer introductory remarks, and then the call will be open for your questions. [Operator Instructions] The company has posted its earnings press release and supplementary information on the Investor Relations section of the company's website, investor.lpl.com.

Today's call will include forward-looking statements, including statements about LPL Financial's future financial and operating results, outlook, business strategies and plans as well as other opportunities and potential risks that management foresees. expressed management's actual or of results differ from reflect that and events statements such materially cause in may or those forward-looking current beliefs estimates uncertainties to forward-looking Such statements. implied or the timing

filings and uncertainties, the release about the the listeners the as with forth the well and set company's in Statements factors company caption refers as For more Forward-Looking Exchange risks other the and the in Commission. information under such recent disclosures to contained disclosures earnings Securities risk press

During certain the also call, the company non-GAAP will discuss financial measures.

such measures to can For non-GAAP reconciliation please release, found figures, be comparable refer of company's which earnings financial to investor.lpl.com. GAAP at the

turn to call over I'll Mr. that, the With Arnold.

Dan Arnold

today. to start minutes on stage Matt tonight's up and to Thank financials. I'll to and call the taking marketplace you, the Q&A, take by [indiscernible]. before share the hand operator, thanks open quarterly set related call it call, for to Then To we business to I'll everyone through events in our us cover our a joining results our over the few for recent perspective for

so on guidance help mission, provide and Okay. context, advisers the to past can personalized our of help over support care their they To advisers dreams. them take We to on financial focused clients taking work. quarter, With continue journey remain achieve their with goals of our their the as that life our important clients. that care

feature-rich and of and and into the of invest model we commitment second the model grow quarter, appeal stability our due the to scale and of robust to continued combination our industry-leading capacity back to the see platform. our our During platform,

helping better in anyone most to make player result, advisers appealing the opportunities challenges and the solve we in a and industry. else than thereby As as capitalize on and serve progress solid institutions continue

on make as quarter our also our the both results these the trillion Now with another In delivered complemented higher continued markets. quarter solid I'll results. of increased assets was review to with respect organic total continuing growth equity solid second strategic to plan. business our progress while of execution starting by quarter, $X.X to performance, we areas, of

second growth. quarter representing also growth representing contributed net were new to organic assets billion, over X% $XX XX $XXX growth, billion, net X% organic months new rate. This Regarding assets the past annualized of an organic

trailing our as In across a second the results assets were billion, the total well the addressable record billion. $XX reflect market. recruited model of XX as bringing strength our to of appeal quarter, continuing our $XX expanded These recruiting months for the our

Looking sales, and care remain at same-store experience. clients delivering taking their differentiated focused the a of on advisers our

clients time, As solid experience same through in the that our operations new and delivery of sales a of expanding the service wallet advisers to winning the same-store result, and clients, drove existing capabilities continue and evolution we function. combination the our are and with technology the At QX. enhance share both new adviser

approximately quarter asset over XX and XX% last for result, a As the second was months. retention the XX%

led results adjusted with financial to business quarter of solid $X.XX. second Our outcomes EPS

made to deployment. the on we Let's now turn progress our strategic

platform of affiliate a with do in as To to and that, marketplace. strategy is our the across share. gives and flexibility to back help adviser-centered leadership invest experience, advisers well market can Now become across Doing how to maximize their success, life us a this to to long-term growth adviser's leader deliver capabilities reminder, cycle the into organic is businesses. sustainable provide vision us industry path a to throughout unprecedented the adviser and services

integration, that expansion, into advisers X ways organize where can such vertical and with strategy, marketplace, categories: to strategic we are and the our look that affiliate marketplace; technology the Now in great and positioned institutions expand be advisers us to in services, focus business. execute differentiate help we operators work where XXX,XXX on advisers win delivering and the our to horizontal capabilities, we all of on to for our the we compete

as with efforts around that our context, start expansion. let's horizontal with And

we breadth the the recruiting of strong our assets. our Over our reaching approximately in industry-leading new market, while pipeline. At same we expanding independent our of a high billion rates saw of go-to-market appeal our second $XX win the maintained to through the and model time, depth quarter, in also quarterly approach, the of traditional and ongoing evolution

billion quarter, With strategic expect increasing respect marketplace and models look assets. models, our RIA the capabilities of and delivered in roughly we a ]. awareness And their ongoing our $X enhancements in as book wealth employee we will to the increase these to in [ sustained recruiting solid new enhanced ahead, our we another drive the affiliation offering, that

growth. Next, and in bank union to traditional QX, $X of assets billion organic credit to we be contributor which added recruited the in a consistent approximately space, continues

institution also large assets add of Wintrust. where will these billion we our we XXXX. early make and the $XX businesses and progress to onboard X brokerage management market to approximately wealth by within quarter, the Financial deals retail During continued the Collectively, preparation advisory Prudential advanced of

mid-XXXX. Now in the as later are growth, to a to complement year close the conversion Solutions of we complete this acquisition our Atria track on organic Wealth to

X,XXX approximately As client billion advisers and unions, credit and this $XXX will managing approximately acquisition XXX a reminder, assets. in add banks

demand momentum our of external with deal signing solid seeing we're and to advisers within the existing QX. our with addition, ecosystem, in liquidity advisers outside LPL and another succession In continues build including of solution as

with for have We've been for a supporting and a ability as choose separating many a Next, have strategically I mission serving and we model efforts. That large there our put This that posture where were with adviser's alignment on with to year, business. firms our years, as these a capstone to to the is in of And incremental OSJ core independence. OSJ were do our as in those OSJ that and result, advisers that period. principles ecosystem our of they want misaligned driving you on we platform. we our independent reminder these actively through on strengthen working firms how to update isolated stark contrast to broader they relationships. of over number to changes adviser surfaced, collaborated resolved And A ecosystem. years, that work, couple limiting

position Collectively, strengthen our these serve firms will have assets, from client to which $XX the overall roughly At platform offboard billion these great ecosystem the July. to part day, end began platform. better in of of separations our and on us our the

to differentiate and the services into on Now run marketplace within our thriving win our focused remain the business. to comprehensive and deliver help we and advisers in technology integration back vertical a investing model platform efforts, capabilities,

ongoing to advisory As of we of more wealth capabilities build continue to that world-class part make comprehensive efficiently And effectively. deliver across manage and developing client a business will trading journey experience of platform. a management a this within progress areas are body help differentiated suite including effort, advisers our of this we focus, key their work, several and

models-based aspiration spirit, personalized strategic we're and ultimately to ClientWorks turn across is and rebalance more of which system, run asset. business. so, In more our rolling that time administrative accounts trading doing a multiple into deliver a new out a models the client practices to help trading client experience advisers In one the Rebalancer, book across from at enables advisers function

seeing we summary, the has initial Rebalancer from proposition while been solid quarter, We're value second feedback driving the invest and to early adoption. In in for our their positive. The growth leadership. and continued advisers increasing clients ClientWorks in market

long-term advisers value. further shareholder help our ahead, focused executing our on look differentiate as we remain in to win strategy we As result, and the drive marketplace a and

With that, call I'll to over turn Matt. the

Matthew Audette

All led our business call. right. delivering the advisers, with growing our focused glad we Dan, the traditional of and shareholder new everyone second in another on and value. organic serving strong Thank to management focus In we Prudential onboard I'm of both to quarter, growth Wintrust. remain are This on businesses And preparing you, and and speak markets. wealth today's quarter our to

momentum with X and the In and closing deals liquidity external X solution, practice. in succession to build we addition, an deal during our quarter signing continue

mid-XXXX. to track half transaction the on the to year second close in Atria the and remain we business in Lastly, plan onboard their on of

opportunities support continuing deliver proposition and to ahead, So by growth. as organic the to drive we have look value and we XX,XXX while serve advisers we industry-leading an our excited remain

to turn QX growth from quarter X% second business continued Total growth up organic as were approximately rate. advisory trillion, X% $X.X let's were results. annualized complemented our an Now assets by Total assets net was $XX and markets. or organic brokerage billion new equity higher

$XX on record. QX billion, highest the assets large quarter were recruited which was institutions, to Our prior

QX, to quarter of are ahead strong deliver pace and another on we continues, recruiting. to momentum Looking our

billion, $X.XXX discipline expense combination EPS As profit organic adjusted for was the Gross and $XX financial our of of QX results, to million sequentially. $X.XX. led growth up

up advisory $X for were net As of payout commission million million, QX. from the fees components, $XXX

XX.X%, payout due rate typical seasonality. Our up was to QX basis from XX points

Looking anticipate the increase ahead build typical payout by production. seasonal will in to the we to approximately QX, XX.X%, rate our driven

to client client quarter by down declined Overall net With the average the billion. cash sequentially, billion, activity cash QX, billion balances during $X buying cash $XXX million, a record ended respect million revenue, from as it client driven down $XX client at $XX quarter. was slightly of balances $XX

ICA increased to target Within XX% to portfolio, our balances XX%, rate mix the of range our of roughly within fixed slightly XX%.

maturing that XXX matured. roughly were new into roughly $X.X higher We during basis X- balances X-year yielding rate their prior As of $X.X a points yield. placed contracts, fixed QX, approximately basis billion is there which those points, reminder, XXX than of contracts to billion

XXX points yield, QX. basis basis more at down Looking from in was closely ICA QX, it X our points

by yield on on basis our well and fixed based balances QX, yields as client rates increase for ICA today contracts, As new XX expect rate to we the are where cash points. as our approximately interest

$X it and in QX. As service QX, up was fee from revenue, million million $XXX for

depending couple by we from Looking well expect from fees. annual additional sequentially, separation by higher IRA Also, the increase million to of Focus OSJs, an of as million timing of approximately large conference revenues revenue record could to our previously ahead $XX service $X on we as the a up mentioned fees. QX, driven fee to

$X transaction was volumes. QX $XX million, up to increased sequentially million due on trading revenue. Moving to It

As relatively to we transaction QX, be expect we ahead look revenue with flat to QX.

core to G&A. It in expenses starting $XXX QX. turn let's with million was Now

be our of would range. if in to growth of Looking continue year, into core this the half half ahead, we expect guidance upper XXXX G&A strong the of levels our second organic

Atria. $XX this a sense reminder, of expect timing core associated with sequentially. you million by prior million a in $X we QX, is spend, give to near-term the increase the expenses Prudential to As and to of To G&A

driven was from resulting assists costs our onboarding on to primarily Moving promotional $XXX QX million recruiting. $XX increased as strong expense. million, from transition as up Prudential-related by It QX, well

by driven conference host Looking ahead as to integration continued approximately to month to QX, well next we costs. we expect million will spend conference expense primarily Focus as increase and $XXX promotional annual to onboarding $XXX our as Prudential-related million,

$X million to Turning depreciation up It amortization. $XX in and million sequentially. was QX,

Looking amortization ahead related $X which $X QX, depreciation includes increase and to to Prudential. by we million million to sequentially, expect of development technology approximately roughly

$XXX of Regarding cash corporate We QX. ended $XXX with million, capital management. QX up from million

Our billion proceeds of senior range to that X.X leverage X.Xx. of ratio be our finance slightly note our we will within during the notes, target would Atria. the of which leverage $X X.Xx, I of quarter, used increased to acquisition to issued

for aligned with excess Investing and pursuing capital foremost, generate. on first remains we capital to shareholders. organic framework in As appropriate our returns growth returning capital allocating where deployment, M&A and focused the

buybacks supporting our capital announcement repurchases, a allocated the organic of where and Specific to of share deployment our was succession Capital. acquisition. the Crown majority growth reminder liquidity solution on and as following to M&A, that we acquisition well focused on closed of QX, capital the paused as Atria the we In

evaluate plan expect following this year. second close, half restarting remains the Our occur to share we which repurchases in of to

business results. closing, we of another strong delivered In quarter and financial

remain we our long-term to investing opportunities excited serve shareholder see our we forward, the and to look business grow value. advisers, about we create As continue

over it Before we Dan. open the back like turn to questions, to call I'd up for

Dan Arnold

business. changes the potential understand remiss marketplace implications. announced to to to revenue not to and developments recent been our speculation better I'd Matt. emphasis, the evaluating We've magnitude read-throughs be on cash the in the acknowledge and Thanks, competitive related

monetization plans, As the and firms can addressed. models we that made for changes, to only speculate may have be as have they issues so they the different business

higher good strive they continuously look serve advisers about products and to a ensure have feel and relates our To competitively end, line it LPL, for regulatory. the their choice position, As balances in that both tools use and clients comprehensive broad-based operational to we and to range specific solutions our and offers expanded from liquid and cash, to or with achieve seeking funds, money income deposit and market yield to program, our in CDs seeking exposure to insurance a rate and when which product maturities. transaction to FDIC various liquidity those solutions alternatives the fixed cash-like sweep to yields to like [indiscernible], interest positional funds immediate

In change our cash successfully solutions good adviser the feel product strong complement to need In have believe [indiscernible]. provides all, that we plans solutions we our they we do serve set spirit, about pricing of provide. to not and

agile will evaluate and for enhance our solution nimble we set control and to we remain always, continuously As opportunities our. as framework

With that, operator, open questions. the to please call

Operator

Instructions] Wolfe Our Research. Steven first question of comes [Operator the from line from Chubak

Steven Chubak

some So developments on plans Dan, across adjust sweep Clearly, remarks just this to platform cash of the you pricing the around have sweep appreciated the at the time. industry. no

industry sweep and next broadly? years, the is you the do wholesale few across over how out pricing to any anticipate more monetized looking changes deposit sweep cash Just

Dan Arnold

just Thanks love of evaluated Yes. the off the proposition, overall and then our the and of we little At jumping in which And regularly. a maybe future the pricing our sort review highest have context value pricing framework context all look, I of for our we strategic point of level, question. question.

we framework, benchmarking of a ourselves position that factors, to market. that ensure host consider in the industry competitively we within including So

program So that including anywhere of we approach, XX dynamic typically we that's a cash AUM-based the to top in thoughtful today. household marketplace pricing the XXX tiers puts that sweep specific where of half our the range our basis or are ICA, and And points. and us to take from

we period a next look this jumping the you approached at year as influence course, will that time. to expect you at some pricing. look of and the that's But off you rates dot where over plots, and out point It are it over up that of of of certainly point. change how from And kind we've

back to might into proposition support been that like. of our X maybe the and disrupt proposition, and in the what last their to all I we the including of we lowering that we shared journey matter most serve advisers But value fair in prices I look believe advisers helping with investing their better into that all us our think to that's clients. evolve don't we've look areas pricing do years the you value it transform obviously challenges and exactly do what by trying clients. know over as the future, And the of and all adviser's pricing, even spirit

then the them. enhancing that value provide exchange, obviously In we're we

discrete Now of at the X one we'll just future, about and as focus strategic and with their to through to cash the value we pricing the fees our think pricing proposition on advisers the respect not said, sweep pricing, advisers. aggregate is and mechanisms and one the priority evaluating to of element highly context of great priorities in overall win, continue a charges That the various we consider needs all of of clients. and

to this number it our solution, a change compelled of scale, alternatives most about way into from because a the most in we how of with of have affiliation the integrated we do standpoint our of and opportunity. respect our we pricing we're think options any that cash our that and programs likely a have, strategic pricing because I think to turn and of and because flexibility to we believe vertically very make great the in it across alternatives, sweep different extent aggregate make can And that competitive different that program, adjustment options a

looks the and model. know with framework we We approach exactly So and I discipline like, take to what that helps that's that our the hope but pricing respect don't that in color. the

Steven Chubak

framing in just topic to around same it's very helpful but sticking at strategy philosophy your just the Maybe that. a Dan, growth from looking it lens. No, color,

You be had and on another strong liquidity active to quarter front. the of M&A, continue succession

approach developments? would of you any some to relating want regulatory, the whether get whether of competitive And the of a Just alter given some sweep in anticipate or peers that light changes it's industry TA sense your these developments deals. and do of around to just you unknowns underwriting to for to cash,

Dan Arnold

Yes.

I'll start let with Let and that, with Matt color. any me then follow

Matthew Audette

Yes. Steven.

economics. Tier a second them. technology deciding they're just I determining ongoing priorities just to third and is X in really the service, are one that's for think important from is name And firm then transition for you foremost, Their TA, what's would TA of And another. to top to and look reminder say, as when when change the capabilities, firms, really at assist most first facilitate, right? the advisers

as quite across EBITDA wouldn't rate We've I look I up to been think that, think to our extent rule, range revenue reflected you we've change. that. general model, within of way time underwritten Xx the down returns, underwriting across to some our always we've a which when for and this move a approach X at interest doing And of things environment.

would So that sweep, it important. want just emphasizing for -- that that there turn cash much, perhaps don't that good that We Dan's are a to. we more think things back feel reiterating where I'm point, And are proposition him change. unless change. much don't I are don't to value other we to expect to you specifically we from positioned over I'll

Dan Arnold

think meet to life for Yes. yield or advisers to set very solutions it product their flexibility necessary so the you or store key and fees cetera, think their their needs. availability to can make and of the the for our do meet the access get easy intended good them we that's in accessible We're I goals make to easily of to clients. those a quick very the that then trades, we needs access simplify for client's have advisers looking necessary and that pay it to does and I to achieve I'm the to that. it's solutions clients' that deliver a dreams, the the we to sweep reinforce give just If have give I'm to job they add vehicle some great looking I the is that income, necessary et liquidity need the might looking to doing they for cash flexibility necessary them and or our them that. between experience of And client life some to help portfolio

Operator

line question next our from of Citizens from comes the Devin And JMP. Ryan

Devin Ryan

we've centrally because managed ask first question, the as received I on guess I well. specifically that on want some accounts questions to

it get if advisory range just different just And level, cash cash of accounts fee-based can accounts. at so that's to broadly, the kind from in when on level appropriate, would just about great obligation, managed And the adviser if these maybe talk at percentage the either the be and centrally firm or at then more all? and you fiduciary of how

Matthew Audette

I'll there. Yes, Centrally levels. models, about those at what about mean $XXX I just Devin, transactional think our invest a I there. was standpoint if right, total of about when talking And options. low we've in that, a in in around cash those standpoint, just are business business It's X% overall. about of you that portfolio start overall, as from into look cash billion levels at cash goes like assets to the X% cash Think similar cash assets. allocation to From AUM of got it there's managed, our a beyond Dan

and short-term money things things funds, like bonds treasury, that. go it So into would like market

are I'd reiterate that when perspective about Dan well, overall just think just and centrally that as cash, on articulated, support look and invest how products clients I can think, advisers centrally the they those in that we really within is prop our quite to managed, at the that the and their to as is sure set well I as allocations cash make value So available how managed, good applies needed. feel serve we for priced both same transactional that up, cash but

Dan Arnold

to I contributed all by and centrally our models, management. across managed they're just LPL research programs cash third-party same to are would for allocation external whether our add the that consistent within

and consistent common a there's So structure.

Devin Ryan

potentially economics relative Terrific generally us color. to And believe they're follow-up, a topic of can get would an sounded the wanted as this the you like you has on in firm-wide a just there. bit, process. EBIT to what anticipate mutual a color I get to look Okay. the the a like OSJs then expectations to headline surprising. then not but ROA on we average? lower, basis this been OSJ know more there. do It just exit intermediate little part just love on other little But And But was color term? remind too bit maybe

Matthew Audette

start I'll Devin. on Yes, the returns.

right. You're

firm, look in our for gross low the profit I overall think you ROA when it's XXs. the at

talking I so For we're this $XX think, low it's the the firms X/X that around XXs. that, about, billion, in of

an growth. So drag growing. reduction are They or then And lower. folks a actually standpoint, the from returns organic a these on growth were weren't organic

would So the lower the Maybe on you Dan, to OSJs growing I'll those firms. lower I think on it headline returning, turn be on back overall.

Dan Arnold

convicted Yes, job business. Devin. and we're And that with good as or OSJs, of think we of a serve think well, growth strategically, support and we to the advisers now done pull which contribute overall large and the more look collectively strengthened really we've will ever that these of can relationships synergies our through I the ultimately I than forward aligning

to work it it done, and of that great extended about we back to and an it's we period time landed was be think dating needed where I feel over XXXX. done

on in on be and go with focused that value within that helps. the real working aligned think forward there all that that. the gives foundation them I how a operate are growth, policies to legal things And and help our both we're key through that that's to structure the and sure folks I of is the us some these agreements then memorialize work contributor was delivered us for, right solve well to to So and by on that it, parties, I we the making one think ecosystem and hope refining

Operator

line Blostein the question Goldman Sachs. next Alex our from of comes And from

Alexander Blostein

is you of and that guess, the what and you with there. offering LPL's the details I that visibility advisory competitors not be you some what's result credit to higher other will the appreciate market rates might action insulated might to banks? and perfect I So of and what So either of confidence happened guess or your starting regulatory thinking in that how a to from options? client And and it incremental function funds sort can supporting you may you obviously function larger a gives view remain account else size? disclosure the have pretty it your season, rationale that with the of seem or from provide is But larger transpired could high-yielding Anything kind murky of discuss sticking of there I topic, would any be shift differ money or great.

Dan Arnold

Yes. start I'll then bigger question regulatory we think maybe about we And Alex, the a forward. just answer let programs how around our how your being me positioning from think about with going different. do standpoint

fund an the So we proprietary don't I have the affiliated to point in mutual think, relative bank starting differences look, as programs, complex. a

of don't interest, we we because solution. have or that our sweep of monetization with a have So certainly conflicts that cash same and program structure potential different

earning the monetize why the asset the also essentially we tend would and structure well the have business, of potential with foundational proprietary banks. both they know, associated you on As potentially management as fees. And then don't sweep as that conflicts through around elimination to products cash

big are, difference, foundational think, So models. those sort foundational will, if of in I or you our

And fundamental we $X place in program benefit ultimately we have of with joint I with create another added think a the through sleeve only don't potentially XXx amount is our having through sort standpoint. value platforms actually can our in right? FDIC contracts a that million or have for companies an programs banks, our third-party single sweep $X.X by banks, of limits, that where those where million insurance program programs a account there's and their so a individual, for from difference Second,

with of positional typical part of funds. we with lot the those, an our of I And a in entry is money have and firms for as that offerings, funds less a charge low out program of which of ticket in $XX,XXX point there's make these think, market purchases our moves. money and advisory contemplated associated Additionally, advisers the cash available movements no really to account, all in

we've so of solutions duty it meeting make their sure their really or any to other will. you clients market these and care, tried needs the accessible and money so of easy advisers access to performing they're that easily And a of alternative fund if the make cash-light can

So that's just not high-level be some exhausted. to but the we're a you places of It's color. not be meant little different. gives It's it meant to comprehensive,

to your about feel prepared the said second in of question, I your and positioning as we Maybe part good remarks, a our from regulatory standpoint.

disclosure these review do of create elements the operating obligations, duty these framework such, and ensure why guidelines, will If the around to environment requirements. all we're we we around little typically think requirements regularly that that that? as maybe color focus -- and regulatory prescribed a Now And you take a on of within guidelines. care operating control

both duty don't our and to advisers investing done cash serve incentives with as and cash investment that provide and with that care. that's referring in to we to and consistent our and allocations programs, think, of clients flexibility for their we to program to of And obligations to the needs advisers then their the respect I and And we is for clients, our and respect products of meeting low solutions entry barriers ensure help care, our provide duty with advisers regularly So sweep to cash review standards conduct our support I direct advisers. their point, sweep important to another what just earlier. was we're

cash overall monitor might the and controls have, that actively there's this and but with accounts, the that that is any goals the we sitting clients' in is managing area advisory number we specifically Now one there's idle an objectives are of with to position respect controls, levels in portfolio. sure advisers there that those not optimized, with not for making aligned cash actively accounts, of

including then in the And the fees to to our clear and -- sorry, we receive. disclosures relative and then I programs, transparent with respect controls provide features terms to mean, yield respect earn the describing disclosures, we clients with of

controls, to of cash meet but we why that end, that needs feel monetization, the for that's there. a know our offering that So [indiscernible]. lot, I'll expectations I the was all framework, the and pause

Operator

next our from Morgan Cyprys line comes Michael of And question Stanley. the from

Michael Cyprys

understanding your with to plans maybe just might sweep lead theme, rates was to you be some change to unpack and able point? But the you I it continue clarify, disclosure you have And just to Maybe just to that practices be don't such? might have pricing. or heard like What hoping scenarios? you different might extent what change from your what sweep on at those regulators same

Dan Arnold

Yes.

Michael, of to respect confident this question, of an very with part a reason and we've your think, of always regulatory in positioning that I along as the our part the reviews and matter regulators, constant way, them around the had ongoing their with consistent second we our today. part discussion ongoing review, with is feel

their that how with strategies. value and holistic innovate are or And and drivers sure well that to I do and invest, biggest of about when to think marketplace our the our in sure with those do proposition; it's sort at needs are respect first clients' we looking with the two we things: your of think part evolve strategic through make aligned needs. the question, differentiating make that then overall is two how lens, first two, we pricing, the might always our we pricing relative to we we and we're foremost, look that advisers'

really the years, transaction the on focused where that's on. sort past going, that's trend we've focus advisory because in to charges very much and was X challenged and business the us advisers our of where In

the that two so for think that. a about great that's what And catalyst those of real how being we drove example that's And activity.

be new I pricing to think else. they think I other with other the we revenue drivers, that price, challenging learn any always we should to mean, that create may box. What somewhere value value, around industries respect places, then offset create new streams outside can extends other they they how how ourselves how from could

lot and client an the if going to standpoint really So from through forward, And business shareholder the to the create to that. we of all how challenge innovation ultimately enhance I part ourselves model a we'll are evolve value adviser. think well those of end value to this do that we

it an vertically that inside the So we're have good We're are we ecosystem. services lots different levers which of We're we've news vertical revenue, a new where is clearing We've look level created as create into solution. to as got integration, can adviser's can lots that that business. bigger about revenue for of a levels think the because we wanted back the broker-dealer. of at hey, -- modify look we or that's With we of advisers. could an if RIA. X down integrated, of of innovate do change revenue, What priority a at we investment to we

somewhere fee offset we'll a with that else. So

at sense the that's least specific, nothing with of terms that and trying of evolve again, and sort think about advisers and helps. in of pricing, the gives about flexibility hope client. this planning the scenario the in I approach to line but I it. you think we take There's So how the serving and we think that we the best how

Michael Cyprys

And if a here. question, Great. could I just follow-up

conversations of based? goalpost on been regulators, the have are sense the whether industry Just practices the that based beyond others the have folks that with and not the look industry, across as accepted having or over you're any including is you you moving years across at do actions disclosure

Dan Arnold

sense. our is not That

requirement I conflict a with so I change clients. which they tidy make proposition business That choice. clients and to have of entire clear and it. understand think framework, an disclose very And we a we logical potential informed very regulatory governs value framework in. all way may think regulatory overall change clear And and begin where for principled there that set principles, within to the much, there's And relationships operate aggregate be a model, can that again, the aggregate to that's much that we and to we to when harder that to how pretty to that. think it's anywhere expectation there's a approach be that

And have would necessarily not answers, we I don't landscape. a change see forward. all so great so It's we you on tell we're signs not don't but seeing will that, we're that going ultimately question. clairvoyants, the the that

Operator

of the our Kyle comes line Voigt KBW. question next And from from

Kyle Voigt

cash same everyone has, start discussion. else on on advisory I'll that the just the a Maybe but follow-up topic

if so? billion versus in accounts allocations but X% I'm for of provide still a on in I that accounts cash or you've cash in past, mentioned the mentioned assets of the brokerage, today. so any of true $XXX program the client You the not think on -- you guess managed as that's in color typically, sure percentage assets RIA, can total is centrally sweep. higher that you those I there's advisory corporate

Matthew Audette

Yes.

it's think X%. cash at it's little you bit of And when a the as of same the little centrally managed. around a Century think rest AUM but I bit you advisory, I percent The that. it's above at still above in ballpark, look manages a overall, when look

I all, fund is have accounts around like lot on business business that cash and X.X%, direct side. that and just brokerage simply a think annuities has the on cash because mutual no brokerage, at that's of

up But smaller end or on is in a the headline ballpark, a same it's on So higher. the just the side, managed overall smaller outside little a percentage. brokerage point you balance advisory ends of up bit having centrally

Kyle Voigt

end related color That's also starting could to you to any cash if or helpful. date towards sweep And give off-boarding then, that Matt, July balances. update $XXX this are the this expect the I in just wondering on or the percentage should on quarter? maybe of assets if they And month monthly that month, OSJs have as would as this we a of figures imply similar million which show to impact of cash client an think a so an up well,

Matthew Audette

so. think I Yes,

the when month. I are walk in it's through you be the familiar quarter, trending in with things I far especially well that. a that July, of X to the think mean, shaping I And would you're how is so factor I'll but you seasonality headline on up So month give on

primarily to quarter. a so seasonality hit specific advisory is the the that client of think reminder in cash, first month fees I

all by will July flows inflow And being around around in $X.X else been reduce that an $XXX million. billion, equal. of So cash outside have of that

put decline or from it things cash seen in million sweep putting So together, $XXX around those of two when what $XX.X a in at around is July standpoint we've billion. you a

that those in billion. first that impact fees advisory the same, the momentum side, quarter, in And we've of outside organic To the $X.X that, hitting really growth to on the continued. we organic at growth as this add half saw first and of seen has just month this year

at an in usually I zone, X.X% quarter. in it's looking in that So July, that lowest to that the of the keeping puts mind month standpoint think us organic from X% something growth

we months business. to over And to so going flow Now X next your there's numbers any make those think standpoint probably of make can the We'll out. on from those on just rest much little cash Very have of make as out. point billion the delineate the flowed is an those point again, cash, X are those But it that versus don't in that far. -- the anything OSJs it that amount clearly the to numbers of to how impact had, OSJs, you We'll is impact it We'll flowed we'll your or sure those report forward. clear different out two clear results distinct as are the has of so prior I will from that see meaning leaving. $XX make clear metrics when firms.

Operator

our And Cho comes from question Michael next JPMorgan. from the line of

Y. Cho

up into regulatory going kind time? buckets just misaligned it you of you just not a touched that little curious for necessarily over OSJs you'll wanted how areas through I of bit, going of similar Dan, was you new, other the the potential and but kind is were this follow particularly you on skip what kind the And characterized? to what cash forward, I on as talk timing would -- OSJ. frame forward. falling maybe delineate going the Matt, discussion. I'm and to

Dan Arnold

Yes.

second So put of of your occur. little going because there's that would structure we and your the forward, very the program, part probability alignment the to question, answer around that,

employee-based the those advisers I is captive cases that again where that think move their at which turn point, where it's and your to an see our your them of construct. ultimately, OSJ into may independence bill model point. of of very principles more approach, assets different or from want where the first buy they And of think flexibility advisers we that's practices, want to up because an to more And to. those question, of back part a type I for they of some in providing

the independence and platform our of within have our As we sitting soon that as hard within a time they began model, to lose the principles [indiscernible]. with within

on principle sure were ecosystem. just alignment So that's to collective forward, that place had of I think an our is such that and we foundational helps. across that in go make example something out trying Hope we tease that we as

Y. Cho

the just to And annuity on Great. little what to then just rate side, can help. and annuities environment a switch seeing gears wondering helped you're continues bit, remain has Clearly, the solid. I'm seeing on demand could quarters of has at LPL's be annuities that point level been recent strong normalization nearing in yet, just or sort that platform. growth strong the years any given the incremental

Dan Arnold

bit. You was up of broke little what a that? just Sorry, second the half

Y. Cho

might normalization Yes. of on that sort see on demand? any No, the you -- strong the

Dan Arnold

got it. Sorry,

Yes. you. Thank Okay.

of be look couple foundation an last or growth, it and supports all I the a planning the it as goals. think of retirement very help at many over So as someone clearly those things a annuity X, is that look, life think call with of year relevant about folks for the The you if solving important to is they marketplace and much the problem happening. one

for stream extended retirement period or a it clients help a revenue variable fixed broad one creating to different obviously, that well solve And for opportunity, annuities and be very income to in with solution so the it's are than the an rate in lived it we that. set. very, certainly whether stream created do or an time, relevant opportunity becoming has across of a And environment positioned

steepening as provide. forward, occur a variable benefits annuities respect to of that helpful terms we the that curve yield with they with go may As features is in and also

differentiate to that something more relative And so that that's to features if alternatives. something obviously got you've relative macro, obviously, the is annuities other and and options that benefits then appealing can

opportunity, product a important more features create set at opportunity standpoint, choice solving a of than you for asset if an look it's in broad more new the necessarily a a I probably to adviser's seasonality need sound. clients will, a it, really are because found From of gathering

do which the more use client. ultimately solution you of to and how it's support think best serve ultimately I pick you're going to

some of of number that it a think done. demonstration being up our necessarily don't advisers utilization the much on create grow I overall solutions That tailwind and as step it's in product our market brokerage just step annuity volumes a evolve said, a case, the or heavier as we given down platform, is a to conditions. this So or solutions as of certainly in

certainly that some that hope I provide helps. does tailwind. So

want add that? to anything You to

Matthew Audette

said. No. Well

Operator

Fannon next our Jefferies. the comes question from line from of Dan And

Daniel Fannon

talk July just Obviously, for So today a and the were the Can question environment you year good ago? recruiting. I versus billion, those think, what quite on maybe And about the underwriting a quarter. then you $XX to into in of assets economics talked ultimately, the you backlog. strong momentum,

progressing the the that's of how So maybe some think characterizations around year. about rest we as

Dan Arnold

to want You part? hit first the

Matthew Audette

Yes. Yes, Dan. start. I'll

haven't economics to our On kind think approach Steven's question, and my to I changed. underwriting earlier and economics point the underwriting, of

the there are the really that underwrite hurdles and at. the the underwritings not But we TA thing advisers are returns, have in return third think changed. looking economics I

Xx in If EBITDA, moved about you comes not that much. think and it X to at general, board as recruiting has on

Dan Arnold

just momentum. said maybe momentum billion over point, the you margin as place to into off question, assets a third we see and as you as QX of we again, said you XX, that which With for is as trailing respect, billion the recruited just second in $XX solid continue to jumping quarter. Yes. a your -- And the $XX had

of models. affiliation it all across think seeing I we're our

the That's of good models. being affiliation by then given set. that appeal driven the got opportunity you've that different we evolution our that continued diversification breadth in and market of this model of So serve,

quarter, value to that how momentum we the that, are strong the sort see our feel and we're third good certainly we we the strategy look we in of efficacy pretty go-to-market trends. structural marketplace, And around deliver as beyond inside given model, those that there. structural So creating

even we we've beyond about some out and institutions. that look the as in we momentum third collectively large about recruited all sort institutions talked same time, that built of have in yet large onboard that So institutions, across good further models. to quarter, billion $XX have as of our At feel represent we

a is certainly to as well. outlook that tailwind that So

already at So your evolving And that hope in feel cost adviser set. all you've as you then the that got helps. across pipeline that positioning and large wins got models in really recruiting well pipeline. about committed side, we beyond on and good I institution good insurance banks the then growing that, as of

Daniel Fannon

pickup helpful. a then promo year-over-year. sizable is a spend is one, That as Yes. both And just The as quick expenses. sequentially Matt, well on

you you said think I have but mean year. conferences, this I conference every

that So pickups? in be just would I the fourth after, curious what about should the quarter see magnitude of And guess, again seasonal we normalize then the pickup.

Matthew Audette

Yes. think things. a I couple I of mean

seasonality a conference each standpoint, from it is the in think I year. QX

So change. color a just on little I giving sequential the was given --

I'd The other Prudential. specific in associated is with mind to onboarding costs keep the thing

on the important get Prudential Just them technology associated of process bring board, board. TA is really them there's to is really spend build a with and the to on the reminder there to no

there, of that's will up spent lot you the show promotional. at So there, technology, the we're being -- look million what $XXX of and cost that and a is that spending when entire million integration amount in $XXX of

spend-related Prudential, the related year-over-year, peak especially spend, look trends, the or for to likely which quarters at and about you highest overall will think be the you -- that. X QX when when probably So probably the QX

levels. the get the then underwriting other the covered amount on it's the our get on just recruiting amount the hitting side get doing, largest you So meaning and I think recruiting, I think of the we're the then new changed, tonnage Prudential-related you our keep you -- conference, of of we record which level get driven we've right? TA few drivers, other side spend, you of into and core QX think side of the into the hasn't that, on or when really by times, I a just really other

a why you largely increasing. Prudential. timing is in it's use conference number that to capital, give of a a It's hopefully, little helps think we that as but So good sense of

Operator

line question next Brennan UBS. our comes from of And Hawken the from

Brennan Hawken

to question ask on like rate I'd a upcoming fixed maturity. the

going middle into So to of even this or pick benefit floating seeing about Are closer and to ICA lower are is you the maturities at continue fixed to range? of end point, you roll side now Or some you the the rate? XX% the fixed up guys to rate. at bring targeted rate the there

Matthew Audette

I the always when I there peak I that given we're be targeting the And like would folks now, want what most I environment range our think you Brennan. conclude think approach it, in think rate and think being a call just we towards now, at look where we in XX%, and that we I the within where XX% to upper right looking at environment think of range, are is. rate while half to Yes, the,

the will range got we can think of you are rates, where overall being in are that where So XX I billion point like now. XX right and that When in deploy earn, typically near $X XXX in to rate on overall, rates including think based spreads X-year think are about basis I point each choices. the as we we'll move X- you are the forward term, which we I But upper that at the those in quarter next sweep curve. to look contracts, the are those couple maturing half. on for in fixed make rates quarters, where And we balances around those

the deploy that they're we would that hopefully to a which be you currently earning. that, where sense rates So give as should above

to hope half So the we I being the like of kind environment XX% towards that headline helps is. top the rate like just that is, with given where We of XX%.

Brennan Hawken

the adviser be second healthy so question, Great. And growth related, And that noticed deals, about unpack the some might I helpful. here but a be contributors some you you growth deal XX%. would here. closed loan Matt, helpful I little it maybe was that could some to I if know that's up really that of then quarter-over-quarter, expect

Matthew Audette

Yes.

remember, break there. TA is in in well the entirely things there But there's -- We related. all them So X all TA a standpoint, release. TA not from I don't think as there's out loans, repayable as necessarily right? it's

standards not continue TA components to of the emphasize just underwriting We before, we're talking of are levels what the For related, changed. have that do kind deliver record recruiting. about

it's the the line that mind And So driver is volume, are entire just TA that rates in of but consistent. keep more that we're not item. paying

Brennan Hawken

that deals Okay. Was recently there from the closed contribution growth? though in some

Matthew Audette

Yes.

So deals I recently think acquisitions. when about you're adviser talking loans, the so closed were

show So that and to would different doing nature, come loans, that the and to would or is in just be that be connected the to it recruiting in would up a be other driver typically growth-related the in places. quarter. it extent -- just loans and would that Specific the of TA, things would spot, the we're goodwill out primary record

Operator

to This to Dan program I'd does conclude any the Arnold hand question-and-answer back program. for of session today's the further remarks. like

Dan Arnold

And we join this speaking afternoon. us to to quarter. next time the forward taking for everyone, with thanks, look again Just Take you care.

Operator

for This you, Thank the and ladies today's participation in conclude your conference. does gentlemen, program.

You may day. disconnect. Good now

LPL Financial (LPLA) 25 Jul 242024 Q2 Earnings call transcript