LPL Financial : 2024 annual report

Published: 2025-03-26 02:05:08 ET LPLA

Member FINRA/SIPC

At LPL Financial,

We Exist to Serve Financial Professionals.

Their Greatness Is Our Goal.

LPL was founded with a simple mission: Help financial professionals and institutions run successful businesses and deliver personalized financial advice. And more than 30 years later, that mission still drives us. Building on that foundation, LPL offers comprehensive support across the spectrum of our industry: from independent financial advisors to financial institutions, from local advisor teams to large RIA firms, from fully autonomous business owners to advisors employed by LPL.

Throughout this Annual Report, the terms "financial advisors" and "advisors" are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial LLC or LPL Enterprise, LLC. Securities and advisory services offered through LPL Financial LLC and LPL Enterprise, LLC, SEC-registered broker-dealers and investment advisors. Members FINRA/ SIPC. We routinely disclose information that may be important to shareholders in the "Investor Relations" or "Press Releases" section of our website.

2024 performance

A message

from the CEO

Dear fellow shareholder,

I'm writing to you for the first time as LPL Financial's chief executive officer, a role I assumed in October 2024 after serving as the company's chief growth officer. I joined LPL in 2018 with the mandate to accelerate LPL's organic growth by expanding our network of financial advisors. Over the past six years, I've worked closely with our leadership team to craft a strategic vision and effectively execute on our plan to achieve it.

As our 2024 financial performance proves, we've made remarkable progress and set the stage for continued success. During a transformative year for our company, we remained focused on serving our advisors and institutions, and expanding our business. I'm proud of our accomplishments, honored to lead this remarkable firm, and confident in our strategy to continue enhancing value for you.

In 2024, we delivered impressive financial results, with record adjusted earnings per share (Adjusted EPS)1 of $16.51.

Adjusted EPS*,1

$6.46

$15.72

$16.51

2020

$7.02

2021

$11.52

2022

2023

2024

At year end, we set new highs with nearly 29,000 advisors on our platform and $1.7 trillion in brokerage and advisory client assets, services or custodied. Total assets were up 29% from the prior year, reflecting industry-leading organic growth of 10%, the acquisition of Atria Wealth Solutions, Inc., and favorable markets.

Total advisory & brokerage assets* ($ billions)

$903

$1,741

$1,206

$1,354

2023

$1,111

2020

2021

2022

Number of advisors*

17,287

2024

28,888

22,660

21,275

19,876

2020

2021

2022

2023

2024

* Amounts shown in all charts are as of or for the indicated year ended

A Message from the CEO, continued

Strategic context

Our vision is clear: we aspire to be the best firm in wealth management. To do that, we continue to invest in our platform, further enhancing our market-leading value proposition. We provide unmatched flexibility in how advisors can affiliate with us, and we deliver the advanced technology, intuitive service, and essential capabilities to help our clients maximize success throughout the lifecycle of their businesses. Executing with precision paves our path to lasting industry leadership-not only within the independent and institutional markets, but also across the spectrum of wealth management. It's a bold aspiration but one I'm confident that we can achieve.

Over the near term, we are intensifying our focus on three key priorities:

1. Maintaining the client-centric foundation upon which the firm was built

2. Empowering our employees to deliver exceptional results for our advisors and their clients

3. Achieving improved operating leverage

Providing extraordinary flexibility in how advisors can do business

In 2024, we continued to differentiate ourselves across the advisor and institutional channels, delivering unmatched value to our clients. This resulted in record-recruited assets of $149 billion for the year, an increase of nearly 90% year-over-year.

In our traditional independent market, we added a record $71 billion of recruited assets, exceeding our prior high by more than 40%. We improved on our already industry-leading capture rates of advisors in motion, while also expanding the breadth and depth of our pipeline.

By enhancing our competitively advantaged array of affiliation models, we were successful in recruiting approximately $11 billion in assets. We expect that growing awareness of these models, along with ongoing capability enhancements, will drive sustainable growth and bolster our industry leadership.

We continued to make progress within the large financial institution marketplace, where we set a new high with recruited assets of $63 billion during the year, reflecting the onboarding of the retail wealth management business of Prudential Financial, Inc. Although it has only been a few months, there are already signs that the integrated experience and enhanced capabilities LPL provides have helped Prudential Financial, Inc. create a more compelling value proposition for their advisors.

As a complement to our organic growth, we closed the acquisition of Atria Wealth Solutions, Inc., welcoming approximately 2,200 advisors, 160 institutions, and home office staff to the LPL family.

Throughout the year, we also advanced our pioneering Liquidity & Succession program, extending its reach to advisors beyond our ecosystem. This program addresses the growing succession needs of advisors by serving as a bridge, enabling them to effectively monetize and transition their businesses to the next generation. Doing so also helps to preserve and extend the life of those assets on our platform.

Throughout 2024, we remained committed to helping our clients provide personalized financial advice and build successful wealth management businesses. LPL's unparalleled approach to client centricity yielded another strong year of financial performance. Our shared success is driven by the approximately 9,000 LPL employees whose dedication and expertise continually strengthen our industry leadership. Every day, I deeply value the privilege and responsibility of leading this incredible team.

This year and beyond, we are asserting our leadership by further shaping the advisor and institutional markets. By fostering an engaged employee culture, executing on a well-defined client-centric strategy, and delivering the capabilities needed to achieve sustainable outperformance, I'm confident we will continue to create long-term value for you.

Sincerely,

Rich Steinmeier, Chief Executive Officer

2024 Financial Highlights

Consolidated Statements of Income Data

Total revenue (in thousands) 2

Total expense (in thousands) 2

Income before provision for income taxes (in thousands) 2

Net income (in thousands) 2

Per Share Data

Earnings per diluted share 2

Adjusted EPS 1, 2

Consolidated Statements of Financial Condition Data

Cash and equivalents (in thousands) 3

Total assets (in thousands) 3

Total debt, net (in thousands) 3, 4

Other Financial and Operating Data

Gross profit (in thousands) 2, 5

EBITDA (in thousands) 2, 6

Adjusted EBITDA (in thousands) 2, 6

Number of advisors 3

Total advisory and brokerage assets (in billions) 3

1. Adjusted EPS is a non-GAAP financial measure defined as 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 our former chief executive officer, divided by the weighted average number of diluted shares outstanding for the applicable period. We present adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into our core operating performance by excluding non-cash items, acquisition costs and certain other charges that management does not believe impact our ongoing operations. Adjusted net income and adjusted EPS are not measures of our financial performance under GAAP and should not be considered as alternatives to net income, earnings per diluted share or any other performance measure derived in accordance with GAAP.

The following is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS. Totals may not foot due to rounding.

In millions, except per share data

2024

2022

2020

Per

Amount Share

2023

Net income / earnings per diluted share

$1,059 $14.03$1,066 $13.69

$846

Regulatory charges

0.24

0.51

Amortization of other intangibles

135

1.79

107

1.38

Acquisition costs

Departure of former CEO

106

(14)

(0.19)

1.40

48 -

0.62 -

36 -

Loss of extinguishment of debt

0.05

Tax benefit

(62)

(0.82)

(37)

(0.48)

(33)

Adjusted net income*

$1,245

$16.51

$1,224

$15.72

$937

Diluted share count

*Adjusted net income / Adjusted EPS reconciliation

2. Amounts shown are for the indicated year ended.

3. Amounts shown are as of the indicated year ended.

2021

$10.40

$460

$5.63

$473

$5.86

- - - - -

1.08

0.97

0.83

0.44 -

76 -

0.93 -

- - - -

(0.40)

(41)

(0.51)

(19)

(0.23)

$11.52

$574

$7.02

$521

$6.46

4. Total debt, net consists of our senior unsecured term loan, senior unsecured subordinated notes and borrowings outstanding under our revolving credit facility and unsecured, uncommitted lines of credit, net of debt issuance costs.

2024

2023

$12,385,107$10,992,215$1,392,892$1,058,616

$14.03$16.51

$10,052,848 $8,608,073 $1,444,775 $1,066,250

$967,079$13,317,404$5,494,724

$13.69 $15.72

$465,671 $10,385,480 $3,734,111

$4,501,345

$4,026,956

$2,110,834

$1,985,784

$2,224,355

$2,073,887

28,888

22,660

$1,740.7

$1,354.1

2022

$8,600,825 $7,489,172 $1,111,653 $845,702

$10.40 $11.52

$847,519 $9,482,226 $2,717,444

$3,189,935

$1,525,264

$1,561,429

21,275

$1,110.8

2021

$7,720,830 $7,119,501 $601,329 $459,866

$5.63 $7.02

$495,246 $7,991,600 $2,814,044

$2,454,717

$936,431

$1,012,819

19,876

$1,206.4

2020

$5,871,640 $5,245,567 $626,073 $472,640

$5.86 $6.46

$808,612 $6,596,162 $2,345,414

$2,103,308

$908,929

17,287

$903.1

5. 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. All other expense categories, including depreciation and amortization of property and equipment and amortization of other intangibles, are considered general and administrative in nature. Because our gross profit amounts do not include any depreciation and amortization expense, we consider our gross profit to be a non-GAAP financial measure that may not be comparable to similar measures used by others in our industry. Our management believes that gross profit can provide investors with useful insight into our core operating performance before indirect costs that are general and administrative in nature.

The following is a calculation of annual gross profit for the periods presented. Totals may not foot due to rounding.

In millions

2024

2023

2022

2021

2020

6. EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles. Adjusted EBITDA is defined as EBITDA plus acquisition costs, certain regulatory charges, losses on extinguishment of debt, and amounts related to the departure of our former chief executive officer. We present EBITDA and adjusted EBITDA because we believe that they can be useful financial metrics in understanding our earnings from operations. EBITDA and adjusted EBITDA are not measures of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP. The following is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented. Totals may not foot due to rounding.

In millions

Net income

Interest expense on borrowings Provision for income taxes Depreciation and amortization Amortization of other intangibles

2024

2023

2022

2021

2020

EBITDA Acquisition costs Regulatory charges Departure of former CEO

Loss on extinguishment of debt Adjusted EBITDA

$1,059

$1,066

$846

$460

$473

274

187

126

104

106

334

379

266

142

153

309

247

200

151

110

135

107

$2,111

$1,986

$1,525

$936

$909

106

(14)

$2,224

$2,074

$1,561

$1,012

$909

3 3 1

(

Forward-looking statements

This introduction to the LPL Financial Holdings Inc.'s (the "Company") 2024 Annual Report contains statements regarding our future investments, potential growth of our affiliation models, the retention of acquired, recruited or transitioned brokerage and advisory assets, and the potential benefits of our strategic relationships, acquisitions and Liquidity & Succession program. These and any other statements that are not related to present facts or current conditions, or that are not purely historical, constitute forward-looking statements. They reflect the Company's expectations and objectives as of March 25, 2025 and are not guarantees that the expectations or objectives expressed or implied will be achieved. The achievement of such expectations and objectives involves risks and uncertainties that may cause actual results, levels of activity or the timing of events to differ materially from those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include difficulties and delays in onboarding or transitioning the assets of acquired, recruited or transitioned advisors; the choice by clients of acquired, recruited or transitioned advisors not to open brokerage and/or advisory accounts at the Company; disruptions in the businesses of the Company that could make it more difficult to maintain relationships with advisors and their clients; effects of competition in the financial services industry and the success of the Company in attracting and retaining financial advisors and institutions, and their ability to provide financial products and services effectively; whether retail investors served by newly-recruited advisors choose to move their respective assets to new accounts at the Company; the execution of the Company's plans and its success in realizing the synergies, expense savings, service improvements and efficiencies expected to result from its investments, initiatives and acquisitions, expense plans and technology initiatives; and the other factors set forth in the Company's most recent Annual Report on Form 10-K, as may be amended or updated in the Company's Quarterly Reports on Form 10-Q or other filings with the Securities and Exchange Commission.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number 001-34963

LPL Financial Holdings Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-3717839

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

4707 Executive Drive, San Diego, California

92121

(Address of principal executive offices)

(Zip Code)

(800) 877-7210

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock - $0.001 par value per share

LPLA

The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to

Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Smaller reporting company

☐

Non-accelerated filer

Emerging growth company

☐

Accelerated filer

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No As of June 30, 2024, the aggregate market value of the voting stock held by non-affiliates of the registrant was $21.3 billion. For purposes of this information, the outstanding shares of Common Stock owned by directors and executive officers of the registrant were deemed to be shares of the voting stock held by affiliates.

The number of shares of Common Stock, par value $0.001 per share, outstanding as of February 14, 2025 was 74,574,576.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the Annual Meeting of Stockholders, which the Company intends to file within 120 days of the fiscal year ended December 31, 2024, are incorporated by reference into Part III.

Disclaimer

LPL Financial Holdings Inc. published this content on March 26, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on March 26, 2025 at 06:04:18.282.