Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-466-LPL-Financial-Holdings-D7C9998-LPL-San-Diego-Exterior-Hero

LPL Financial Holdings, which joins the Fortune 500 for the first time this year, is considered the largest independent broker-dealer in the U.S., with more than 17,500 financial advisors operating under its umbrella.

This year's Fortune 500 marks the 66th running of the list.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Key Financials (last Fiscal Year)

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Total Stockholder Equity ($M)

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Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

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Total Return to Investors (last year)

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The largest independent broker-dealer in the United States, LPL Financial Holdings provides a range of services and products to independent financial advisors and institutions across the country, including retirement plan products, annuities, alternative investments, mutual funds, and insurance, as well as proprietary technology, compliance, and back-office support tools. For institutions like banks and credit unions, LPL Financial offers financial advisory services to their clients and helps improve efficiency through its technology offerings. The company was formed when two smaller brokerage companies, Linsco and Private Ledger, merged in 1989.

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

LPL Financial Holdings (LPLA): Company Profile, Stock Price, News, Rankings

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LPL Financial Holdings

lpl financial holdings

Good afternoon, and thank you for joining the Q1 2026 earnings conference call for LPL Financial Holdings Inc. Joining the call today are Chief Executive Officer Rich Steinmeier and President and Chief Financial Officer Matt Audette. Rich and Matt will offer introductory remarks, and then the call will be open for questions.

The company would appreciate if analysts would limit themselves to only one question. To ask a follow-up, please re-enter the queue. 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.

Such forward-looking statements reflect management's current estimates or beliefs and are subject to known and unknown risks and uncertainties that may cause actual results or the timing of events to differ materially from those expressed or implied in such forward-looking statements. For more information about such risks and uncertainties, the company refers listeners to the disclosures set forth under the caption Forward-Looking Statements in the earnings press release, as well as the risk factors and other disclosures contained in the company's recent filings with the Securities and Exchange Commission.

During the call, the company will also discuss certain non-GAAP financial measures. For a reconciliation of such non-GAAP financial measures to the comparable GAAP figures, please refer to the company's earnings release, which can be found at investor.lpl.com. With that, I will turn the call over to Mr. Steinmeier.

Thanks, operator, and thank you to everyone for joining our call. It is a pleasure to speak with you again. It's been a strong start to the year for LPL. We delivered solid organic asset growth and continued to progress and build our recruiting pipelines. We advanced the operational work in preparation to onboard Commonwealth Financial Network, and we made meaningful progress driving improved operating leverage.

We accomplished all this against the backdrop of rising macroeconomic and geopolitical uncertainty, and an increasingly loud and often speculative narrative around the role of artificial intelligence in wealth management, whether enabler or disruptor. It's periods like this that serve as a reminder of the value of professional advice, the importance of our responsibility to support our advisors and institutions, and the strength and resiliency of our business model. Okay, now let's turn to our Q1 results.

In the quarter, total assets decreased to $2.3 trillion, as organic growth was more than offset by lower equity markets. We attracted organic net new assets of $21 billion, representing a 4% annualized growth rate. Our Q1 business results led to strong financial performance, with record adjusted EPS of $5.60, an increase of 9% from a year ago.

Next, let's turn to our strategic plan and how we are progressing against our organic and inorganic initiatives. Our vision is clear. We aspire to be the best firm in wealth management. To do that, we remain focused on three key priorities. One, maintaining the client centricity the firm was built upon. Two, empowering our employees to deliver exceptionally for our advisors and their clients. Three, delivering improved operating leverage.

Effectively executing on these focus areas will help us sustain our industry-leading growth while advancing the efficiency and effectiveness of our model. With that as context, let's review a few highlights of our business growth. In Q1, recruited assets improved to $17 billion, a solid outcome in what is typically our slowest quarter of the year.

Throughout Q1, we advanced opportunities into the later stages of our recruiting pipeline while pushing the overall pipeline to record levels. We continue to expect the pull-through to improve over the course of the year, supporting improved organic growth. In our traditional markets, we added approximately $15 billion in assets during Q1 as we improved on our already industry-leading capture of rates of advisors in motion.

With respect to our expanded affiliation models, Strategic Wealth Services, independent employee advisor model, and our enhanced RIA offering, we delivered another solid quarter, recruiting roughly $2 billion in assets. Turning to overall asset retention, it was 98% for Q1 and 97% over the last 12 months. This is a testament to our continued efforts to enhance the advisor experience through the delivery of new capabilities and technology and the evolution of our service and operations functions.

As for Commonwealth, the integration is progressing well. Advisors are completing their diligence, and as they do, we are pleased that many are deciding to stay with Commonwealth. In terms of asset retention, we are in the mid-80s today, and we continue to track towards our target of 90% retention. At the same time, we are working closely with our Commonwealth partners to jointly map the path forward to ensure we are bringing together the best of Commonwealth and LPL with several foundational elements we are looking to embrace.

For example, Commonwealth's indispensable approach to advisor satisfaction and their commitment to responsiveness is woven into the fabric of their culture and something that must be preserved. As a key step to enable this, we are developing a comprehensive case management solution to serve as a foundation for an evolved approach to how we route work and communicate progress to our advisors. The modernized platform will connect advisors' offices to critical systems from relationship management to service to operations, the product experience function helping ensure greater continuity, consistency, and follow-through across every step of the advisor experience.

Beyond the work we're doing to prepare for the onboarding of Commonwealth Advisors in Q4, we've continued to advance our capabilities to better meet the needs of high-net-worth individuals. We've expanded the inventory of alternative investment products available on the platform and are delivering more personalized investment solutions through enhanced direct indexing and tax loss harvesting capabilities.

In closing, the Q1 was a strong start to the year, and we feel great about our position as a critical partner to advisors and institutions. As we continue to improve the efficiency of our operations, we are creating capacity to reinvest in growth while driving stronger operating leverage. We believe this positions us to deliver sustained value for both our advisors and our shareholders. With that, I'll turn the call over to Matt.

Thanks, Rich. I'm glad to speak with everyone on today's call. As we move into 2026, we continue to advance our key priorities, which include driving solid organic growth, driving improved operating leverage by enhancing efficiencies and better monetizing the value we deliver, providing a market-leading advisor experience through ongoing investments in our platform, and advancing our M&A initiatives as we continue our preparation to onboard Commonwealth, announce the acquisition of Mariner Advisor Network, and continue to execute on our liquidity and succession strategy.

These efforts resulted in strong Q1 business and financial performance and position us well for the year ahead. Now turning to a few highlights from our Q1 business results. Total client assets were $2.3 trillion, down slightly from Q4, as continued organic growth was more than offset by lower equity markets.

Total organic net new assets were $21 billion and approximately 4% annualized growth rate. As for our Q1 financial results, the combination of organic growth and expense discipline led to adjusted pre-tax margin of approximately 38% and record adjusted EPS of $5.60. Gross profit was $1,593 million, up $51 million sequentially.

As for the key drivers, commission advisory fees net of payout were $487 million, up $33 million from Q4. Our payout rate was 87.2%, down 80 basis points from Q4, largely due to the seasonal reset of the production bonus at the beginning of the year. Looking ahead, we expect our payout rate will increase approximately 50 basis points in Q2, driven by the typical seasonal build.

With respect to client cash revenue, it was $460 million, up $4 million as the growth in average cash balances more than offset the full quarter impact of short-term rates. Overall client cash balances ended the quarter at $59 billion, down $2 billion, primarily driven by record net buying in Q1. Within our ICA portfolio, the mix of fixed-rate balances ended the quarter at roughly 60% within our target range of 50%-75%. Looking more closely at our ICA yield, it was 336 basis points in Q1, down 5 basis points sequentially, driven by the full quarter impact from the Q4 rate cuts. As we look ahead to Q2, based on where client cash balances and interest rates are today, we expect our ICA yield to be roughly flat.

As for service and fee revenue, it was $211 million in Q1, up $30 million from Q4, as the benefits from our previously announced fee changes more than offset the seasonal decline in conference revenue. Looking ahead to Q2, we expect service and fee revenue to increase by approximately $5 million as the previously announced direct mutual fund fees go into effect. Moving on to Q1 transaction revenue.

It was $81 million, up $6 million from Q4, driven by record trading volumes. As we look ahead to Q2, we expect trading activity to normalize and transaction revenue to decline by roughly $5 million. With respect to other revenue, it was $4 million in Q1. Going forward, we expect this to be roughly $6 million per quarter. Turning to our acquisition of Commonwealth.

As Rich mentioned, the transaction continues to progress well, and we remain on track to onboard in the Q4. As for the financials, accounting for the market-driven decline in Q1 assets, we now estimate run rate EBITDA of approximately $410 million once fully integrated. Next, let's move on to expenses, starting with core G&A.

It was $532 million in Q1, below the low end of our outlook range, reflecting our continued progress in driving greater efficiency and reducing our cost to serve. For the full year, given our progress to date, we are lowering the upper end of our outlook range by $20 million. We now anticipate 2026 core G&A to be in a range of $2.155 billion-$2.190 billion.

To give you a sense of the near-term timing of the spend, we expect Q2 core G&A to be in a range of $540 million-$560 million. Turning to TA loan amortization. It was $136 million in Q1, up $3 million from Q4. As we look ahead to the Q2, we expect TA loan amortization to increase by roughly $10 million, driven by the strengthening of our recruiting activity.

As for promotional expense, it totaled $76 million in the Q1, roughly flat with Q4. Looking ahead to Q2, we expect promotional expense to increase $5 million, driven by conference spend. Moving on to share-based compensation expense. It was $22 million in Q1, and we expect this to increase a few million sequentially as we head into Q2.

Turning to our tax rate, it was approximately 26.5% in Q1, and we expect a similar tax rate in Q2. Regarding capital management, we ended Q1 with corporate cash of $567 million, up $98 million from Q4. As for our leverage ratio, it was 1.86 times at the end of Q1, just under the midpoint of our target range. Moving on to capital deployment.

Our framework remains the same. Focus on allocating capital aligned with the returns we generate. Investing in organic growth first and foremost, pursuing M&A where appropriate, and returning excess capital to shareholders. In Q1, we continued to deploy capital in line with our priorities, investing primarily in organic growth in M&A, where we advanced the Commonwealth integration and continued to allocate capital to our Liquidity & Succession solution.

Regarding share repurchases, a reminder that we paused buybacks following the announcement of the Commonwealth acquisition with a plan to revisit following the onboard. Given our progress to date, with leverage slightly below the midpoint of our target range, the operational work to onboard Commonwealth on track, and the dislocation in the price of our stock, we opportunistically resumed buybacks earlier this month with roughly $125 million planned for Q2.

We will continue to remain flexible and dynamic with our capital deployment as we advance through the year. In closing, we delivered another quarter of strong business and financial results. As we look forward, we remain excited about the opportunities we have to continue to drive growth, deliver operating leverage, and create long-term shareholder value. With that, operator, please open the call for questions.

Certainly. Our first question for today comes from the line of Steven Chubak from Wolfe Research. Your question, please.

Hi. Good afternoon, Rich and Matt, and thanks for taking my question.

Absolutely, Steven. Good to hear from you.

There's been much focus on the structural headwinds to cash growth with anticipated adoption of agentic AI tools. Given the value prop you offer your advisors, both in terms of technology and enhanced service, can you speak to the flexibility on the pricing side if cash balances do remain in structural decline? Have you done any external research or engaged with advisors on a potential pivot to a more fee-based model that reduces your reliance on cash monetization?

Yeah. Thanks, Steven. First off, we don't see an imminent risk to further advisor-led cash sorting from AI. With respect to cash, while the AI and tokenization angle is new, we've heard variations of this question over time. We are well attuned to the recent developments in the sector and understand the focus on this subject, so you should know we're doing the work to properly assess the opportunities and risks of reducing our reliance on cash sweep economics over time.

As with everything we do, we must ensure we're delivering a fair value exchange with our advisors and their end investors and understand how any change may impact them or position us with prospective advisors while being cognizant of how our shareholders value predictable recurring earning streams. However, while the levers are clear, this is grounded in a lot of complex work.

On the one hand, we're a monoline business, so theoretically it should be straightforward to affect change, especially since we don't have to contend with the constraints of operating a bank and all that that entails. On the other hand, we only exist to serve the over 30,000 advisors and over 1,000 institutions that have trusted us with their business and the 8 million American families they serve.

We must ensure that any potential changes would work for them and also how it might intersect with other services we are delivering in the broader value exchange. Maybe to summarize, we're doing the work, which we know is extremely important. However, I would note it's going to take some time as we work closely with our clients to ensure any potential changes would work for them. We appreciate the question, deeply understand the setup, and know that this is top of mind for many of you.

Thank you. Our next question comes from the line of Alex Blostein from Goldman Sachs. Your question, please.

Hi. Good afternoon, everybody. Thank you as well. I was hoping you could speak to your appetite for incremental M&A vis-a-vis the updated share repurchase outlook over the coming several quarters as you're getting kind of deeper into the Commonwealth integration. Obviously, very nice to get a deal announced here recently. Maybe speak to the pipeline, the engagement you see in the channel now for additional M&A, and again, how to think about that versus share purchases. Thanks.

Yeah, Alex. I think maybe I'll speak to the near term, then Rich definitely jump in with anything you want to add on the longer term. I think more in the near term, Alex, like when you look at our focus on integrating Commonwealth, that's where we're spending our time and energy. I think from a capital allocation standpoint, what is right in front of us is the opportunities to drive organic growth, which we covered a bit in the prepared remarks on those pipelines building. Then I think the really clear and compelling returns on buying back our stock. I think that's more of a near-term dynamic. I think the longer-term dynamic, maybe I'll turn it over to you, Rich, to touch on this. I think the longer-term dynamic is still quite, you know, quite compelling.

Thanks, Matt. I think longer term, look, our core strategy is to drive organic growth. M&A is an important component of thinking about that holistic growth story. Historically and continually, we would look at a couple of different categories for M&A. One would be growing our markets. Broker-dealers and RIAs of different size. I think you could look at Mariner as a good example of that, the Mariner Advisor Network. For us, we've demonstrated that ability to integrate large and complex opportunities and deals better than anyone else.

Second would be our Liquidity & Succession solution, which we've talked extensively about, but the ability to help existing and external advisors solve succession needs in ways other firms don't. The point that this is a very unique offering in the marketplace, for us, and we feel very good about its continued progress in supporting our advisors and opportunistically looking externally.

Third, where appropriate, we'll look at capability transactions, evaluate whether we should allocate capital to build, buy or partner. In general, our M&A criteria remain, whether a transaction is a good fit strategically, financially, culturally, and operationally, but we'll remain disciplined around this framework as we go forward.

Thank you. Our next question comes from the line of Craig Siegenthaler from Bank of America. Your question, please.

Good evening, everyone. AUM retention rebounded to 98.2% in the quarter, but the advisor count declined by 34. That's a rounding area, but a little curious on what drove that dynamic. How do you expect the financial advisor head count to trend into year-end?

Craig Siegenthaler, I'll take that. I think you've got on the Q1 results. That's just a near-term dynamic with respect to Commonwealth. As, you know, as we track towards that 90% retention, we're at in the mid-80s right now. As those folks actually leave, you'll see those come out of head count. They're still in our head count until they actually leave. That's just a little bit of a dynamic there. That was about a net 90 reduction in the quarter from that. Head count was positive from that. I think to your question on head count going forward, I think it's, you know, be pretty typically tied to our recruiting efforts as those ramp up.

Just always, I think you asked as we went into the end of the year, just always keeping in mind as you get towards the end of the year, especially November and December, so for Q4, that's a lot of times where you see smaller advisors not, you know, kind of get out of the business to not renew their licenses. That would be something where you could have some head count noise that really has little to no AUM or NNA impact. That would be typical pretty much every year towards the end of the year.

Thank you. Our next question comes from the line of Devin Ryan from Citizens Bank. Your question, please.

Great. Hi, Rich. Hi, Matt. Wanna come back to the topic of artificial intelligence and maybe just a broader question. Can you talk about how you're just thinking about implications right now on LPL's model across areas like advisor productivity? How do you see it impacting demand for advice over time, even potentially consolidation towards scale firms or even advisor movement towards scale firms? Just some more color there would be helpful. Thank you.

Hey, Devin. It's Rich. Thanks for the question. A lot of questions out there around AI. I think if you look to historically how we've driven the enhanced value exchange and value proposition at the firm, we have consistently invested in tools and technology and services to support advisors throughout the life cycle of their practice. Not surprisingly, we view transformative technology, and specifically AI, as an incredibly powerful tool to help our advisors, not as a replacement.

We put it into three broad buckets. First would be directly serving the advisor. This is where we help them deliver their value to clients, and usually helping them accelerate their growth as well. Think about that, like note-taking tools, proposal generation tools, enhancements to wealth planning and portfolio construction.

I think we're really bullish there, that there's ways to build solutions and integrate them into our core, our core workstation. I think will be very valuable and enhance their value delivery to their clients. Second bucket would be processing of transactions and tasks to drive straight-through processing. We've alluded to these before.

This is the automation and made more efficient of actual workflows, transaction types, et cetera, follow-up. This will lead to more efficient workflows, fewer errors, less manual intervention, while dramatically reducing our cost to serve and improving the advisor experience. I think examples in this area, Devin, would be, you know, reducing the time and cost of compliance, supervision, marketing reviews, et cetera. Things that really sometimes fall to the advisor and oftentimes fall to their staff.

Maybe our last bucket that we think about are foundational improvements in coding and development. This, for us, is the ability to materially advance the development and deployment of code inside of our systems, to modernize our code base, and to deliver capabilities more quickly and more robustly. In there, we're leaning on tools like GitHub Copilot, Cursor, Cloud Code, et cetera, and are seeing early results that are very encouraging.

I think taken together, you know, maybe specifically to address your question, we feel really good about the ability for us to integrate those experiences into our value delivery. I think that's why you've seen an increasing move of advisors choosing to join this firm. We're that scale firm in the independent segment, supporting advisors and institutions with a differentiated set of capabilities that are fully integrated.

I think the integration of those capabilities are incredibly important in driving efficiency through the advisor's practice. You marry that with our ability and responsibility to protect our cyber environment through the deployment of AI and enhancement of our controls and governance systems, and strengthening our own defenses through AI, like reducing the time required to identify and address emerging risks in an increasingly AI-driven threat environment. When you take that together, we feel like this is an extension and continuation of our strategy and not a marked change. We are incredibly excited about how AI will help our advisors as well as our bottom line.

Thank you. Our next question comes from the line of Michael Cho from JP Morgan. Your question, please.

Hi, good evening. Thanks for taking my question. Rich, I just wanna touch on NNA and recruiting. I think you mentioned in your prepared remarks about record pipeline exiting Q1, and, you know, the expectation of improvement throughout 2026. I was kind of curious, you know, how you think the pace of improvement progresses from here for your recruiting pipeline, and any comments in terms of April, since we're at the end of the month anyway. Thank you.

Hey, Michael, thanks. First, I will tell you, I think we feel really good about as you're aware, advisor movement has returned to historical norms. We feel good about the environment that we're in stabilizing with more advisors beginning to move again. Second, maybe specific to us, given our strong progress with Commonwealth, we're increasingly focusing our recruiting efforts on external opportunities.

My interpretation for us was that as we've gotten more and more resources back and available to talk to advisors, I see an increasing responsiveness to the value proposition that we're putting forward in the marketplace. I think as you look throughout the year, and it takes time, and we referenced this before. It takes time to build those pipelines, to progress those pipelines.

Now sitting at record levels, we feel really good about the progression and about the absolute level of engagement we're having with advisors in the marketplace, in a marketplace for which more advisors are moving. You take that together, with the strength of our value proposition. I think it leads us to feel very confident in our ability to deliver those mid to high single-digit growth over time.

You know, if you look at that, not just in the near term, but maybe over the longer term, it also supports a long-term systemic leading in organic growth through, you know, 1, increasing our win rates in traditional markets. 2, further penetration of the wirehouse and regional employee advisor space for which we continue to see progression.

We're up to capturing now 11% of the advisors in that segment in motion, up from 9% just a couple of years ago. LNS. I'll tell you, as we're in conversations, LNS is a critically important component, not necessarily always just at the time of transition, but as us having a unique and differentiated solution in the marketplace for advisors as they think about their options to transition their business. You pair that with low attrition and steady contribution from same store sales, and it sets up collectively to hit a mid-to-high single-digit growth over the long term as well as the short term.

Yeah. I'll Thanks, Rich. I'll take Michael, I think you slipped in 2 questions there, but we'll do it. I'll do the second question. I'll cover client cash too, because I think everybody would also be interested in how April's shaping up there too. We'll save someone else from asking that. Overall, I think everybody knows, but like April, the seasonality in April, it's typically from an organic growth standpoint, one of the lowest months of the year, if not the lowest month of the year. On cash balances, you'll typically see 1 of the larger declines of the year, because of the two seasonal factors.

Starting with client cash, in addition to advisory fees, hitting in the first month of the quarter, which is around $2.5 billion now, given our size, you also have the impact of people paying their annual taxes. That reduced client cash by about $3 billion this year. Those two seasonal factors together are a decline of around $5.5 billion. From a cash standpoint, outside of that, we continue to see the build that we saw in March. We continue to see the build into April, going up by about $1 billion. The net of all that would be client cash down by around $4.5 billion.

On the organic growth side, those seasonal factors hit organic growth as well and get annualized into that single month. Both taxes, the impact of tax payments and the impact of advisory fees reduced April organic growth by around 3 percentage points. We had a little bit of attrition that was earlier in the quarter from a large practice that left in April that impacted as well.

Outside of those factors to what Rich was just highlighting, organic growth has continued to improve as recruiting has continued to pick up. That said, when you put all those factors together for April, we'll probably be in the zone of around 1.5%. As we move into May and June, as the seasonal factors abate, and to the recruiting point, as the pipelines build and the recruiting starts to come on board, we would expect to see organic growth pick up, in May and in June.

Thank you. Our next question comes from the line of Chris Allen from KBW. Your question, please.

Yeah, afternoon, guys. Thanks for taking the question. I wanted to ask about the Commonwealth EBIT run rate being lowered. I realize you talked about mark to market dynamics, just trying to reconcile that versus with the current market levels, the improvement we've seen so far in April. I would imagine the EBITDA was as of the quarter end. Would we expect a positive inflection next quarter?

Yeah, Chris, you got it right. I think the reduction from $425 to $410 was all market driven, meaning no changes to expected synergies or things like that. To your point, if we were to, you know, snap the chalk with the market having come back, and that's where it stays until the end of the quarter, I would expect us to be back at $425.

Thank you. Our next question comes from the line of Benjamin Budish from Barclays. Your question, please.

Hi, good evening. Maybe just following up on Chris's question there. The 410 run rate down sequentially, based on the market moves, but that is still below the starting point that you disclosed in Q1, Q2 of 2025, but the asset level was still higher than that. I'm just curious, is there anything else going on under the surface, anything mix related or anything like that might be impacting the EBITDA run rate today?

No, not at all. I mean, we've given updates each quarter on some things that have moved around, but I think the. The two things that have moved from market standpoint are gonna be the equity market levels or the market levels overall. Maybe the other item just to highlight is cash sweep, which that also has moved around. That's the only update. No changes to expected synergies. It's simply market movements and just reiterating, you know, what I just said to Chris. As we sit here today, those things have recovered. If we were giving a, you know, an instant update, which we're not, we would be back at $4.25.

Thank you. Our next question comes from the line of Michael Cyprys from Morgan Stanley. Your question please.

Hi, good afternoon. Thanks for taking the question. I wanted to follow up on AI and cash monetization. I was hoping you could help unpack why you don't see more risk or risk of more advisor sorting from an AI. I am curious what informs your viewpoint there. I think you mentioned you're doing some work around reducing reliance on cash sweep economics. I was hoping you could elaborate on what exactly this work entails, how you're going about your analysis, what factors are you considering and also not considering.

Okay. It's Rich. Let me take the first part of that, and maybe I'll take both if I hear. On why don't we think it's a risk. I think in first, in many ways, the behavior we're alluding to has already happened. We've seen sustained yield seeking over time, cash allocations today are already at historical low levels. Cash is around $5,000 per account, which has been hovering there for nearly two years consistently, barring kind of slight seasonal movements.

The system has been adjusting, and what we tend to see is incremental evolution, not step function change first. Second, we've always provided advisors with an abundance of options for managing yield since the cash on behalf of their clients. We think that this set of offerings, most advisors have adopted that into their practices themselves. We don't see behavioral change necessarily occurring, whether a tool be available or not available. In terms of the work, do you wanna take the work? Yeah.

Yeah, sure. I mean, I think.Yeah, Mike, I just have to unmute myself before I answer. It was a really good answer to start there. Look, I think on, and just kind of building on or reiterating what Rich had said, I think when you look at what the changes could be, like we have straightforward fee-based levers that we can use to manage and sustain our economics.

We've got flexibility in how we price, how we package, how we deliver value across the platform. I think the core item, and just to reiterate, what Rich had said, is like we exist to serve our 30,000 advisors and over 1,000 institutions that have trusted us with their business and the 8 million clients that they have, right?

I think the work that we're describing is all about ensuring, you know, any potential changes would work for them, and how that would intersect with other services that we're delivering. That's what I would just underscore. We've got the levers. It's more about what could work for our clients, and that's the work that we have in front of us.

Thank you. Our next question comes from the line of Jeff Schmitt from William Blair. Your question please.

Hi, good afternoon. One more question on the run rate EBITDA for Commonwealth. What are you assuming for synergies in that estimate that would materialize, I guess, mostly next year? Just what are a few of the biggest drivers of those synergies?

Yeah, Jeff, there's no change there. I think they're the ones that we had covered in the beginning. They're pretty common from a revenue side when you get things onto our custody and our clearing platform, whether it be cash sweep, as well as the sponsor-related revenues. Then you get your typical expense synergies of being on our platform, in our self-clearing platform on that side too. They're the synergies that you would expect. No change there.

Thank you. Our next question comes from the line of Michael Brown from UBS. Your question please.

Okay, great. Good evening, Rich and Matt. How are you guys?

Just wanted to ask another one on AI and AI disruption risk, but maybe more from the risk to the advisor and, you know, not from the cash angle. I think over time, advisors have continued to really prove the value to their customers, but the transformative potential of AI is tough to ignore here. Could you maybe speak to the risk of AI impacting that traditional advisor model with some of these AI-centric platforms and capabilities that are kind of rolling out in real time? Like could we see client behaviors shift to you know, prefer models like this, especially if the economics are more favorable? How are you kind of thinking about defending the turf of the traditional advisor model?

Yeah. Thanks, Michael. It's Rich. I think first, what we see historically is that the ties that bind in a relationship are between the advisor and their client, and those aren't necessarily because of efficiency of the delivery of the experience. More often than not, it's because of a trust, an extended relationship that for many has extended over years and oftentimes decades. When we look at the potential for the enhancements to the technology, we see things that actually may commoditize everyday low-value experiences, make them more efficient for the advisor. We see things that allow the personalization of the experience between the advisor and the client to enhance.

More often, what I would say is we'll see more time available to actually serve clients, more insights available to work with those clients, the ability to deliver them, where I think you're going to see more of advisors' time spent with clients, but also more of their staff and their team's time in support of those, and oftentimes their teams moving away from mundane task delivery into higher value-added. I think you see the opportunity there.

For a significant enhance in the delivery of the EQ element of the advisor experience, while you see a commoditization of some of the IQ elements, that being portfolio construction, risk remediation, et cetera, but with a personalization opportunity that is dramatically enhanced. We are running headlong into those enhancements through AI that prop the advisor up.

I think we see cases even in the services industry. When you look at radiologists, I think there was a belief that radiologists were going to be minimized with the application of AI in the reading of scans when in fact what you see is there are more radiologists today than there were 10 years ago because there are more high value-added services being provided in that experience, as well as more folks getting scans.

I think you might see an opportunity for advisors to more broadly serve more clients with deeper personalized advice through tools to help them be more productive. In that regard, those are the applications that we're running at with advisors in partnership with them. We don't see the risk exposure nearly as much as we see the opportunity side of that equation.

Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Wilma Burgess from Raymond James. Your question please.

Hey, good evening. Just a quick one on the payout ratio. It was 87.2% in 1Q, up about 40 BPS from just year-over-year and then, you know, compared to also 2024. Can you go into some of the drivers, and is it related to recent acquisitions or Commonwealth or anything along those lines, or what else could be driving it? Thanks.

Yeah. Wilma, that was the primary driver. It was Commonwealth. A couple of things related to Commonwealth. One, on average, they have advisors with larger AUM, the payout is higher. There's a little bit of noise that's unique to Q1 in the way that our payout works with a production bonus that builds throughout the year. They don't have that. The mixed impact of their payout being higher is most notable in Q1. Now that, you know, now that we've closed on the acquisition, you see that noise in Q1.

A secondary item, I'd say relatively, a minor driver of it, is just keep in mind the payout was driven off of advisory fees that were snapped, if you will, at the end of the year when asset levels were much higher. For those larger advisors where, you know, there's a tiered pricing impact, where they get discounts the larger they are, you had a little bit of that happen as well. The primary driver is the Commonwealth noise as you suspected.

Thank you. Our next question is a follow-up from the line of Michael Cho from J.P. Morgan. Your question, please.

Hi. Thanks for getting back in. I just had a quick follow-up on G&A. Matt, you talked through G&A and efficiency, and you pulled down the top end of the guide. I was wondering if you could just unpack a little bit more about where the efficiency gains, I guess, were maybe in the quarter and how we should think about those efficiency gains as you progress through the year in terms of, you know, areas for, you know, more potential there versus maybe other areas of more organic investment that you're considering. Thanks.

Yeah. I mean, I think broadly on where we're investing is, you know, continues to be at the highest level, investments to drive advisor capabilities, our technology, drive organic growth overall, combined with investments to drive efficiency. I think maybe just to give you a little bit of examples on the efficiency side and building on what Rich Steinmeier talked about a little bit earlier on AI, that's been a big driver of it, and it's a big component of our plans for the year. If we take those kind of 3 areas that we're talking about for AI, for advisor capability, for our own internal operations and efficiency, and then third, our ability to develop technology faster.

LPL Financial Holdings (LPLA) Q1 2026 Earnings Call Transcript

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