LPL Financial (NASDAQ:LPLA) executives highlighted record quarterly and annual results on the company’s fourth-quarter 2025 earnings call, emphasizing continued organic growth, integration milestones, and progress on a range of efficiency and technology initiatives. Chief Executive Officer Rich Steinmeier and President and Chief Financial Officer Matt Audette also provided updated guidance for key revenue and expense lines and addressed investor questions centered on the firm’s Commonwealth Financial Network acquisition, recruiting conditions, and cash trends.
Year-end results and strategic milestones
Steinmeier described 2025 as a “milestone year,” citing several major strategic accomplishments. He said the company delivered industry-leading organic asset growth of 8% for the year and onboarded the retail wealth management businesses of Wintrust Financial and First Horizon, which he said collectively support more than 200 financial advisors managing about $34 billion in client assets. He also pointed to completion of the Atria Wealth Solutions integration, which included converting seven broker-dealers to the LPL platform.
Fourth-quarter performance: assets, growth, and profitability
Management reported total assets of $2.4 trillion in the quarter, which both Steinmeier and Audette said reflected organic growth and higher equity markets. The company reported organic net new assets of $23 billion in the quarter, representing an approximately 4% annualized growth rate. Audette added that for the full year, total organic net new assets were $147 billion, equating to approximately 8% growth.
LPL reported record adjusted EPS of $5.23 for the quarter, up 23% from a year earlier, alongside an adjusted pre-tax margin of approximately 36%. Gross profit was $1.542 billion, up $62 million sequentially, according to Audette.
Key revenue drivers discussed on the call included:
- Commission and advisory fees net of payout: $453 million, up $27 million from the third quarter; payout rate of 88%, up 53 basis points sequentially due to seasonal production bonuses.
- Client cash revenue: $456 million, up $14 million from the third quarter, as growth in balances offset the impact of lower short-term interest rates.
- Service and fee revenue: $181 million, up $6 million sequentially, with a full quarter of Commonwealth partially offset by lower conference revenue and IRA fees.
- Transaction revenue: $75 million, up $8 million sequentially due to increased trading volumes.
Cash balances and the interest rate backdrop
Audette said client cash balances ended the quarter at $61 billion, up $5 billion sequentially, which he characterized as strong even considering a typical fourth-quarter seasonal build. He added that within the company’s ICA portfolio, fixed-rate balances ended the quarter at about 55%, within the firm’s stated target range of 50% to 75%.
He also noted ICA yield of 341 basis points in the fourth quarter, down 10 basis points from the third quarter, attributing the decline to October and December rate cuts. Looking to the first quarter, Audette said the full-quarter impact of the fourth-quarter rate cuts is expected to lower ICA yield by roughly another 10 basis points.
In response to questions about cash levels early in the year, Audette said January organic growth was around 2.5%, noting January is typically one of the slowest organic growth months due to year-end recruiting seasonality and the time needed for activity to ramp. On cash, he said advisory fees of roughly $2.5 billion typically come out of cash during the month, and that outside of fees, cash balances were down roughly $1 billion, implying overall cash sweep of roughly $57.5 billion at that point in January.
Commonwealth acquisition: retention, integration, and financial expectations
Much of the Q&A focused on Commonwealth—particularly retention metrics and integration execution. Steinmeier reiterated the company’s expectation of roughly 90% retention of client assets. Addressing press coverage that referenced headcount departures, he emphasized the company measures retention based on assets expected to land on the platform after onboarding and said advisors who have committed to stay so far are “larger,” “faster growing,” and “higher producers” than those who have chosen to leave.
Steinmeier also said advisors representing the “low 80% range” of assets had signed agreements to stay with Commonwealth at the time of the call, improving from nearly 80% previously disclosed. Management said some advisors are still making decisions over the coming months and quarters and that LPL and Commonwealth teams remain focused on education, due diligence support, and maintaining Commonwealth’s experience and culture.
Audette reaffirmed management’s estimate of approximately $425 million in run-rate EBITDA from Commonwealth once fully integrated. When asked why that estimate had not increased given market appreciation, Audette pointed to offsets including an additional interest rate cut and the reversal of a December buildup in Commonwealth cash sweep that “already gone back into the marketplace.”
On integration progress, Steinmeier said the firm has significant experience executing “major integration events” and that scoping work for Commonwealth-related capability builds is complete, development has begun, and complexity in those builds contributed to the extended timeline for conversion. He referenced enhancements intended to benefit both Commonwealth and broader LPL advisors, including a more robust advisor feedback ingestion process, a “single relationship agreement across multiple account structures,” and work related to householding and repricing.
Outlook: fees, expenses, and capital management
Audette provided several line-item expectations for the first quarter and broader guidance for 2026. For service and fee revenue, he said the company expects a sequential increase of approximately $25 million in the first quarter, reflecting a seasonal decline in conference revenue of about $10 million that is expected to be more than offset by previously announced fee changes. Audette said those fee changes are expected to provide an ongoing quarterly benefit of roughly $35 million, or $140 million annually.
On expenses, core G&A was $536 million in the fourth quarter, with full-year core G&A of $1.852 billion, which Audette said came in below the low end of the company’s outlook range. For 2026, prior to Commonwealth, management expects core G&A growth of 4.5% to 7% (or $1.775 billion to $1.820 billion). The company also expects a full-year Commonwealth expense impact of roughly $300 million to $390 million, bringing total 2026 core G&A expectations to $2.155 billion to $2.210 billion. For the first quarter, management expects core G&A of $540 million to $560 million.
Audette also noted that transition assistance (TA) loan amortization was $133 million in the fourth quarter, up $28 million sequentially due to Commonwealth-related transition assistance and ongoing recruiting. Promotional expense was $76 million, down $21 million sequentially due primarily to lower conference spend.
On capital management, the company ended the fourth quarter with corporate cash of $470 million and a leverage ratio of 1.95x, near the midpoint of management’s target range. Audette reiterated that share repurchases were paused following the Commonwealth acquisition announcement, with plans to revisit after onboarding, but said there “may be an opportunity” to refine the timing of resuming buybacks later in the year given the pace of deleveraging and onboarding preparation.
About LPL Financial (NASDAQ:LPLA)
LPL Financial (NASDAQ: LPLA) is a U.S.-focused financial services firm that provides brokerage, custodial and advisory platforms to independent financial advisors, registered investment advisers and institutions. Operating primarily as an independent broker-dealer and custodian, the company supports a network of advisors with the operational, compliance and clearing infrastructure needed to manage client accounts and deliver investment advice outside of traditional wirehouse models.
The firm’s product and service offerings include trade execution and clearing, custody services, retirement plan services, model portfolio and advisory platforms, wealth management technology, investment research and product access across equities, fixed income, mutual funds, exchange-traded funds and insurance and annuity solutions.
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