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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
☐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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock - $0.001 par value per share
LPLA
The Nasdaq Global Select Market
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. x Yes   o No
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). x Yes   o No
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 filerxAccelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).  
☐ Yes   x No
The number of shares of Common Stock, par value $0.001 per share, outstanding as of April 29, 2024 was 74,708,931.


TABLE OF CONTENTS
Page
ii
ii
Note 1 - Organization and Description of the Company
Note 2 - Summary of Significant Accounting Policies
Note 4 - Acquisitions
Note 5 - Fair Value Measurements
Note 6 - Investment Securities
Note 7 - Goodwill and Other Intangibles, Net
Note 9 - Corporate Debt and Other Borrowings, Net
Note 10 - Commitments and Contingencies
Note 11 - Stockholders’ Equity
Note 12 - Share-based Compensation
Note 13 - Earnings per Share
Note 14 - Net Capital and Regulatory Requirements
Note 15 - Financial Instruments with Off-Balance Sheet Credit Risk and Concentrations of Credit Risk

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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public on the SEC’s website at sec.gov.
We post the following filings to our website at lpl.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual reports on Form 10-K, our proxy statements, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. Copies of all such filings are available free of charge by request via email (investor.relations@lplfinancial.com), telephone ((617) 897-4574) or mail (LPL Financial Investor Relations at 1055 LPL Way, Fort Mill, SC 29715). The information contained or incorporated on our website is not a part of this Quarterly Report on Form 10-Q.
We may use our website as a means of disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures are included on our website in the “Investor Relations” or “Press Releases” sections. Accordingly, investors should monitor these portions of our website in addition to following the Company’s press releases, SEC filings, public conference calls and webcasts.
When we use the terms “LPLFH”, “LPL”, “we”, “us”, “our” and “the Company”, we mean LPL Financial Holdings Inc., a Delaware corporation, and its consolidated subsidiaries, taken as a whole, unless the context otherwise indicates.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q regarding:
•the Company’s future financial and operating results, outlook, growth, plans, business strategies, liquidity, future share repurchases and dividends, including statements regarding future resolution of regulatory matters, legal proceedings and related costs;
•a potential settlement with the SEC related to its civil investigation into the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal devices in connection with an industry-wide review of off-platform communications (the “Off-Channel Investigation”);
•the Company’s future revenue and expense;
•future affiliation models and capabilities;
•the expected closing of the Company’s acquisition of Atria Wealth Solutions, Inc. (“Atria”);
•the expected transition and onboarding of advisors, institutions and assets in connection with our acquisition and recruitment activity;
•market and macroeconomic trends, including the effects of inflation and the interest rate environment;
•projected savings and anticipated improvements to the Company’s operating model, services and technologies as a result of its investments, initiatives, programs and acquisitions; and
•any other statements that are not related to present facts or current conditions, or that are not purely historical, constitute forward-looking statements.

These forward-looking statements reflect the Company’s expectations and objectives as of May 2, 2024. The words “anticipates,” “believes,” “expects,” “may,” “plans,” “predicts,” “will” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees that expectations or objectives expressed or implied by the Company 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:
•changes in general economic and financial market conditions, including retail investor sentiment;
•changes in interest rates and fees payable by banks participating in the Company’s client cash programs, including the Company’s success in negotiating agreements with current or additional counterparties;
•the Company’s strategy and success in managing client cash program fees;
•fluctuations in the levels of advisory and brokerage assets, including net new assets, and the related impact on revenue;
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•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 market 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;
•difficulties and delays in onboarding the assets of acquired or recruited advisors, including the receipt and timing of regulatory approvals that may be required;
•disruptions in the businesses of the Company that could make it more difficult to maintain relationships with advisors and their clients;
•the choice by clients of acquired or recruited advisors not to open brokerage and/or advisory accounts at the Company;
•changes in the growth and profitability of the Company’s fee-based offerings;
•the effect of current, pending and future legislation, regulation and regulatory actions, including disciplinary actions imposed by federal and state regulators and self-regulatory organizations;
•the cost of settling and remediating issues related to regulatory matters or legal proceedings, including actual costs of reimbursing customers for losses in excess of our reserves;
•the negotiation of the definitive documentation in connection with the settlement of the Off-Channel Investigation;
•changes made to the Company’s services and pricing, including in response to competitive developments and current, pending and future legislation, regulation and regulatory actions, and the effect that such changes may have on the Company’s gross profit streams and costs;
•execution of the Company’s capital management plans, including its compliance with the terms of the Company’s amended and restated credit agreement (the “Credit Agreement”), the committed revolving credit facility at our primary broker-dealer subsidiary, LPL Financial LLC (the “Broker-Dealer Revolving Credit Facility”), and the indentures governing the Company’s senior unsecured notes (the “Indentures”);
•strategic acquisitions and investments, including pursuant to the Company’s Liquidity & Succession solution, and the effect that such acquisitions and investments may have on the Company’s capital management plans and liquidity;
•the price, availability and trading volumes of shares of the Company’s common stock, which will affect the timing and size of future share repurchases by the Company, if any;
•execution of the Company’s plans and its success in realizing the synergies, expense savings, service improvements or efficiencies expected to result from its investments, initiatives and acquisitions, expense plans and technology initiatives;
•whether advisors affiliated with Prudential Financial, Inc. (“Prudential”) will transition registration to the Company and whether assets reported as serviced by such financial advisors will translate into assets of the Company;
•the failure to satisfy the closing conditions applicable to the strategic relationship agreement between the Company and Prudential, including regulatory approval;
•the performance of third-party service providers to which business processes have been transitioned;
•the Company’s ability to control operating risks, information technology systems risks, cybersecurity risks and sourcing risks; 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.

Except as required by law, the Company specifically disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this Quarterly Report on Form 10-Q, and you should not rely on statements contained herein as representing the Company’s view as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

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GLOSSARY OF TERMS
Acquisition Costs: Expenses that include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of the acquisitions.
Adjusted EBITDA: A non-GAAP financial measure defined as EBITDA plus acquisition costs.
Adjusted EPS: A non-GAAP financial measure defined as Adjusted Net Income divided by the weighted average number of diluted shares outstanding for the applicable period.
Adjusted Net Income: A non-GAAP financial measure defined as net income plus the after-tax impact of amortization of other intangibles and acquisition costs.
Basis Point: One basis point equals 1/100th of 1%.
Core G&A: A non-GAAP financial measure defined as total expense excluding the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; brokerage, clearing and exchange; amortization of other intangibles; market fluctuations on employee deferred compensation; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs.
Corporate Cash: A component of cash and equivalents that includes the sum of cash and equivalents from the following: (1) cash and equivalents held at LPL Holdings, Inc., (2) cash and equivalents held at regulated subsidiaries as defined by the Company’s Credit Agreement, which include LPL Financial LLC and The Private Trust Company, N.A., in excess of the capital requirements of the Company’s Credit Agreement, which, in the case of LPL Financial LLC is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with the Uniform Net Capital Rule, and (3) cash and equivalents held at non-regulated subsidiaries.
Credit Agreement: The Company’s amended and restated credit agreement.
Credit Agreement EBITDA: A non-GAAP financial measure defined in the Credit Agreement as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments and to include future expected cost savings, operating expense reductions or other synergies from certain transactions.
EBITDA: A non-GAAP financial measure defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles.
FINRA: The Financial Industry Regulatory Authority.
GAAP: Accounting principles generally accepted in the United States of America.
Gross Profit: A non-GAAP financial measure defined as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation.
Indentures: The indentures governing the Company’s senior unsecured notes.
Leverage Ratio: A financial metric from our Credit Agreement that is calculated by dividing Credit Agreement net debt, which equals consolidated total debt less Corporate Cash, by Credit Agreement EBITDA.
NFA: The National Futures Association.
OCC: The Office of the Comptroller of the Currency.
RIA: Registered investment advisor.
SEC: The U.S. Securities and Exchange Commission.
Uniform Net Capital Rule: Refers to Rule 15c3-1 under the Exchange Act, which specifies minimum capital requirements that are intended to ensure the general financial soundness and liquidity of broker-dealers.
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PART I — FINANCIAL INFORMATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
LPL serves the advisor-mediated marketplace as the nation’s largest independent broker-dealer, a leading investment advisory firm and a top custodian. We serve nearly 23,000 financial advisors, including advisors at approximately 1,100 institutions and at approximately 570 registered investment advisor (“RIA”) firms nationwide, providing the front-, middle- and back-office support our advisors need. Through our comprehensive platform, we offer integrated technology solutions; brokerage and advisory platforms; clearing, compliance, business and planning and advice services; consultative practice management programs and training; and in-house research to help our advisors deliver advice to their clients and run successful businesses.
We are steadfast in our commitment to the advisor-mediated model and the belief that investors deserve access to personalized guidance from a financial advisor. We believe advisors should have the freedom to choose the business model, services and technology they need and to manage their client relationships. We believe investors achieve better outcomes when working with a financial advisor, and we strive to make it easy for advisors to do what is best for their clients.
We believe that we are the only company that offers the unique combination of an integrated technology platform, comprehensive self-clearing services and access to a wide range of curated non-proprietary products all delivered in an environment unencumbered by conflicts from product manufacturing, underwriting and market-making.
Our Sources of Revenue
Our revenue is derived primarily from fees and commissions from products and advisory services offered by our advisors to their clients, a substantial portion of which we pay out to our advisors, as well as fees we receive from our advisors for the use of our technology, custody, clearing, trust and reporting platforms. We also generate asset-based revenue through our insured bank sweep vehicles, money market account balances and the access we provide to a variety of product providers with the following product lines:
• Alternative Investments
• Retirement Plan Products
• Annuities
• Separately Managed Accounts
• Exchange Traded Products
• Structured Products
• Insurance Based Products
• Unit Investment Trusts
• Mutual Funds
Under our self-clearing platform, we custody the majority of client assets invested in these financial products, for which we provide statements, transaction processing and ongoing account management. In return for these services, mutual funds, insurance companies, banks and other financial product sponsors pay us fees based on asset levels or number of accounts managed. We also earn interest from margin loans made to our advisors’ clients, cash and equivalents segregated under federal or other regulations, advisor repayable loans and operating cash, which is included in interest income, net in the condensed consolidated statements of income. A portion of our revenue is not asset-based or correlated with the equity financial markets.
We regularly review various aspects of our operations and service offerings, including our policies, procedures and platforms, in response to marketplace developments. We seek to continuously improve and enhance aspects of our operations and service offerings in order to position our advisors for long-term growth and to align with competitive and regulatory developments. For example, we regularly review the structure and fees of our products and services, including related disclosures, in the context of the changing regulatory environment and competitive landscape for advisory and brokerage accounts.
Significant Events
Entered into a definitive purchase agreement to acquire Atria Wealth Solutions, Inc. (“Atria”)
On February 13, 2024, the Company announced that it had entered into a definitive purchase agreement to acquire Atria, a wealth management solutions holding company headquartered in New York. As part of the agreement, Atria will transition its brokerage and advisory assets, currently custodied with its network of broker-dealers, to the Company’s platform. The Company expects to close the transaction in the second half of 2024 for an initial purchase price of approximately $805 million with the conversion expected to be completed in mid-2025, subject to receipt of regulatory approval and other closing conditions.
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Executive Summary
Financial Highlights
Results for the first quarter of 2024 included net income of $288.8 million, or $3.83 per diluted share, which compares to $338.9 million, or $4.24 per diluted share, for the first quarter of 2023.
Asset Trends
Total advisory and brokerage assets served were $1.4 trillion at March 31, 2024, compared to $1.2 trillion at March 31, 2023. Total net new assets were $16.7 billion for the three months ended March 31, 2024, compared to $24.5 billion for the same period in 2023.
Net new advisory assets were $16.2 billion for the three months ended March 31, 2024, compared to $14.6 billion for the same period in 2023. Advisory assets were $793.0 billion, or 55.0% of total advisory and brokerage assets served, at March 31, 2024, up 28% from $620.9 billion at March 31, 2023.
Net new brokerage assets were $0.5 billion for the three months ended March 31, 2024, compared to $9.9 billion for the same period in 2023. Brokerage assets were $647.9 billion at March 31, 2024, up 17% from $554.3 billion at March 31, 2023.
Gross Profit Trend
Gross profit, a non-GAAP financial measure, was $1.1 billion for the three months ended March 31, 2024, an increase of 5% from $1.0 billion for the three months ended March 31, 2023. See the “Key Performance Metrics” section for additional information on gross profit.
Common Stock Dividends and Share Repurchases
During the three months ended March 31, 2024, we paid stockholders cash dividends of $22.4 million and repurchased 296,145 of our outstanding shares for a total of $70.0 million.

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Key Performance Metrics
We focus on several key metrics in evaluating the success of our business relationships and our resulting financial position and operating performance. Our key operating, business and financial metrics are as follows:
As of and for the Three Months Ended
March 31,December 31,March 31,
Operating Metrics (dollars in billions)(1)
202420232023
Advisory and Brokerage Assets(2)
Advisory assets$793.0 $735.8 $620.9 
Brokerage assets647.9 618.2 554.3 
Total Advisory and Brokerage Assets$1,440.9 $1,354.1 $1,175.2 
Advisory as a % of total Advisory and Brokerage Assets55.0%54.3%52.8%
Net New Assets(3)
Net new advisory assets$16.2 $20.5 $14.6 
Net new brokerage assets0.5 4.2 9.9 
Total Net New Assets$16.7 $24.7 $24.5 
Organic Net New Assets
Organic net new advisory assets$16.2 $20.5 $13.7 
Organic net new brokerage assets0.5 4.2 7.1 
Total Organic Net New Assets$16.7 $24.7 $20.8 
Organic advisory net new assets annualized growth(4)
8.8%12.4%9.4%
Total organic net new assets annualized growth(4)
4.9%8.0%7.5%
Client Cash Balances
Insured cash account sweep$32.6 $34.5 $39.7 
Deposit cash account sweep9.2 9.3 10.2 
Total Bank Sweep41.8 43.8 49.9 
Money market sweep 2.4 2.4 2.6 
Total Client Cash Sweep Held by Third Parties44.2 46.2 52.5 
Client cash account(5)
2.1 2.0 1.6 
Total Client Cash Balances$46.3 $48.2 $54.0 
Client Cash Balances as a % of Total Assets3.2%3.6%4.6%
Net buy (sell) activity(6)
$37.8 $32.8 $36.9 
As of and for the Three Months Ended
March 31,December 31,March 31,
Business and Financial Metrics (dollars in millions)202420232023
Advisors22,884 22,660 21,521 
Average total assets per advisor(7)
$63.0 $59.8 $54.6 
Share repurchases$70.0 $225.0 $275.0 
Dividends$22.4 $22.7 $23.6 
Leverage ratio(8)
1.65 1.63 1.34 
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Three Months Ended March 31,
Financial Metrics (dollars in millions, except per share data)20242023
Total revenue$2,832.6 $2,417.8 
Net income$288.8 $338.9 
Earnings per share (“EPS”), diluted$3.83 $4.24 
Non-GAAP Financial Metrics (dollars in millions, except per share data)
Adjusted EPS(9)
$4.21 $4.49 
Gross profit(10)
$1,066.4 $1,020.0 
Adjusted EBITDA(11)
$540.5 $566.9 
Core G&A(12)
$363.5 $326.2 
_______________________________
(1)Totals may not foot due to rounding.
(2)Consists of total advisory and brokerage assets under custody at the Company’s primary broker-dealer subsidiary, LPL Financial LLC (“LPL Financial”). Please consult the “Results of Operations” section for a tabular presentation of advisory and brokerage assets.
(3)Consists of total client deposits into advisory or brokerage accounts less total client withdrawals from advisory or brokerage accounts, plus dividends, plus interest, minus advisory fees. We consider conversions from and to brokerage or advisory accounts as deposits and withdrawals, respectively.
(4)Calculated as annualized current period organic net new assets divided by preceding period assets in their respective categories of advisory assets or total advisory and brokerage assets.
(5)During the first quarter of 2024, the Company updated its definition of client cash account balances to exclude other client payables. Prior period disclosures have been updated to reflect this change as applicable.
(6)Represents the amount of securities purchased less the amount of securities sold in client accounts custodied with LPL Financial.
(7)Calculated based on the end of period total advisory and brokerage assets divided by the end of period advisor count.
(8)The leverage ratio is a financial metric from our Credit Agreement and is calculated by dividing Credit Agreement net debt, which equals consolidated total debt less Corporate Cash, by Credit Agreement EBITDA. Credit Agreement EBITDA, a non-GAAP financial measure, is defined by the Credit Agreement as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions. Please consult the “Debt and Related Covenants” section for more information. Below are reconciliations of corporate debt and other borrowings to Credit Agreement net debt as of the dates below and net income to EBITDA and Credit Agreement EBITDA for the trailing twelve-month periods presented (in millions):
March 31,December 31,March 31,
Credit Agreement Net Debt Reconciliation202420232023
Corporate debt and other borrowings$3,875.5 $3,757.2 $2,870.2 
Corporate Cash(13)
(311.1)(183.7)(234.2)
Credit Agreement Net Debt(†)
$3,564.5 $3,573.5 $2,636.0 
March 31,December 31,March 31,
EBITDA and Credit Agreement EBITDA Reconciliation202420232023
Net income$1,016.1 $1,066.3 $1,050.8 
Interest expense on borrowings207.7 186.8 138.2 
Provision for income taxes358.3 378.5 331.9 
Depreciation and amortization258.1 247.0 210.4 
Amortization of other intangibles112.7 107.2 90.5 
EBITDA(†)
$1,952.9 $1,985.8 $1,821.9 
Credit Agreement Adjustments:
Acquisition costs and other(14)(15)
$117.2 $110.2 $42.0 
Employee share-based compensation70.7 66.0 55.3 
M&A accretion(16)
17.0 30.3 42.0 
Advisor share-based compensation2.6 2.6 2.6 
Credit Agreement EBITDA(†)
$2,160.5 $2,194.8 $1,963.7 
March 31,December 31,March 31,
202420232023
Leverage Ratio1.65 1.63 1.34 
_______________________________
(†)    Totals may not foot due to rounding.
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(9)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 and acquisition costs, divided by the weighted average number of diluted shares outstanding for the applicable period. The Company presents adjusted net income and adjusted EPS because management believes that these metrics can provide investors with useful insight into the Company’s core operating performance by excluding non-cash items and acquisition costs that management does not believe impact the Company’s ongoing operations. Adjusted net income and adjusted EPS are not measures of the Company's 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. Below is a reconciliation of net income and earnings per diluted share to adjusted net income and adjusted EPS for the periods presented (in millions, except per share data):
Three Months Ended March 31,
20242023
Adjusted Net Income / Adjusted EPS ReconciliationAmountPer ShareAmountPer Share
Net income / earnings per diluted share$288.8 $3.83 $338.9 $4.24 
Amortization of other intangibles 29.6 0.39 24.1 0.30 
Acquisition costs(14)
9.5 0.13 3.1 0.04 
Tax benefit(10.3)(0.14)(7.2)(0.09)
Adjusted Net Income / Adjusted EPS(†)
$317.5 $4.21 $358.9 $4.49 
Weighted-average shares outstanding, diluted75.5 80.0 
_______________________________
(†)    Totals may not foot due to rounding.
(10)Gross profit is a non-GAAP financial measure defined as total revenue less advisory and commission expense; brokerage, clearing and exchange expense; and market fluctuations on employee deferred compensation. All other expense categories, including depreciation and amortization of property and equipment and amortization of other intangibles, are considered by management to be general and administrative in nature. Because our gross profit amounts do not include any depreciation and amortization expense, we consider our gross profit amounts to be non-GAAP financial measures that may not be comparable to those of others in our industry. We believe that gross profit amounts can provide investors with useful insight into our core operating performance before indirect costs that are general and administrative in nature. Below is a calculation of gross profit for the periods presented (in millions):
Three Months Ended March 31,
Gross Profit20242023
Total revenue$2,832.6 $2,417.8 
Advisory and commission expense1,733.5 1,370.6 
Brokerage, clearing and exchange expense30.5 26.1 
Employee deferred compensation
2.1 1.1 
Gross Profit(†)
$1,066.4 $1,020.0 
_______________________________
(†)    Totals may not foot due to rounding.
(11)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. The Company presents EBITDA and adjusted EBITDA because management believes that they can be useful financial metrics in understanding the Company’s earnings from operations. EBITDA and adjusted EBITDA are not measures of the Company's financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. Below is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented (in millions):
Three Months Ended March 31,
EBITDA Reconciliation20242023
Net income$288.8 $338.9 
Interest expense on borrowings60.1 39.2 
Provision for income taxes85.4 105.6 
Depreciation and amortization67.2 56.1 
Amortization of other intangibles29.6 24.1 
EBITDA$531.0 $563.8 
Acquisition costs(14)
9.5 3.1 
Adjusted EBITDA(†)
$540.5 $566.9 
_______________________________
(†)    Totals may not foot due to rounding.
        
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(12)Core G&A is a non-GAAP financial measure defined as total expense less the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; brokerage, clearing and exchange; amortization of other intangibles; market fluctuations on employee deferred compensation; promotional (ongoing); employee share-based compensation; regulatory charges; and acquisition costs. Management presents core G&A because it believes core G&A reflects the corporate expense categories over which management can generally exercise a measure of control, compared with expense items over which management either cannot exercise control, such as advisory and commission expense, or which management views as promotional expense necessary to support advisor growth and retention, including conferences and transition assistance. Core G&A is not a measure of the Company’s total expense as calculated in accordance with GAAP. Below is a reconciliation of the Company’s total expense to core G&A for the periods presented (in millions):
Three Months Ended March 31,
Core G&A Reconciliation20242023
Total expense$2,458.4 $1,973.3 
Advisory and commission(1,733.5 )(1,370.6 )
Depreciation and amortization(67.2 )(56.1 )
Interest expense on borrowings(60.1 )(39.2 )
Brokerage, clearing and exchange(30.5 )(26.1 )
Amortization of other intangibles(29.6 )(24.1 )
Employee deferred compensation
(2.1)(1.1 )
Total G&A(†)
535.4 456.1 
Promotional (ongoing)(14)(17)
(132.3 )(101.2 )
Employee share-based compensation(22.6 )(18.0 )
Acquisition costs(14)
(9.5 )(3.1 )
Regulatory charges
(7.5 )(7.7 )
Core G&A(†)
$363.5 $326.2 
_______________________________
(†)    Totals may not foot due to rounding.
(13)See the “Liquidity and Capital Resources” section for additional information about Corporate Cash.
(14)Acquisition costs include the costs to setup, onboard and integrate acquired entities and other costs that were incurred as a result of acquisitions. The below table summarizes the primary components of acquisition costs for the periods presented (in millions):
Three Months Ended March 31,
Acquisition costs20242023
Compensation and benefits$3.9 $0.9 
Professional services3.2 1.6 
Promotional(17)
2.3 0.2 
Other0.2 0.4 
Acquisition costs(†)
$9.5 $3.1 
_______________________________
(†)    Totals may not foot due to rounding.
(15)In March 2024, the Company and the SEC reached a settlement in principle to resolve the SEC’s civil investigation of the Company's compliance with records preservation requirements for business-related electronic communications stored on personal devices or messaging platforms that have not been approved by the Company. As a result of this settlement, the Company would pay a $50.0 million civil monetary penalty. The Company recorded $40.0 million in regulatory charges during the three months ended September 30, 2023 to reflect the amount of the penalty that is not covered by the Company's captive insurance subsidiary. See Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements for further detail.
(16)M&A accretion is an adjustment to reflect the annualized expected run rate EBITDA of an acquisition as permitted by the Credit Agreement for up to eight fiscal quarters following the close of such acquisition.
(17)Promotional (ongoing) for the three months ended March 31, 2024 and 2023 includes $8.0 million and $3.2 million, respectively, of support costs related to full-time employees that are classified within compensation and benefits expense in the condensed consolidated statements of income. Promotional (ongoing) for the three months ended March 31, 2024 and 2023 excludes $2.3 million and $0.2 million, respectively, of expenses incurred as a result of acquisitions, which are included in the acquisition costs line item.
Legal and Regulatory Matters
The financial services industry is subject to extensive regulation by U.S. federal and state government agencies as well as various self-regulatory organizations. Compliance with all applicable laws and regulations involves a significant investment in time and resources, and we continue to invest in our compliance functions to monitor our adherence to the numerous legal and regulatory requirements applicable to our business. Any new laws or regulations applicable to our business, any changes to existing laws or regulations, or any changes to the interpretations or enforcement of those laws or regulations may affect our operations and/or financial condition. We seek to participate in the development of significant rules and regulations that govern our industry.
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As a regulated entity, we are subject to regulatory oversight and inquiries related to, among other items, our compliance and supervisory systems and procedures and other controls, as well as our disclosures, supervision and reporting. We review these items in the ordinary course of business in our effort to adhere to legal and regulatory requirements applicable to our operations. Nevertheless, additional regulation and enhanced regulatory enforcement has resulted, and may result in the future, in additional operational and compliance costs, as well as increased costs in the form of penalties and fines, investigatory and settlement costs, customer restitution and remediation related to regulatory matters. In the ordinary course of business, we periodically identify or become aware of purported inadequacies, deficiencies and other issues. It is our policy to evaluate these matters for potential legal or regulatory violations and other potential compliance issues. It is also our policy to self-report known violations and issues as required by applicable law and regulation. When deemed probable that matters may result in financial losses, we accrue for those losses based on an estimate of possible fines, customer restitution and losses related to the repurchase of sold securities and other losses, as applicable. Certain regulatory and other legal claims and losses may be covered through our wholly-owned captive insurance subsidiary, which is chartered with the insurance commissioner in the state of Tennessee.
Assessing the probability of a loss occurring and the timing and amount of any loss related to a regulatory matter or legal proceeding, whether or not covered by our captive insurance subsidiary, is inherently difficult and requires judgments based on a variety of factors and assumptions. There are particular uncertainties and complexities involved when assessing the adequacy of loss reserves for potential liabilities that are self-insured by our captive insurance subsidiary, which depends in part on historical claims experience, including the actual timing and costs of resolving matters that begin in one policy period and are resolved in a subsequent period.
Our accruals, including those established through our captive insurance subsidiary at March 31, 2024, include estimated costs for significant regulatory matters or legal proceedings, generally relating to the adequacy of our compliance and supervisory systems and procedures and other controls, for which we believe losses are both probable and reasonably estimable.
The outcome of regulatory or legal proceedings could result in legal liability, regulatory fines or monetary penalties in excess of our accruals and insurance, which could have a material adverse effect on our business, results of operations, cash flows or financial condition. For more information on management’s loss contingency policies, see Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements.
Economic Overview and Impact of Financial Market Events
Our business is directly and indirectly sensitive to several macroeconomic factors and the state of the financial markets in the United States. According to the most recent estimate from the U.S. Bureau of Economic Analysis, the U.S. economy grew at an annualized pace of 1.6% in the first quarter of 2024 after growing at an annualized pace of 3.4% in the fourth quarter of last year. Although inflation, rising interest rates and volatile global markets were all headwinds, the U.S. economy added roughly 829,000 jobs in the first quarter of 2024. The unemployment rate averaged 3.8% in the first quarter of 2024, up slightly from the 3.7% average in the prior quarter, but still historically low, indicating a tight labor market. The equity markets rebounded as the Federal Reserve (“Fed”) held rates unchanged and prepared markets for future rate cuts. As a result, the S&P 500 returned 10.6% during the first quarter of 2024.
Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Fed policy. During the first quarter of 2024, Fed policymakers maintained the target range for the federal funds rate of 5.25% to 5.50%. To the extent they pursue tighter monetary policy, the Federal Open Market Committee members are expected to take into account the cumulative impacts from higher rates, the inflation trajectory and global financial conditions.
Please consult the “Risks Related to Our Business and Industry” section within Part I, “Item 1A. Risk Factors” in our 2023 Annual Report on Form 10-K for more information about the risks associated with significant interest rate changes and the potential related effects on our profitability and financial condition.
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Results of Operations
The following discussion presents an analysis of our results of operations for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended March 31,
20242023% Change
REVENUE
Advisory$1,199,811 $954,057 26 %
Commission:
Sales-based385,235 286,072 35 %
Trailing361,211 317,653 14 %
Total commission746,446 603,725 24 %
Asset-based:
Client cash352,382 418,275 (16 %)
Other asset-based248,339 203,473 22 %
Total asset-based600,721 621,748 (3 %)
Service and fee132,172 118,987 11 %
Transaction57,258 48,935 17 %
Interest income, net43,525 37,358 17 %
Other52,660 33,022 59 %
Total revenue    
2,832,593 2,417,832 17 %
EXPENSE
Advisory and commission1,733,487 1,370,634 26 %
Compensation and benefits274,369 233,533 17 %
Promotional126,619 98,223 29 %
Depreciation and amortization67,158 56,054 20 %
Occupancy and equipment66,264 60,173 10 %
Interest expense on borrowings60,082 39,184 53 %
Brokerage, clearing and exchange30,532 26,126 17 %
Amortization of other intangibles29,552 24,092 23 %
Communications and data processing19,744 17,675 12 %
Professional services13,279 14,220 (7 %)
Other37,315 33,421 12 %
Total expense    
2,458,401 1,973,335 25 %
INCOME BEFORE PROVISION FOR INCOME TAXES
374,192 444,497 (16 %)
PROVISION FOR INCOME TAXES
85,428 105,613 (19 %)
NET INCOME
$288,764 $338,884 (15 %)
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Revenue
Advisory
Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate RIA advisory platform and is based on a percentage of the market value of the eligible assets in the clients’ advisory accounts. We provide ongoing investment advice and act as a custodian, providing brokerage and execution services on transactions, and perform administrative services for these accounts. Advisory fees are primarily billed to clients on a quarterly basis in advance, and are recognized as revenue ratably during the quarter. The performance obligation for advisory fees is considered a series of distinct services that are substantially the same and are satisfied daily. As the value of the eligible assets in an advisory account is susceptible to changes due to customer activity, this revenue includes variable consideration and is constrained until the date that the fees are determinable. The majority of these client accounts are on a calendar quarter and are billed using values as of the last business day of the preceding quarter. The value of the eligible assets in an advisory account on the billing date is adjusted for estimates of contributions and withdrawals to determine the amount billed, and accordingly, the revenue earned in the following three-month period. Advisory revenue collected on our corporate RIA advisory platform is proposed by the advisor and agreed to by the client and was approximately 1% of the underlying assets for the three months ended March 31, 2024.
We also support independent RIA firms that conduct their business through our separate registered investment advisor firms (“Independent RIAs”) advisory platform, which allows advisors to engage us for technology, clearing and custody services, as well as access the capabilities of our investment platforms. The assets held under an Independent RIA’s investment advisory accounts custodied with LPL Financial are included in total advisory assets and net new advisory assets. However, the advisory revenue generated by an Independent RIA is not included in our advisory revenue. We charge separate fees to Independent RIAs for technology, clearing, administrative, oversight and custody services, which may vary and are included in our service and fee revenue in our condensed consolidated statements of income.
The following table summarizes the composition of advisory assets for the periods presented (in billions):
March 31,
20242023$ Change% Change
Corporate advisory assets$537.6 $415.3 $122.3 29 %
Independent RIA advisory assets255.4 205.6 49.8 24 %
Total advisory assets$793.0 $620.9 $172.1 28 %

Net new advisory assets are generated throughout the quarter, therefore, the full impact of net new advisory assets to advisory revenue is not realized in the same period. The following table summarizes activity impacting advisory assets for the periods presented (in billions):
Three Months Ended March 31,
20242023
Balance - Beginning of period$735.8 $583.1 
Net new advisory assets(1)
16.2 14.6 
Market impact(2)
41.0 23.2 
Balance - End of period$793.0 $620.9 
_______________________________
(1)Net new advisory assets consist of total client deposits into custodied advisory accounts less total client withdrawals from custodied advisory accounts, plus dividends, plus interest, minus advisory fees. We consider conversions from and to brokerage accounts as deposits and withdrawals, respectively.
(2)Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time.
Advisory revenue increased during the three months ended March 31, 2024 as compared to the same period in 2023, due primarily to continued organic growth, which increased advisory asset balances during the period.
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Commission
We generate two types of commission revenue: (1) sales-based commissions that are recognized at the point of sale on the trade date and are based on a percentage of an investment product’s current market value at the time of purchase and (2) trailing commissions that are recognized over time as earned and are generally based on the market value of investment holdings in trail-eligible assets. Sales-based commission revenue, which occurs when clients trade securities or purchase various types of investment products, primarily represents gross commissions generated by our advisors and can vary from period to period based on the overall economic environment, number of trading days in the reporting period and investment activity of our advisors’ clients. We earn trailing commission revenue primarily on mutual funds and variable annuities held by clients of our advisors. See Note 3 - Revenue, within the notes to the condensed consolidated financial statements for further detail regarding our commission revenue by product category.
The following table sets forth the components of our commission revenue for the periods presented (in thousands):
Three Months Ended March 31,
20242023$ Change% Change
Sales-based$385,235 $286,072 $99,163 35 %
Trailing361,211 317,653 43,558 14 %
Total commission revenue
$746,446 $603,725 $142,721 24 %
The increase in trailing commission revenue for the three months ended March 31, 2024 compared to 2023 was primarily due to an increase in sales of annuities during the period. The increase in sales-based commission revenue for the three months ended March 31, 2024 compared to 2023 was primarily driven by an increase in sales of annuities and fixed income securities as a result of the higher interest rate environment.
The following table summarizes activity impacting brokerage assets for the periods presented (in billions):
Three Months Ended March 31,
20242023
Balance - Beginning of period$618.2 $527.7 
Net new brokerage assets(1)
0.5 9.9 
Market impact(2)
29.2 16.7 
Balance - End of period$647.9 $554.3 
_______________________________
(1) Net new brokerage assets consist of total client deposits into brokerage accounts less total client withdrawals from brokerage accounts, plus dividends, plus interest. We consider conversions from and to advisory accounts as deposits and withdrawals, respectively.
(2) Market impact is the difference between the beginning and ending asset balance less the net new asset amounts, representing the implied growth or decline in asset balances due to market changes over the same period of time.
Asset-Based
Asset-based revenue consists of fees from our client cash programs, fees from our sponsorship programs with financial product manufacturers and fees from omnibus processing and networking services (collectively referred to as “recordkeeping”). Client cash revenue is generated on advisors’ clients’ cash balances in insured bank sweep accounts and money market accounts. We also receive fees from certain financial product manufacturers in connection with sponsorship programs that support our marketing and sales force education and training efforts. Compensation for these performance obligations is either a fixed fee, a percentage of the average annual amount of product sponsor assets held in advisors’ clients’ accounts, a percentage of new sales or a combination. Omnibus processing revenue is paid to us by mutual fund product sponsors or their affiliates and is based on the value of mutual fund assets in accounts for which the Company provides omnibus processing services and the number of accounts in which the related mutual fund positions are held. Networking revenue on brokerage assets is correlated to the number of positions we administer and is paid to us by mutual fund product sponsors and annuity product manufacturers.
Asset-based revenue for the three months ended March 31, 2024 decreased by $21.0 million compared to 2023, primarily due to a decrease in client cash revenue. Client cash revenue for the three months ended March 31, 2024 decreased compared to 2023 due to lower average client cash balances during the three months ended March 31, 2024 as compared to 2023. For the three months ended March 31, 2024, our average client cash balances decreased to $44.4 billion compared to $55.7 billion in 2023.


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Service and Fee
Service and fee revenue is generated from advisor and retail investor services, including technology, insurance, conferences, licensing, business services and planning and advice services, Individual Retirement Account (“IRA”) custodian and other client account fees. We charge separate fees to RIAs on our Independent RIA advisory platform for technology, clearing, administrative, oversight and custody services, which may vary. We also host certain advisor conferences that serve as training, education, sales and marketing events for which we charge sponsors a fee. Service and fee revenue for the three months ended March 31, 2024 increased compared to 2023, primarily due to increases in IRA custodian fees, business services and planning and advice services fees, and fees relating to confirmations and error and omission insurance.
Transaction
Transaction revenue includes transaction charges generated in both advisory and brokerage accounts from mutual funds, exchange-traded funds and fixed income products. Transaction revenue for the three months ended March 31, 2024 increased compared to 2023, primarily due to increases in the number of transactions and transaction charges for fixed income products, partially offset by a decrease in charges for managed assets.
Other
Other revenue primarily includes unrealized gains and losses on assets held by us in our advisor non-qualified deferred compensation plan and model research portfolios and other miscellaneous revenue, which is not generated from contracts with customers. Other revenue for the three months ended March 31, 2024 increased compared to 2023, primarily due to unrealized gains on assets held in our advisor non-qualified deferred compensation plan, which are based on the market performance of the underlying investment allocations chosen by advisors in the plan, and a related increase in dividend income on assets held in our advisor non-qualified deferred compensation plan.
Expense
Advisory and Commission
Advisory and commission expense consists of the following: payout amounts that are earned by and paid out to advisors and institutions based on advisory and commission revenue earned on each client’s account, production-based bonuses earned by advisors and institutions based on the levels of advisory and commission revenue they produce, compensation and benefits paid to employee advisors, share-based compensation expense from equity awards granted to advisors and institutions based on the fair value of the awards at grant date and the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to our advisors.
The following table sets forth our payout rate, which is a statistical or operating measure, for the periods presented:
Three Months Ended March 31,
20242023Change
Payout rate86.64%86.19%45 bps
Our payout rate for the three months ended March 31, 2024 increased slightly compared to 2023, primarily due to the effect of acquisitions during the prior year.
Compensation and Benefits
Compensation and benefits expense includes salaries, wages, benefits, share-based compensation and related taxes for our employees, as well as compensation for temporary workers and contractors. The following table sets forth our average number of employees for the periods presented:
Three Months Ended March 31,
20242023Change
Average number of employees8,7247,12422%
Compensation and benefits expense for the three months ended March 31, 2024 increased by $40.8 million compared to 2023, primarily due to an increase in average headcount.
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Promotional
Promotional expense includes business development costs related to advisor recruitment and retention, costs related to hosting certain advisory conferences that serve as training, sales and marketing events, and other costs that support advisor business growth. Promotional expense for the three months ended March 31, 2024 increased by $28.4 million compared to 2023, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistance and retention.
Depreciation and Amortization
Depreciation and amortization expense relates to the use of property and equipment, which includes internally developed software, hardware, leasehold improvements and other equipment. Depreciation and amortization expense for the three months ended March 31, 2024 increased by $11.1 million compared to 2023, primarily due to our continued investment in technology to support integrations, enhance our advisor platform and experience, and support onboarding of institutions.
Interest Expense on Borrowings
Interest expense on borrowings includes the interest associated with the Company’s senior notes, senior secured Term Loan B (“Term Loan B”) and revolving credit facilities; amortization of debt issuance costs; and fees associated with the Company’s revolving lines of credit. Interest expense on borrowings for the three months ended March 31, 2024 increased by $20.9 million compared to 2023, primarily due to increased interest rates on our Term Loan B and revolving credit facilities and higher outstanding debt balances. See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for further detail.
Provision for Income Taxes
Our effective income tax rate was 22.8% and 23.8% for the three months ended March 31, 2024 and 2023, respectively. The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0%, primarily as a result of state taxes, reserves for uncertain tax positions and non-deductible expenses. Our effective income tax rate is reduced by tax benefits received from income tax credits as well as share-based compensation vesting and exercises. The decrease in our effective tax rate for the three months ended March 31, 2024 was primarily driven by lower pre-tax income during the first quarter of 2024 as compared to the prior year.
Liquidity and Capital Resources
We have established liquidity and capital policies intended to support the execution of strategic initiatives, while meeting regulatory capital requirements and maintaining ongoing and sufficient liquidity. We believe liquidity is of critical importance to the Company and, in particular, to LPL Financial, our primary broker-dealer subsidiary. The objective of our policies is to ensure that we can meet our strategic, operational and regulatory liquidity and capital requirements under both normal operating conditions and under periods of stress in the financial markets.
Liquidity
Our liquidity needs are primarily driven by capital requirements at LPL Financial, interest due on our corporate debt and other capital returns to stockholders. Our liquidity needs at LPL Financial are driven primarily by the level and volatility of our client activity. Management maintains a set of liquidity sources and monitors certain business trends and market metrics closely in an effort to ensure we have sufficient liquidity. We believe that based on current levels of cash flows from operations and anticipated growth, together with available cash balances and external liquidity sources, we have adequate liquidity to satisfy our short-term and long-term working capital needs, the payment of all of our obligations and the funding of anticipated capital expenditures.
Parent Company Liquidity
LPL Holdings, Inc. (the “Parent”), the direct holding company of our operating subsidiaries, considers its primary sources of liquidity to be dividends from and excess capital generated by LPL Financial, as well as capacity for additional borrowing under its $2.0 billion secured revolving credit facility, which it has the ability to borrow against for working capital and general corporate purposes.
Dividends from and excess capital generated by LPL Financial are primarily generated through our cash flow from operations. Subject to regulatory approval or notification, capital generated by regulated subsidiaries can be distributed to the Parent to the extent the capital levels exceed regulatory requirements and internal capital thresholds. During the three months ended March 31, 2024, LPL Financial paid dividends of $120.0 million to the Parent. No such dividends were paid during the three months ended March 31, 2023.
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We believe Corporate Cash, a component of cash and equivalents, is a useful measure of the Parent’s liquidity as it represents the capital available for use in excess of the amount we are required to maintain pursuant to the Credit Agreement. Corporate Cash is the sum of cash and equivalents from the following: (1) cash and equivalents held at the Parent, (2) cash and equivalents held at regulated subsidiaries as defined by the Credit Agreement, which include LPL Financial and The Private Trust Company, N.A. (“PTC”), in excess of the capital requirements of the Credit Agreement (which, in the case of LPL Financial, is net capital in excess of 10% of its aggregate debits, or five times the net capital required in accordance with Exchange Act Rule 15c3-1) and (3) cash and equivalents held at non-regulated subsidiaries.
The following table presents the components of Corporate Cash (in thousands):
March 31, 2024December 31, 2023
Cash and equivalents$1,102,270 $465,671 
Cash at regulated subsidiaries(1,038,241)(410,313)
Excess cash at regulated subsidiaries per the Credit Agreement247,033 128,327 
Corporate Cash$311,062 $183,685 
Corporate Cash
Cash at the Parent$30,781 $26,587 
Excess cash at regulated subsidiaries per the Credit Agreement247,033 128,327 
Cash at non-regulated subsidiaries33,248 28,771 
Corporate Cash$311,062 $183,685 
Corporate Cash is monitored as part of our liquidity risk management. We target maintaining approximately $200 million in Corporate Cash, which covers approximately 12 months of principal and interest due on our corporate debt.
We actively monitor changes to our liquidity needs caused by general business volumes and price volatility, including higher margin requirements of clearing corporations and exchanges, and stress scenarios involving a sustained market downturn and the persistence of current interest rates. We believe that based on current levels of operations and anticipated growth, our cash flow from operations, together with other available sources of funds, which include five uncommitted lines of credit, the revolving credit facility established through our Credit Agreement and the committed revolving credit facility of LPL Financial, will provide us with adequate liquidity to satisfy our short-term and long-term working capital needs, the payment of all of our obligations and the funding of anticipated capital expenditures.
We regularly evaluate our existing indebtedness, including potential issuances and refinancing opportunities, based on a number of factors, including our capital requirements, future prospects, contractual restrictions, the availability of refinancing on attractive terms and general market conditions. As of March 31, 2024, the earliest principal maturity date for our corporate debt with outstanding balances is in 2026 and our revolving credit facilities and uncommitted lines of credit mature between 2024 and 2026.
Share Repurchases
We engage in a share repurchase program that was approved by our Board of Directors (the “Board”), pursuant to which we may repurchase our issued and outstanding shares of common stock from time to time. Purchases may be effected in open market or privately negotiated transactions. Our current capital deployment framework remains focused on investing in organic growth first, pursuing acquisitions where appropriate and returning excess capital to stockholders. We repurchased 296,145 shares for a total of $70.0 million during the three months ended March 31, 2024. As of March 31, 2024, we had $830.0 million remaining under our existing repurchase program. As a result of our planned acquisition of Atria, we paused share repurchases during the quarter. Subsequent to closing of the transaction, we will evaluate resuming share repurchases, consistent with our existing capital management strategy. The timing and amount of share repurchases, if any, is determined at our discretion within the constraints of our Credit Agreement, applicable laws and consideration of our general liquidity needs. See Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information regarding our share repurchases.
Common Stock Dividends
The payment, timing and amount of any dividends are subject to approval by LPLFH’s Board of Directors (the “Board”), as well as certain limits under our Credit Agreement. See Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information regarding our dividends.
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LPL Financial Liquidity
LPL Financial relies primarily on client payables to fund margin lending. LPL Financial maintains additional liquidity through external lines of credit totaling $1.2 billion at March 31, 2024. LPL Financial also maintains a line of credit with the Parent.
External Liquidity Sources
The following table presents amounts outstanding and available under our external lines of credit at March 31, 2024 (in millions):
DescriptionBorrowerMaturity DateOutstandingAvailable
Senior secured, revolving credit facility
LPL Holdings, Inc.March 2026$401 $1,599 
Broker-dealer revolving credit facility
LPL Financial LLCJuly 2024$— $1,000 
Unsecured, uncommitted lines of creditLPL Financial LLC
None
$— $75 
Unsecured, uncommitted lines of creditLPL Financial LLCSeptember 2024$— $50 
Secured, uncommitted lines of creditLPL Financial LLCMarch 2025$— $75 
Secured, uncommitted lines of creditLPL Financial LLCNone$— unspecified
Secured, uncommitted lines of creditLPL Financial LLCNone$— unspecified
Capital Resources
The Company seeks to manage capital levels in support of its business strategy of generating and effectively deploying capital for the benefit of our stockholders.
Our primary requirement for working capital relates to funds we loan to our advisors’ clients for trading conducted on margin and funds we are required to maintain for regulatory capital and reserves based on the requirements of our regulators and clearing organizations, which also consider client balances and trading activities. We have several sources of funds that enable us to meet increases in working capital requirements that relate to increases in client margin activities and balances. These sources include cash and equivalents on hand, the committed revolving credit facility of LPL Financial and proceeds from repledging or selling client securities in margin accounts. When an advisor’s client purchases securities on margin or uses securities as collateral to borrow from us on margin, we are permitted, pursuant to the applicable securities industry regulations, to repledge, loan or sell securities, up to 140% of the client’s margin loan balance, that collateralize those margin accounts.
Our other working capital needs are primarily related to loans we are making to advisors and timing associated with receivables and payables, which we have satisfied in the past from internally generated cash flows.
We may sometimes be required to fund capital requirements necessary to effect client transactions in securities markets and cash sweep balances held at third-party banks that arise from the delayed receipt of client funds. These capital requirements are funded either with internally generated cash flows or, if needed, with funds drawn on our uncommitted lines of credit at LPL Financial or one of our revolving credit facilities.
Our broker-dealer subsidiaries are subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1 under the Exchange Act), which requires the maintenance of minimum net capital. LPL Financial, our primary broker-dealer subsidiary, computes net capital requirements under the alternative method, which requires firms to maintain minimum net capital equal to the greater of $250,000 or 2% of aggregate debit balances arising from client transactions.
The following table presents the net capital position of the Company’s primary broker-dealer subsidiary (in thousands):
March 31, 2024
LPL Financial LLC
Net capital$328,479 
Less: required net capital18,070 
Excess net capital$310,409 
Payment by our broker-dealer subsidiaries of dividends greater than 10% of their respective excess net capital during any 35-day rolling period requires approval from FINRA. In addition, each broker-dealer subsidiary’s ability to pay dividends would be restricted if its net capital would be less than 5% of aggregate customer debit balances.
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LPL Financial also acts as an introducing broker-dealer for commodities and futures. Accordingly, its trading activities are subject to the National Futures Association’s (“NFA”) financial requirements and it is required to maintain net capital that is in excess of or equal to the greatest of NFA’s minimum financial requirements. The NFA was designated by the Commodity Futures Trading Commission as LPL Financial’s primary regulator for such activities. Currently, the highest NFA requirement is the minimum net capital calculated and required pursuant to the SEC’s Uniform Net Capital Rule.
Our subsidiary PTC is also subject to various regulatory capital requirements. Failure to meet the respective minimum capital requirements can result in certain mandatory and discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on PTC’s operations.
Supplemental Guarantor Financial Information
The Company filed a registration statement on Form S-3 to register, among other things, non-convertible debt securities that may be offered by LPL Holdings, Inc. (the “Issuer”), a wholly owned subsidiary of LPL Financial Holdings Inc. (“LPLFH” and together with the Issuer, the “Obligor Group”), and full and unconditional guarantees by LPLFH of such debt securities. The debt securities issued by the Issuer pursuant to such registration statement are fully and unconditionally guaranteed by LPLFH. LPLFH is a Delaware holding corporation that manages substantially all of its operations through investments in subsidiaries. See Note 1 - Organization and Description of the Company and Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.
Pursuant to Rule 3-10 of Regulation S-X under the Securities Act of 1933, as amended, the following tables present unaudited summarized financial information for the Obligor Group on a combined basis. Balances and transactions between the Obligor Group have been eliminated. Financial information for non-guarantor subsidiaries, which includes all other subsidiaries of the Issuer, has been excluded and intercompany balances and transactions between the Obligor Group and non-guarantor subsidiaries are presented on separate lines. The summarized financial information below should be read in conjunction with the Company’s condensed consolidated financial statements contained herein as the summarized financial information for the Obligor Group may not be indicative of results of operations or financial position of the Issuer or LPLFH had they operated as independent entities.
The following tables present the summarized financial information for the periods presented (in thousands):
LPL Holdings, Inc. & LPL Financial Holdings Inc.
Three Months Ended March 31,
Combined Summarized Statements of Income
2024
Revenues(1)
$49,734 
Revenues from non-guarantor subsidiaries
5,335 
Advisory and commission expense(1)
49,140 
Interest expense on borrowings
59,158 
Expenses from non-guarantor subsidiaries
3,509 
Loss before provision for income taxes
(68,692)
Net loss
(53,128)
____________________
(1)Revenues primarily include unrealized gains and losses on assets held in the non-qualified deferred compensation plan offered to advisors and employees, while advisory and commission expense includes the deferred advisory and commission fee expense associated with mark-to-market gains or losses on the non-qualified deferred compensation plan offered to advisors.
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LPL Holdings, Inc. & LPL Financial Holdings Inc.
Combined Summarized Statements of Financial Condition
March 31, 2024December 31, 2023
Cash and equivalents$30,781 $26,587 
Other receivables, net
3,330 2,793 
Property and equipment, net
155,133 154,920 
Goodwill
1,251,908 1,251,908 
Other intangibles, net
88,467 95,461 
Receivables from non-guarantor subsidiaries
152,179 153,377 
Other assets
1,050,215 1,017,289 
Corporate debt and other borrowings, net
3,853,794 3,734,111 
Accounts payable and accrued liabilities
64,793 53,817 
Payables to non-guarantor subsidiaries
77,292 76,683 
Other liabilities
1,091,363 986,274 
Debt and Related Covenants
The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to:
•incur additional indebtedness or issue disqualified stock or preferred stock;
•declare dividends, or other distributions to stockholders;
•repurchase equity interests;
•redeem indebtedness that is subordinated in right of payment to certain debt instruments;
•make investments or acquisitions;
•create liens;
•sell assets;
•guarantee indebtedness;
•engage in certain transactions with affiliates;
•enter into agreements that restrict dividends or other payments from subsidiaries; and
•consolidate, merge or transfer all or substantially all of our assets.
Our Credit Agreement allows us to pay dividends and distributions or repurchase our common stock only when certain conditions are met. In addition, our revolving credit facility requires us to be in compliance with certain financial covenants as of the last day of each fiscal quarter. The financial covenants require the calculation of Credit Agreement EBITDA, as defined in, and calculated by management in accordance with, the Credit Agreement. The Credit Agreement defines Credit Agreement EBITDA as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions.
As of March 31, 2024, we were in compliance with our Credit Agreement financial covenants, which include a maximum Consolidated Total Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement) or “Leverage Ratio” and a minimum Consolidated EBITDA to Consolidated Interest Expense Ratio (as defined in the Credit Agreement) or “Interest Coverage”. The breach of these financial covenants would be subject to certain equity cure rights. The required ratios under our financial covenants and actual ratios were as follows:
March 31, 2024
Financial RatioCovenant RequirementActual Ratio
Leverage Ratio (Maximum)
4.01.65
Interest Coverage (Minimum)3.011.02
Certain restrictive covenants under certain of our Indentures are currently suspended. However, a credit rating downgrade to a below investment grade rating could cause currently suspended restrictive covenants under certain of our Indentures to be automatically reinstated.
See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for further detail regarding the Credit Agreement.
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Contractual Obligations
During the three months ended March 31, 2024, there were no material changes in our contractual obligations, other than in the ordinary course of business, from those disclosed in our 2023 Annual Report on Form 10-K. See Note 9 - Corporate Debt and Other Borrowings, Net and Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements, as well as the Contractual Obligations section within Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K, for further detail.
Risk Management
Risk is an inherent part of our business and activities. To effectively manage these risks, we have an enterprise risk management (“ERM”) framework that is designed to facilitate the incorporation of risk assessment into decision-making processes across the Company, enable execution our business strategy, and protect our Company and its franchise. This framework aims to ensure policies and procedures are in place and appropriately designed to identify and manage risk at appropriate levels throughout our organization and within various departments. These control mechanisms attempt to ensure that operational policies and procedures are being followed and that our employees and advisors operate within established corporate policies and limits. Please consult the “Risks Related to Our Technology” and the “Risks Related to Our Business and Industry” sections within Part I, “Item 1A. Risk Factors” and the “Risk Management” section within Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K for more information about our risks, our risk management policies and procedures, the potential related effects on our operations, and our ERM framework.
Operational Risk
Operational Risk is reviewed, monitored and challenged by the Operational Risk Oversight Committee. Operational risk is defined as the risk of loss resulting from failed or inadequate processes or systems, actions by people or external events. Please consult the “Risk Management” section within Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Annual Report on Form 10-K for more information about the operational risks that we face.
Regulatory and Compliance Risk
The regulatory environment in which we operate is discussed in detail within Part I, “Item 1. Business” in our 2023 Annual Report on Form 10-K. In recent years, and during the periods presented in this Quarterly Report on Form 10-Q, we have observed the SEC, FINRA, the U.S. Department of Labor and state regulators broaden the scope, frequency and depth of their examinations and inquiries to include greater emphasis on the quality, consistency and oversight of our compliance systems and programs. Please consult the “Risks Related to Our Regulatory Environment” and the “Risks Related to Our Business and Industry” sections within Part I, “Item 1A. Risk Factors” in our 2023 Annual Report on Form 10-K for more information about the risks associated with operating within our regulatory environment, pending regulatory matters and the potential related effects on our operations.
Critical Accounting Policies and Estimates
In the notes to our consolidated financial statements and in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Annual Report on Form 10-K, we have disclosed those accounting policies that we consider to be most significant in determining our results of operations and financial condition and involve a higher degree of judgment and complexity. There have been no changes to those policies that we consider to be material since the filing of our 2023 Annual Report on Form 10-K. The accounting principles used in preparing our condensed consolidated financial statements conform in all material respects to GAAP.
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Item 1. Financial Statements (unaudited)
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
20242023
REVENUE
 Advisory$1,199,811 $954,057 
Commission:
Sales-based385,235 286,072 
Trailing361,211 317,653 
Total commission746,446 603,725 
Asset-based:
Client cash352,382 418,275 
Other asset-based248,339 203,473 
Total asset-based600,721 621,748 
Service and fee132,172 118,987 
Transaction57,258 48,935 
Interest income, net43,525 37,358 
Other52,660 33,022 
Total revenue2,832,593 2,417,832 
EXPENSE
Advisory and commission1,733,487 1,370,634 
Compensation and benefits274,369 233,533 
Promotional126,619 98,223 
Depreciation and amortization67,158 56,054 
Occupancy and equipment66,264 60,173 
Interest expense on borrowings60,082 39,184 
Brokerage, clearing and exchange30,532 26,126 
Amortization of other intangibles29,552 24,092 
Communications and data processing19,744 17,675 
Professional services13,279 14,220 
Other37,315 33,421 
Total expense2,458,401 1,973,335 
INCOME BEFORE PROVISION FOR INCOME TAXES374,192 444,497 
PROVISION FOR INCOME TAXES85,428 105,613 
NET INCOME$288,764 $338,884 
EARNINGS PER SHARE
Earnings per share, basic$3.87 $4.30 
Earnings per share, diluted$3.83 $4.24 
Weighted-average shares outstanding, basic74,562 78,750 
Weighted-average shares outstanding, diluted75,463 79,974 
See notes to unaudited condensed consolidated financial statements.
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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(In thousands, except share data)
(Unaudited)
ASSETSMarch 31, 2024December 31, 2023
Cash and equivalents$1,102,270 $465,671 
Cash and equivalents segregated under federal or other regulations1,610,996 2,007,312 
Restricted cash114,006 108,180 
Receivables from clients, net591,503 588,585 
Receivables from brokers, dealers and clearing organizations103,236 50,069 
Advisor loans, net1,573,774 1,479,690 
Other receivables, net863,119 743,317 
Investment securities57,451 91,311 
Property and equipment, net987,308 933,091 
Goodwill1,840,972 1,856,648 
Other intangibles, net690,767 671,585 
Other assets1,482,137 1,390,021 
Total assets$11,017,539 $10,385,480 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Client payables$2,486,605 $2,266,176 
Payables to brokers, dealers and clearing organizations190,419 163,337 
Accrued advisory and commission expenses payable232,084 216,541 
Corporate debt and other borrowings, net3,853,794 3,734,111 
Accounts payable and accrued liabilities369,244 485,963 
Other liabilities1,615,512 1,440,373 
Total liabilities8,747,658 8,306,501 
Commitments and contingencies (Note 10)
Common stock, $0.001 par value; 600,000,000 shares authorized; 130,704,541 shares and 130,233,328 shares issued at March 31, 2024 and December 31, 2023, respectively
131 130 
Additional paid-in capital2,016,666 1,987,684 
Treasury stock, at cost — 55,998,999 shares and 55,576,970 shares at March 31, 2024 and December 31, 2023, respectively
(4,101,055)(3,993,949)
Retained earnings4,354,139 4,085,114 
Total stockholders’ equity2,269,881 2,078,979 
Total liabilities and stockholders’ equity$11,017,539 $10,385,480 

See notes to unaudited condensed consolidated financial statements.
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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)
Three Months Ended March 31, 2023
Additional
Paid-In
Capital		Retained
Earnings		Total
Stockholders’
Equity
 Common StockTreasury Stock
 SharesAmountSharesAmount
BALANCE — December 31, 2022129,656 $130 $1,912,886 50,408 $(2,846,536)$3,101,072 $2,167,552 
Net income— — — — — 338,884 338,884 
Issuance of common stock to settle restricted stock units368 — — 148 (36,602)— (36,602)
Treasury stock purchases— — — 1,206 (277,053)— (277,053)
Cash dividends on common stock - $0.30 per share
— — — — — (23,584)(23,584)
Stock option exercises and other62 — 2,466 (13)477 2,157 5,100 
Share-based compensation— — 18,636 — — — 18,636 
BALANCE — March 31, 2023130,086 $130 $1,933,988 51,749 $(3,159,714)$3,418,529 $2,192,933 
Three Months Ended March 31, 2024
Additional
Paid-In
Capital		Retained
Earnings		Total
Stockholders’
Equity
Common StockTreasury Stock
SharesAmountSharesAmount
BALANCE — December 31, 2023130,233 $130 $1,987,684 55,577 $(3,993,949)$4,085,114 $2,078,979 
Net income— — — — — 288,764 288,764 
Issuance of common stock to settle restricted stock units353 — — 144 (37,729)— (37,729)
Treasury stock purchases— — — 296 (70,005)— (70,005)
Cash dividends on common stock - $0.30 per share
— — — — — (22,411)(22,411)
Stock option exercises and other119 1 5,647 (18)628 2,672 8,948 
Share-based compensation— — 23,335 — — — 23,335 
BALANCE — March 31, 2024130,705 $131 $2,016,666 55,999 $(4,101,055)$4,354,139 $2,269,881 
See notes to unaudited condensed consolidated financial statements.
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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$288,764 $338,884 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization67,158 56,054 
Amortization of other intangibles29,552 24,092 
Amortization of debt issuance costs2,675 2,026 
Share-based compensation23,335 18,636 
Provision for credit losses2,668 3,347 
Deferred benefit for income taxes4 (96)
Loan forgiveness64,605 49,036 
Other9,126 10,218 
Changes in operating assets and liabilities:
Receivables from clients, net(2,754)(20,580)
Receivables from brokers, dealers and clearing organizations(53,167)4,680 
Advisor loans, net(159,839)(84,418)
Other receivables, net(121,596)(16,457)
Investment securities - trading32,902 461 
Other assets(59,125)(52,258)
Client payables220,429 (562,308)
Payables to brokers, dealers and clearing organizations27,082 (35,046)
Accrued advisory and commission expenses payable15,543 (9,513)
Accounts payable and accrued liabilities(115,129)(90,011)
Other liabilities154,473 158,098 
Operating lease assets(805)(765)
Net cash provided by (used in) operating activities
425,901 (205,920)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(121,024)(101,252)
Acquisitions, net of cash acquired(10,171)(251,338)
Proceeds from maturities of securities classified as held-to-maturity1,250 1,750 
Net cash used in investing activities(129,945)(350,840)

Continued on following page
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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March 31,
20242023
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities245,000 135,000 
Repayments of revolving credit facilities(124,000)— 
Repayment of senior secured term loans(2,675)(2,675)
Payment of contingent consideration(46,887)— 
Tax payments related to settlement of restricted stock units(37,729)(36,602)
Repurchase of common stock(70,005)(275,024)
Dividends on common stock(22,411)(23,584)
Proceeds from stock option exercises and other8,948 5,100 
Principal payment of finance leases and obligations(88)(70)
Net cash used in financing activities(49,847)(197,855)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH
246,109 (754,615)
CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH — Beginning of period2,581,163 3,137,270 
CASH AND EQUIVALENTS, CASH AND EQUIVALENTS SEGREGATED UNDER FEDERAL OR OTHER REGULATIONS AND RESTRICTED CASH — End of period$2,827,272 $2,382,655 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid$43,542 $39,870 
Income taxes paid$9,205 $10,404 
Cash paid for amounts included in the measurement of operating lease liabilities$7,055 $6,436 
Cash paid for amounts included in the measurement of finance lease liabilities$2,175 $2,138 
NONCASH DISCLOSURES:
Capital expenditures included in accounts payable and accrued liabilities$24,448 $23,753 
Lease assets obtained in exchange for operating lease liabilities$3,484 $1,700 
Contingent consideration liabilities recognized at acquisition date
$19,918 $41,334 
March 31,
20242023
Cash and equivalents$1,102,270 $469,785 
Cash and equivalents segregated under federal or other regulations1,610,996 1,807,283 
Restricted cash114,006 105,587 
Total cash and equivalents, cash and equivalents segregated under federal or other regulations and restricted cash shown in the statements of cash flows$2,827,272 $2,382,655 
See notes to unaudited condensed consolidated financial statements.
22
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE COMPANY
LPL Financial Holdings Inc. (“LPLFH”), a Delaware holding corporation, together with its consolidated subsidiaries (collectively, the “Company”), provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at institutions (collectively, “advisors”) in the United States. Through its custody and clearing platform, using both proprietary and third-party technology, the Company provides access to diversified financial products and services, enabling its advisors to offer personalized financial advice and brokerage services to retail investors (their “clients”). The Company’s most significant, wholly owned subsidiaries are described below:
•LPL Holdings, Inc. (“LPLH” or “Parent”) is an intermediate holding company and directly or indirectly owns 100% of the issued and outstanding common equity interests of all of LPLFH’s indirect subsidiaries, including a captive insurance subsidiary that underwrites insurance for various legal and regulatory risks of the Company.
•LPL Financial LLC (“LPL Financial”), with primary offices in San Diego, California; Fort Mill, South Carolina; Boston, Massachusetts; and Austin, Texas is a clearing broker-dealer and an investment advisor that principally transacts business for its advisors and institutions on behalf of their clients in a broad array of financial products and services. LPL Financial is licensed to operate in all 50 states, Washington D.C., Puerto Rico and the U.S. Virgin Islands.
•LPL Insurance Associates, Inc. operates as an insurance brokerage general agency that offers life and disability insurance products and services for LPL Financial advisors.
•AW Subsidiary, Inc. is a holding company for AdvisoryWorld and Blaze Portfolio Systems LLC (“Blaze”). AdvisoryWorld offers technology products, including proposal generation, investment analytics and portfolio modeling, to both the Company’s advisors and external clients in the wealth management industry. Blaze provides an advisor-facing trading and portfolio rebalancing platform.
•PTC Holdings, Inc. (“PTCH”) is a holding company for The Private Trust Company, N.A. (“PTC”). PTC is chartered as a non-depository limited purpose national bank, providing a wide range of trust, investment management oversight and custodial services for estates and families. PTC, together with its affiliate Fiduciary Trust Company of New Hampshire, also provides Individual Retirement Account (“IRA”) custodial services for LPL Financial.
•LPL Employee Services, LLC and its subsidiary, Allen & Company of Florida, LLC, along with their affiliate Financial Resources Group Investment Services, LLC (“FRGIS”), provide primary support for the Company’s employee advisor affiliation model.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These unaudited condensed consolidated financial statements (“condensed consolidated financial statements”) are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require the Company to make estimates and assumptions regarding the valuation of certain financial instruments, acquisitions, goodwill and other intangibles, allowance for credit losses on receivables, share-based compensation, accruals for liabilities, income taxes, revenue and expense accruals and other matters that affect the condensed consolidated financial statements and related disclosures. The condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations for the interim periods presented. Actual results could differ from those estimates under different assumptions or conditions and the differences may be material to the condensed consolidated financial statements.
The condensed consolidated financial statements include the accounts of LPLFH and its subsidiaries. Intercompany transactions and balances have been eliminated. The condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the related notes for the year
23
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

ended December 31, 2023, contained in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”).
Recently Issued or Adopted Accounting Pronouncements
There are no relevant recently issued accounting pronouncements that would materially impact the Company’s condensed consolidated financial statements and related disclosures. There were no new accounting pronouncements adopted during the three months ended March 31, 2024 that materially impacted the Company’s condensed consolidated financial statements and related disclosures.
NOTE 3 - REVENUE
Commission
The following table presents total commission revenue disaggregated by product category (in thousands):
Three Months Ended March 31,
20242023
Commission revenue
Annuities$436,473 $344,061 
Mutual funds186,540 165,038 
Fixed income48,641 35,267 
Equities35,451 25,890 
Other39,341 33,469 
Total commission revenue
$746,446 $603,725 
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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents sales-based and trailing commission revenue disaggregated by product category (in thousands):
Three Months Ended March 31,
20242023
Commission revenue
Sales-based
Annuities
$229,077 $162,176 
Fixed income
48,641 35,267 
Mutual funds
43,496 37,477 
Equities
35,451 25,890 
Other
28,570 25,262 
Total sales-based revenue
$385,235 $286,072 
Trailing
Annuities$207,396 $181,885 
Mutual funds143,044 127,561 
Other10,771 8,207 
Total trailing revenue$361,211 $317,653 
Total commission revenue
$746,446 $603,725 
Asset-Based
The following table sets forth asset-based revenue disaggregated by product category (in thousands):
Three Months Ended March 31,
20242023
Asset-based revenue
Client cash
$352,382 $418,275 
Sponsorship programs
134,101 102,470 
Recordkeeping
114,238 101,003 
Total asset-based revenue$600,721 $621,748 
Service and Fee
The following table sets forth service and fee revenue disaggregated by recognition pattern (in thousands):
Three Months Ended March 31,
20242023
Service and fee revenue
Over time(1)
$102,536 $93,029 
Point-in-time(2)
29,636 25,958 
Total service and fee revenue$132,172 $118,987 
_______________________________
(1)Service and fee revenue recognized over time includes revenue such as error and omission insurance fees, IRA custodian fees, and technology fees.
(2)Service and fee revenue recognized at a point-in-time includes revenue such as IRA termination fees, account fees, and confirmation fees.




25
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

Unearned Revenue
The Company records unearned revenue when cash payments are received or due in advance of the Company’s performance obligations, including amounts which are refundable. Unearned revenue increased from $156.2 million as of December 31, 2023 to $206.7 million as of March 31, 2024. The increase in unearned revenue for the three months ended March 31, 2024 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, partially offset by $154.2 million of revenue recognized during the three months ended March 31, 2024 that was included in the unearned revenue balance as of December 31, 2023.
The Company receives cash in advance for advisory services to be performed and conferences to be held in future periods. For advisory services, revenue is recognized as the Company provides the administration, brokerage and execution services over time to satisfy the performance obligations. For conference revenue, the Company recognizes revenue as the conferences are held.
NOTE 4 - ACQUISITIONS
Acquisitions in the Current Period
Entered into a definitive purchase agreement to acquire Atria Wealth Solutions, Inc (“Atria”)
On February 13, 2024, the Company announced that it had entered into a definitive purchase agreement to acquire Atria, a wealth management solutions holding company headquartered in New York. As part of the agreement, Atria will transition its brokerage and advisory assets to the Company’s platform. The Company expects to close the transaction in the second half of 2024 for an initial purchase price of approximately $805 million and potential contingent consideration of up to $230 million based on future retention. The closing and the conversion, which is expected to be completed in mid-2025, are both subject to receipt of regulatory approval and other closing conditions.
Other Acquisitions
During the three months ended March 31, 2024, the Company completed two acquisitions under the Liquidity & Succession solution, in which the Company buys advisor practices.
Total consideration for these transactions, which were accounted for under the acquisition method of accounting for business combinations, was $22.0 million, which included $9.5 million of cash, and liabilities of $12.5 million for contingent consideration, which represents the acquisition date fair value of the additional cash consideration that may be transferred to the sellers if certain asset growth is achieved in the three to seven years following the closing. This contingent consideration may be settled for amounts up to $84.3 million in the years following the closing.
At March 31, 2024, the Company provisionally allocated $3.9 million of the purchase price to goodwill and $18.1 million to client relationships acquired as part of these acquisitions. The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes. The client relationships were valued using the income approach and assigned useful lives of 14 years. See Note 7 – Goodwill and Other Intangibles, Net, for additional information.
Acquisitions Completed in Prior Periods
Acquisition of Financial Resources Group Investment Services, LLC
On January 31, 2023, the Company acquired Financial Resources Group Investment Services, LLC, a broker-dealer and independent branch office, in order to expand its addressable markets and complement organic growth. The Company accounted for the acquisition under the acquisition method of accounting for business combinations, and total consideration for the transaction was $189.2 million, which included an initial cash payment of $143.8 million and a liability of $45.4 million for contingent consideration. The Company allocated $129.7 million of the purchase price to goodwill, $53.5 million to definite-lived intangible assets, $9.0 million to cash acquired and the remainder to other assets acquired and liabilities assumed as part of the acquisition. The goodwill primarily includes
26
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

synergies expected to result from combining operations and is deductible for tax purposes. See Note 7 – Goodwill and Other Intangibles, Net, for additional information.
Other Acquisitions
During the year ended December 31, 2023, the Company completed a total of 19 acquisitions under the Liquidity & Succession solution. The Company also completed the acquisition of Boenning & Scattergood’s Private Client Group on January 31, 2023. Certain of these acquisitions have been accounted for as business combinations and certain have been accounted for as asset acquisitions.
Business Combinations
The Company accounted for five Liquidity & Succession transactions under the acquisition method of accounting for business combinations during the year ended December 31, 2023. Total consideration for these transactions was $190.2 million, which included initial consideration of $147.4 million, including $140.3 million of cash and a liability of $42.7 million for contingent consideration. At December 31, 2023, the Company allocated $84.5 million of the purchase price to goodwill and $105.7 million to the definite-lived intangible assets acquired as part of these acquisitions. The goodwill primarily includes synergies expected to result from combining operations and is deductible for tax purposes.
The Company recorded purchase accounting adjustments during the three months ended March 31, 2024 related to acquisitions which were completed during the fourth quarter of 2023 and for which the Company’s purchase accounting analysis is ongoing. These adjustments resulted in a $39.6 million increase in customer relationships, a $7.4 million increase in liabilities for contingent consideration, a $12.6 million decrease in technology, and a $19.6 million decrease in goodwill. At March 31, 2024, the Company has provisionally allocated $42.7 million of the purchase price to goodwill and $64.5 million to definite-lived intangible assets acquired. The intangible assets are comprised primarily of client relationships which were assigned useful lives of 15 years. See Note 7 – Goodwill and Other Intangibles, Net, for additional information.
Asset Acquisitions
The Company accounted for fifteen other acquisitions as asset acquisitions during the year ended December 31, 2023. These transactions included initial consideration of $180.4 million, including $142.3 million of which was allocated to client relationships and $38.1 million of which was allocated to advisor relationships. These transactions include potential contingent payments of up to $73.1 million in the three years following the closing if certain asset growth is achieved. The Company has not recognized a liability for these contingent payments as the amounts to be paid will be uncertain until a future measurement date. See Note 7 - Goodwill and Other Intangibles, Net, for additional information.
NOTE 5 - FAIR VALUE MEASUREMENTS
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:    
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
There have been no transfers of assets or liabilities between these fair value measurement classifications during the three months ended March 31, 2024 or 2023.
27
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company’s fair value measurements are evaluated within the fair value hierarchy, based on the nature of inputs used to determine the fair value at the measurement date. At March 31, 2024 and December 31, 2023, the Company had the following financial assets and liabilities that are measured at fair value on a recurring basis:
Cash Equivalents — The Company’s cash equivalents include money market funds and U.S. government obligations, which are short term in nature with readily determinable values derived from active markets.
Cash Equivalents Segregated Under Federal or Other Regulations — The Company’s cash equivalents segregated under federal or other regulations include U.S. treasury bills, which are short term in nature with readily determinable values derived from active markets.
Trading Securities and Securities Sold, But Not Yet Purchased — The Company’s trading securities consist of house account model portfolios established and managed for the purpose of benchmarking the performance of its fee-based advisory platforms and temporary positions resulting from the processing of client transactions.
The Company uses prices obtained from independent third-party pricing services to measure the fair value of its trading securities. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. In general, these quoted prices are derived from active markets for identical assets or liabilities. When quoted prices in active markets for identical assets and liabilities are not available, the quoted prices are based on similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. For negotiable certificates of deposit and treasury securities, the Company utilizes market-based inputs, including observable market interest rates that correspond to the remaining maturities or the next interest reset dates. At March 31, 2024 and December 31, 2023, the Company did not adjust prices received from the independent third-party pricing services.
Other Assets — The Company’s other assets include: (1) deferred compensation plan assets that are invested in life insurance, money market and other mutual funds, which are actively traded and valued based on quoted market prices; and (2) certain non-traded real estate investment trusts, which are valued using quoted prices for identical or similar securities and other inputs that are observable or can be corroborated by observable market data.
Fractional Shares — The Company’s investment in fractional shares held by customers is reflected in other assets while the related purchase obligation for such shares is reflected in other liabilities. The Company uses prices obtained from independent third-party pricing services to measure the fair value of its investment in fractional shares held by customers and the related repurchase obligation. Prices received from the pricing services are validated using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. At March 31, 2024 and December 31, 2023, the Company did not adjust prices received from the independent third-party pricing services.
Contingent Consideration — The Company measures contingent consideration liabilities at fair value at the acquisition date, as applicable, and thereafter on a recurring basis using unobservable (Level 3) inputs. These contingent consideration liabilities are reflected in other liabilities. See Note 4 - Acquisitions for additional information.
Level 3 Recurring Fair Value Measurements
The Company determines the fair value for its contingent consideration obligations using Monte Carlo simulation and discounted cash flows models. Contingent payments are estimated by applying significant unobservable inputs, including forecasted growth rates applied to project future revenue or asset growth and discount rates which are based on the cost of debt and equity. These projections are measured against the performance targets specified in each respective acquisition agreement, which may include growth in assets under management, net new assets, asset conversion or retention, or revenue growth. Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement.

28
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table summarizes inputs used in the measurement of contingent consideration (dollars in thousands):
Quantitative Information About Level 3 Fair Value Measurements
March 31, 2024December 31, 2023TypeValuation TechniquesUnobservable InputsRange
$84,762 $114,844 Contingent Consideration
Monte-Carlo Simulation Model
Forecasted Growth Rates
12.0% - 29.5%
Discount Rate
13.1% - 23.2%
2,500 4,000 
Contingent Consideration
Discounted Cash Flow Model
Discount Rate
9.3%
$87,262 $118,844 

The following table summarizes the changes in fair value for the Company’s Level 3 liabilities during the periods presented (in thousands):

Three Months Ended March 31,
20242023
Balance - Beginning of period
$118,844 $3,860 
Additions
19,918 41,334 
Payments
(51,500)— 
Fair value adjustments
— 86 
Balance - End of period
$87,262 $45,280 

29
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

Recurring Fair Value Measurements
The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):
March 31, 2024Level 1Level 2Level 3Total
Assets    
Cash equivalents$184 $— $— $184 
Cash equivalents segregated under federal or other regulations769,823 — — 769,823 
Restricted cash
110,231 — — 110,231 
Investment securities — trading:    
U.S. treasury obligations28,029 — — 28,029 
Mutual funds14,538 — — 14,538 
Equity securities627 — — 627 
Money market funds118 — — 118 
Debt securities— 116 — 116 
Total investment securities — trading43,312 116 — 43,428 
Other assets:
Deferred compensation plan740,549 — — 740,549 
Fractional shares — investment(1)
197,093 — — 197,093 
Other investments— 4,270 — 4,270 
Total other assets:937,642 4,270 — 941,912 
Total assets at fair value$1,861,192 $4,386 $— $1,865,578 
Liabilities    
Other liabilities:
Securities sold, but not yet purchased:    
Equity securities$74 $— $— $74 
U.S. treasury obligations
5 — — 5 
Total securities sold, but not yet purchased79 — — 79 
Fractional shares — repurchase obligation(1)
197,093 — — 197,093 
Contingent consideration
— — 87,262 87,262 
Total other liabilities197,172 — 87,262 284,434 
Total liabilities at fair value$197,172 $— $87,262 $284,434 
____________________
(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s dividend reinvestment program (“DRIP”).


30
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):
December 31, 2023Level 1Level 2Level 3Total
Assets
Cash equivalents$166 $— $— $166 
Cash equivalents segregated under federal or other regulations720,077 — — 720,077 
Restricted cash
103,226 — — 103,226 
Investment securities — trading:
Mutual funds50,518 — — 50,518 
U.S. treasury obligations25,388 — — 25,388 
Money market funds107 — — 107 
Equity securities43 — — 43 
Debt securities— 32 — 32 
Total investment securities — trading76,056 32 — 76,088 
Other assets:
Deferred compensation plan677,548 — — 677,548 
Fractional shares — investment(1)
177,131 — — 177,131 
Other investments— 3,960 — 3,960 
Total other assets854,679 3,960 — 858,639 
Total assets at fair value$1,754,204 $3,992 $— $1,758,196 
Liabilities
Other liabilities:
Securities sold, but not yet purchased:
Equity securities$487 $— $— $487 
Mutual funds55 — — 55 
Total securities sold, but not yet purchased542 — — 542 
Fractional shares — repurchase obligation(1)
177,131 — — 177,131 
    Contingent consideration
— — 118,844 118,844 
Total other liabilities177,673 — 118,844 296,517 
Total liabilities at fair value$177,673 $— $118,844 $296,517 
____________________
(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s DRIP.

31
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

Fair Value of Financial Instruments Not Measured at Fair Value
The following tables summarize the carrying values, fair values and fair value hierarchy level classification of financial instruments that are not measured at fair value (in thousands):
March 31, 2024Carrying ValueLevel 1Level 2Level 3Total Fair Value
Assets    
Cash$1,102,086 $1,102,086 $— $— $1,102,086 
Cash segregated under federal or other regulations841,173 841,173 — — 841,173 
Restricted cash3,775 3,775 — — 3,775 
Receivables from clients, net591,503 — 591,503 — 591,503 
Receivables from brokers, dealers and clearing organizations103,236 — 103,236 — 103,236 
Advisor repayable loans, net(1)
341,091 — — 257,480 257,480 
Other receivables, net863,119 — 863,119 — 863,119 
Investment securities — held-to-maturity securities14,023 — 13,836 — 13,836 
Other assets:
Securities borrowed2,671 — 2,671 — 2,671 
Deferred compensation plan(2)
7,509 7,509 — — 7,509 
Other investments(3)
4,692 — 4,692 — 4,692 
Total other assets14,872 7,509 7,363 — 14,872 
Liabilities
Client payables$2,486,605 $— $2,486,605 $— $2,486,605 
Payables to brokers, dealers and clearing organizations190,419 — 190,419 — 190,419 
Corporate debt and other borrowings, net3,853,794 — 3,784,875 — 3,784,875 
December 31, 2023Carrying ValueLevel 1Level 2Level 3Total Fair Value
Assets
Cash$465,505 $465,505 $— $— $465,505 
Cash segregated under federal or other regulations1,287,235 1,287,235 — — 1,287,235 
Restricted cash4,954 4,954 — — 4,954 
Receivables from clients, net588,585 — 588,585 — 588,585 
Receivables from brokers, dealers and clearing organizations50,069 — 50,069 — 50,069 
Advisor repayable loans, net(1)
340,985 — — 236,888 236,888 
Other receivables, net743,317 — 743,317 — 743,317 
Investment securities - held-to-maturity securities15,223 — 15,079 — 15,079 
Other assets:
Securities borrowed4,334 — 4,334 — 4,334 
Deferred compensation plan(2)
6,217 6,217 — — 6,217 
Other investments(3)
4,695 — 4,695 — 4,695 
Total other assets15,246 6,217 9,029 — 15,246 
Liabilities
Client payables$2,266,176 $— $2,266,176 $— $2,266,176 
Payables to brokers, dealers and clearing organizations163,337 — 163,337 — 163,337 
Corporate debt and other borrowings, net3,734,111 — 3,680,199 — 3,680,199 
__________________
(1)Includes repayable loans and forgivable loans which have converted to repayable upon advisor termination or change in agreed upon terms.
(2)Includes cash balances awaiting investment or distribution to plan participants.
(3)Other investments include Depository Trust Company common shares and Federal Reserve stock.
32
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 6 - INVESTMENT SECURITIES
The Company’s investment securities include debt and equity securities that the Company has classified as trading securities, which are carried at fair value, as well as investments in U.S. government notes, which are held by The Private Trust Company, N.A. to satisfy minimum capital requirements of the OCC. These securities are recorded at amortized cost and classified as held-to-maturity as the Company has both the intent and ability to hold these investments to maturity.

The following table summarizes investment securities (in thousands):
 March 31, 2024December 31, 2023
Trading securities — at fair value:  
U.S. treasury obligations$28,029 $25,388 
Mutual funds14,538 50,518 
Equity securities627 43 
Money market funds118 107 
Debt securities116 32 
Total trading securities$43,428 $76,088 
Held-to-maturity securities — at amortized cost:
U.S. government notes$14,023 $15,223 
Total held-to-maturity securities$14,023 $15,223 
Total investment securities$57,451 $91,311 
At March 31, 2024, the held-to-maturity securities were scheduled to mature as follows (in thousands):
Within one yearAfter one but within five yearsAfter five but within ten yearsAfter ten yearsTotal
U.S. government notes — at amortized cost$4,969 $9,054 $— $— $14,023 
U.S. government notes — at fair value$4,901 $8,935 $— $— $13,836 
NOTE 7 - GOODWILL AND OTHER INTANGIBLES, NET
A summary of the activity impacting goodwill is presented below (in thousands):
Balance at December 31, 2022
$1,642,468 
Goodwill acquired214,180 
Balance at December 31, 2023
1,856,648 
Purchase accounting adjustments
(19,627)
Goodwill acquired3,951 
Balance at March 31, 2024
$1,840,972 
The Company completed various acquisitions, which were accounted for under the acquisition method of accounting for business combinations and as asset acquisitions, and recorded purchase accounting adjustments during the periods presented. See Note 4 - Acquisitions, for additional information.
33
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

The components of other intangibles, net were as follows at March 31, 2024 (in thousands):
Weighted-Average Life 
Remaining
(in years)		Gross
 Carrying 
Value		 Accumulated AmortizationNet
 Carrying 
Value
Definite-lived intangibles, net(1):
    
Advisor and institution relationships
7.3$936,178 $(632,613)$303,565 
Product sponsor relationships2.0234,086 (212,053)22,033 
Client relationships12.8374,229 (58,487)315,742 
Technology9.220,850 (11,242)9,608 
Total definite-lived intangible assets, net $1,565,343 $(914,395)$650,948 
Other indefinite-lived intangibles:    
Trademark and trade name   39,819 
Total other intangibles, net   $690,767 
_______________________________
(1)During the three months ended March 31, 2024, the Company completed various acquisitions. See Note 4 - Acquisitions, for additional information.
The components of other intangibles, net were as follows at December 31, 2023 (in thousands):
Weighted-Average Life 
Remaining
(in years)		Gross
 Carrying 
Value		 Accumulated AmortizationNet
 Carrying 
Value
Definite-lived intangibles, net(1):
    
Advisor and institution relationships
7.3$935,478 $(614,277)$321,201 
Product sponsor relationships2.2234,086 (209,076)25,010 
Client relationships
12.6313,585 (51,328)262,257 
Technology8.733,460 (10,162)23,298 
Total definite-lived intangibles, net$1,516,609 $(884,843)$631,766 
Other indefinite-lived intangibles:
Trademark and trade name39,819 
Total other intangibles, net$671,585 
_______________________________
(1)    During the year ended December 31, 2023, the Company completed various acquisitions. See Note 4 - Acquisitions, for additional information.
Total amortization of other intangibles was $29.6 million and $24.1 million for the three months ended March 31, 2024 and 2023, respectively. Future amortization is estimated as follows (in thousands):
2024 - remainder$85,475 
2025104,686 
202666,429 
202761,280 
202855,488 
Thereafter277,590 
Total
$650,948 

34
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 8 - OTHER ASSETS AND OTHER LIABILITIES
The components of other assets and other liabilities were as follows (dollars in thousands):
 March 31, 2024December 31, 2023
Other assets:
Deferred compensation$748,058 $683,765 
Prepaid assets177,668 173,039 
Fractional shares — investment(1)
197,093 177,131 
Deferred tax assets, net167,446 167,450 
Operating lease assets93,032 93,797 
Debt issuance costs, net7,747 9,065 
Other91,093 85,774 
Total other assets$1,482,137 $1,390,021 
Other liabilities:
Deferred compensation$746,356 $684,178 
Unearned revenue(2)
206,698 156,214 
Fractional shares — repurchase obligation(1)
197,093 177,131 
Operating lease liabilities121,907 123,477 
Finance lease liabilities105,376 105,465 
Taxes payable
100,741 24,522 
Contingent consideration
87,262 118,844 
Other50,079 50,542 
Total other liabilities$1,615,512 $1,440,373 
_______________________________
(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s DRIP program.
(2)See Note 3 - Revenue for further information.



35
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 9 - CORPORATE DEBT AND OTHER BORROWINGS, NET
The Company’s outstanding corporate debt and other borrowings, net were as follows (in thousands):
March 31, 2024December 31, 2023
Corporate Debt
 
Balance
Applicable
Margin
Interest Rate
 
Balance
Applicable
Margin
Interest rateMaturity
Term Loan B(1)
$1,024,525 
SOFR+185 bps
7.176 %$1,027,200 
SOFR+185 bps
7.206 %11/12/2026
2027 Senior Notes(1)
400,000 Fixed Rate4.625 %400,000 Fixed Rate4.625 %11/15/2027
2028 Senior Notes(1)
750,000 Fixed Rate6.750 %750,000 
Fixed Rate
6.750 %11/17/2028
2029 Senior Notes(1)
900,000 Fixed Rate4.000 %900,000 Fixed Rate4.000 %3/15/2029
2031 Senior Notes(1)
400,000 Fixed Rate4.375 %400,000 Fixed Rate4.375 %5/15/2031
Total Corporate Debt3,474,525 3,477,200 
Less: Unamortized Debt Issuance Cost(21,731)(23,089)
Corporate debt, net$3,452,794 $3,454,111 
Other Borrowings
Revolving Credit Facility(2)
401,000 
ABR+37.5 bps / SOFR+147.5 bps
6.852 %280,000 
ABR+37.5 bps / SOFR+147.5 bps
6.966 %3/15/2026
Total other borrowings$401,000 $280,000 
Corporate Debt and Other Borrowings, Net$3,853,794 $3,734,111 
_______________________________
(1)No leverage or interest coverage maintenance covenants.
(2)The Parent’s outstanding balance at March 31, 2024 was comprised of an alternate base rate (“ABR”)-based balance of $10.0 million with the applicable margin of ABR + 37.5 bps (8.875%) and a SOFR-based balance of $391.0 million with the applicable margin of SOFR + 147.5 bps (6.800%).
The following table presents amounts outstanding and available under the Company’s external lines of credit at March 31, 2024 (in millions):
DescriptionBorrowerMaturity DateOutstandingAvailable
Senior secured, revolving credit facilityLPL Holdings, Inc.March 2026$401 $1,599 
Broker-dealer revolving credit facilityLPL Financial LLCJuly 2024$— $1,000 
Unsecured, uncommitted lines of creditLPL Financial LLC
None
$— $75 
Unsecured, uncommitted lines of creditLPL Financial LLC
September 2024
$— $50 
Secured, uncommitted lines of creditLPL Financial LLCMarch 2025$— $75 
Secured, uncommitted lines of creditLPL Financial LLCNone$— unspecified
Secured, uncommitted lines of creditLPL Financial LLCNone$— unspecified
Issuance of 2028 Senior Notes
LPLH issued $750.0 million in aggregate principal amount of 6.750% senior notes on November 17, 2023 at 99.929% (“2028 Senior Notes”). The 2028 Senior Notes are unsecured obligations that will mature on November 17, 2028, and are fully and unconditionally guaranteed on a senior unsecured basis by LPLFH. The Company used the proceeds from the issuance to repay borrowings made under its senior secured revolving credit facility and for general corporate purposes. In connection with the issuance of the 2028 Senior Notes, the Company incurred $6.3 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.
Credit Agreement
On March 13, 2023, LPLFH and LPLH entered into a sixth amendment agreement to the Company’s amended and restated credit agreement (the “Credit Agreement”), which, among other things, replaced LIBOR with SOFR. The Credit Agreement subjects the Company to certain financial and non-financial covenants. As of March 31, 2024, the Company was in compliance with such covenants.
36
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

Parent Revolving Credit Facility
On July 18, 2023, LPLH amended its revolving credit facility to, among other things, increase the maximum borrowing from $1.0 billion to $2.0 billion. Borrowings under the revolving credit facility bear interest at a rate per annum ranging from 112.5 to 187.5 basis points over SOFR plus 10 basis points or 12.5 to 87.5 basis points over the alternate base rate (the greatest of (i) the NYFRB Rate plus 1/2 of 1%, (ii) the Prime Rate and (iii) the Adjusted Term SOFR Rate for a one month Interest Period plus 1%, each as defined in the Credit Agreement) depending on the Debt Ratings (as defined in the Credit Agreement). In connection with the amendment of the credit facility, LPLH incurred $5.5 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition.
Broker-Dealer Revolving Credit Facility
On July 18, 2023, LPL Financial, the Company’s broker-dealer subsidiary, renewed its committed senior unsecured revolving credit facility that matures on July 16, 2024 and allows for a maximum borrowing of up to $1.0 billion. Borrowings under the credit facility bear interest at a rate per annum equal to 1.25% per annum plus the greatest of (i) SOFR plus 0.10%, (ii) the effective federal funds rate and (iii) the overnight bank funding rate, in each case, as such rate is administered or determined by the Federal Reserve Bank of New York from time to time. In connection with the renewal of the credit facility, LPL Financial incurred $1.7 million in costs, which were capitalized as debt issuance costs in the condensed consolidated statements of financial condition. The broker-dealer credit agreement subjects LPL Financial to certain financial and non-financial covenants. LPL Financial was in compliance with such covenants as of March 31, 2024.
Other External Lines of Credit
LPL Financial maintained five uncommitted lines of credit as of March 31, 2024. Two of the lines have unspecified limits, which are primarily dependent on LPL Financial’s ability to provide sufficient collateral. The other three lines have a total limit of $200.0 million, which allow for uncollateralized borrowings. There were no balances outstanding under these lines at March 31, 2024 or December 31, 2023.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Service and Development Contracts 
The Company is party to certain long-term contracts for systems and services that enable back-office trade processing and clearing for its product and service offerings.
Guarantees 
The Company occasionally enters into contracts that contingently require it to indemnify certain parties against third-party claims. The terms of these obligations vary and, because a maximum obligation is not explicitly stated, the Company has determined that it is not possible to make an estimate of the amount that it could be obligated to pay under such contracts.
LPL Financial provides guarantees to securities clearing houses and exchanges under their standard membership agreements, which require a member to guarantee the performance of other members. Under these agreements, if a member becomes unable to satisfy its obligations to the clearing houses and exchanges, all other members would be required to meet any shortfall. The Company’s liability under these arrangements is not quantifiable and could exceed the cash and securities it has posted as collateral. However, the potential requirement for the Company to make payments under these agreements is remote. Accordingly, no liability has been recognized for these transactions.
Loan Commitments 
From time to time, LPL Financial makes loans to advisors and institutions, primarily to newly recruited advisors and institutions to assist in the transition process, which may be forgivable. Due to timing differences, LPL Financial may make commitments to issue such loans prior to actually funding them. These commitments are generally contingent upon certain events occurring, including but not limited to the advisor or institution joining LPL Financial. LPL Financial had no significant unfunded loan commitments at March 31, 2024 or December 31, 2023.
37
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

Legal and Regulatory Matters
The Company is subject to extensive regulation and supervision by U.S. federal and state agencies and various self-regulatory organizations. The Company and its advisors periodically engage with such agencies and organizations, in the context of examinations or otherwise, to respond to inquiries, informational requests and investigations. From time to time, such engagements result in regulatory complaints or other matters, the resolution of which has in the past and may in the future include fines, customer restitution and other remediation. Assessing the probability of a loss occurring and the timing and amount of any loss related to a legal proceeding or regulatory matter is inherently difficult. While the Company exercises significant and complex judgments to make certain estimates presented in its condensed consolidated financial statements, there are particular uncertainties and complexities involved when assessing the potential outcomes of legal proceedings and regulatory matters. The Company’s assessment process considers a variety of factors and assumptions, which may include: the procedural status of the matter and any recent developments; prior experience and the experience of others in similar matters; the size and nature of potential exposures; available defenses; the progress of fact discovery; the opinions of counsel and experts; or the potential opportunities for settlement and the status of any settlement discussions. The Company monitors these factors and assumptions for new developments and re-assesses the likelihood that a loss will occur and the estimated range or amount of loss, if those amounts can be reasonably determined. The Company has established an accrual for those legal proceedings and regulatory matters for which a loss is both probable and the amount can be reasonably estimated.
In October 2022, the Company received a request for information from the SEC in connection with an investigation of the Company’s compliance with records preservation requirements for business-related electronic communications stored on personal devices or messaging platforms that have not been approved by the Company. In 2023, the SEC proposed a potential settlement, under which the Company would pay a $50.0 million civil monetary penalty. As a result, the Company recorded $40.0 million in other expense in the consolidated statements of income for the year ended December 31, 2023 to reflect the amount of the penalty that is not covered by the Company’s captive insurance subsidiary. On March 22, 2024, the Company reached a settlement in principle with the staff of the SEC to resolve its civil investigation. The Company expects to pay the civil monetary penalty of $50.0 million during the second quarter of 2024. The settlement in principle remains subject to the negotiation of definitive documentation and approval by the SEC.
Third-Party Insurance
The Company maintains third-party insurance coverage for certain potential legal proceedings, including those involving certain client claims. With respect to such client claims, the estimated losses on many of the pending matters are less than the applicable deductibles of the insurance policies.
Self-Insurance
The Company has self-insurance for certain potential liabilities through its captive insurance subsidiary. Liabilities associated with the risks that are retained by the Company are not discounted and are estimated by considering, in part, historical claims experience, severity factors, and actuarial assumptions and estimates. The estimated accruals for these potential liabilities could be significantly affected if future occurrences and claims differ from such assumptions and historical trends, so there are particular complexities and uncertainties involved when assessing the adequacy of loss reserves for potential liabilities that are self-insured. Self-insurance liabilities are included in accounts payable and accrued liabilities in the condensed consolidated statements of financial condition. Self-insurance related charges are included in other expense in the condensed consolidated statements of income.
The following table provides a reconciliation of the beginning and ending balances of self-insurance liabilities for the periods presented (in thousands):
Three Months Ended March 31,
20242023
Beginning balance — January 1$82,883 $74,071 
Losses incurred9,306 9,047 
Losses paid(12,205)(5,725)
Ending balance — March 31
$79,984 $77,393 
38
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Commitments
As of March 31, 2024, the Company had approximately $484.9 million of client margin loans that were collateralized with securities having a fair value of approximately $678.9 million that LPL Financial can repledge, loan or sell. Of these securities, approximately $357.2 million were client-owned securities pledged to the Options Clearing Corporation as collateral to secure client obligations related to options positions. As of March 31, 2024, there were no restrictions that materially limited the Company’s ability to repledge, loan or sell the remaining $321.7 million of client collateral.
Investment securities on the condensed consolidated statements of financial condition include $8.4 million and $5.5 million of trading securities pledged to the Options Clearing Corporation at March 31, 2024 and December 31, 2023, respectively, and $19.7 million and $19.9 million of trading securities pledged to the National Securities Clearing Corporation at March 31, 2024 and December 31, 2023, respectively.
NOTE 11 - STOCKHOLDERS’ EQUITY
Dividends
The payment, timing and amount of any dividends are subject to approval by the Company’s Board of Directors (the “Board”) as well as certain limits under the Credit Agreement. Cash dividends per share of common stock and total cash dividends paid on a quarterly basis were as follows (in millions, except per share data):
20242023
Dividend per ShareTotal Cash DividendDividend per ShareTotal Cash Dividend
First quarter$0.30 $22.4 $0.30 $23.6 
Share Repurchases
The Company engages in a share repurchase program that was approved by the Board, pursuant to which LPLFH may repurchase its issued and outstanding shares of common stock from time to time. Repurchased shares are included in treasury stock on the condensed consolidated statements of financial condition.
During the three months ended March 31, 2024 LPLFH repurchased 296,145 shares of common stock at a weighted-average price of $236.39 for a total of $70.0 million. As of March 31, 2024, the Company had $830.0 million remaining under the existing share repurchase program. As a result of our planned acquisition of Atria, the Company paused share repurchases during the quarter. Future share repurchases may be effected in open market or privately negotiated transactions, including transactions with affiliates, with the timing of purchases and the amount of stock purchased generally determined at the discretion of the Company within the constraints of the Credit Agreement and the Company’s general working capital needs.
NOTE 12 - SHARE-BASED COMPENSATION
In May 2021, the Company adopted its 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), which provides for the granting of stock options, warrants, restricted stock awards, restricted stock units, deferred stock units, performance stock units and other equity-based compensation to the Company’s employees, non-employee directors and other service providers. The 2021 Plan serves as the successor to the Company’s 2010 Omnibus Equity Incentive Plan (the “2010 Plan”). Following the adoption of the 2021 Plan, the Company is no longer making grants under the 2010 Plan, and the 2021 Plan is the only plan under which equity awards are granted. However, awards previously granted under the 2010 Plan will remain outstanding until vested, exercised or forfeited, as applicable.
There were 17,754,197 shares authorized for grant under the 2021 Plan and 11,656,366 shares remaining available for future issuance at March 31, 2024.
39
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

Stock Options and Warrants
The Company has not granted stock options or warrants since 2019. The following table summarizes the Company’s stock option and warrant activity as of and for the three months ended March 31, 2024:
Number of
Shares		Weighted-
Average
Exercise Price		Weighted-Average
Remaining
Contractual Term
(Years)		Aggregate
Intrinsic
Value
(In thousands)
Outstanding — December 31, 2023
546,820 $54.81 
Granted— $— 
Exercised(119,010)$47.30 
Forfeited and Expired— $— 
Outstanding — March 31, 2024427,810 $56.90 3.59$88,684 
Exercisable — March 31, 2024427,810 $56.90 3.59$88,684 
Exercisable and expected to vest — March 31, 2024427,810 $56.90 3.59$88,684 
The following table summarizes information about outstanding stock options and warrants as of March 31, 2024:
 OutstandingExercisable
Range of Exercise PricesNumber of
Shares		Weighted-
Average
Exercise
Price		Weighted-Average
Remaining Life
(Years)		Number of
Shares		Weighted-
Average
Exercise
Price
$19.85 - $25.0060,485 $19.85 1.9760,485 $19.85 
$25.01 - $35.00— $— 0.00— $— 
$35.01 - $45.0093,509 $39.48 2.8593,509 $39.48 
$45.01 - $65.006,687 $45.55 0.936,687 $45.55 
$65.01 - $75.00130,005 $65.50 3.77130,005 $65.50 
$75.01 - $80.00137,124 $77.53 4.75137,124 $77.53 
 427,810 $56.90 3.59427,810 $56.90 
The Company recognized no share-based compensation expense related to the vesting of stock options awarded to employees and officers during the three months ended March 31, 2024 and 2023. As of March 31, 2024, there was no unrecognized compensation cost related to non-vested stock options.
Restricted Stock and Stock Units
The following summarizes the Company’s activity in its restricted stock awards and stock units, which include restricted stock units, deferred stock units and performance stock units, as of and for the three months ended March 31, 2024:
Restricted Stock AwardsStock Units
Number of
Shares		Weighted-Average
Grant-Date
Fair Value		Number of
Units		Weighted-Average
Grant-Date
Fair Value
Outstanding — December 31, 20231,568 $187.93 776,604 $205.51 
  Granted— $— 397,845 $262.65 
  Vested— $— (352,203)$190.54 
  Forfeited— $— (6,979)$229.66 
Outstanding — March 31, 20241,568 $187.93 815,267 (1)$239.66 
Expected to vest — March 31, 20241,568 $187.93 644,042 $258.09 
_______________________________
(1)    Includes 90,412 vested and undistributed deferred stock units.
40
LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company grants restricted stock awards and deferred stock units to its directors and restricted stock units and performance stock units to its employees and officers. Restricted stock awards and stock units must vest or are subject to forfeiture; however, restricted stock awards are included in shares outstanding upon grant and have the same dividend and voting rights as the Company’s common stock. The Company recognized $20.3 million and $16.2 million of share-based compensation expense related to the vesting of these restricted stock awards and stock units during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, total unrecognized compensation cost for restricted stock awards and stock units was $138.4 million, which is expected to be recognized over a weighted-average remaining period of 2.23 years.
The Company also grants restricted stock units to its advisors and to institutions. The Company recognized share-based compensation expense of $0.7 million related to the vesting of these awards during both the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, total unrecognized compensation cost for restricted stock units granted to advisors and institutions was $4.5 million, which is expected to be recognized over a weighted-average remaining period of 1.98 years.
NOTE 13 - EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if dilutive potential shares of common stock had been issued. The calculation of basic and diluted earnings per share for the periods noted was as follows (in thousands, except per share data):
Three Months Ended March 31,
 20242023
Net income$288,764 $338,884 
Basic weighted-average number of shares outstanding74,562 78,750 
Dilutive common share equivalents901 1,224 
Diluted weighted-average number of shares outstanding75,463 79,974 
Basic earnings per share$3.87 $4.30 
Diluted earnings per share$3.83 $4.24 
The computation of diluted earnings per share excludes stock options, warrants and stock units that are anti-dilutive. For the three months ended March 31, 2024 and 2023, stock options, warrants and stock units representing common share equivalents of 162,078 shares and 75,416 shares, respectively, were anti-dilutive.
NOTE 14 - NET CAPITAL AND REGULATORY REQUIREMENTS
The Company’s broker-dealer subsidiaries are subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1 under the Exchange Act of 1934, as amended), which requires the maintenance of minimum net capital. The net capital rules also provide that a broker-dealer’s capital may not be withdrawn if the resulting net capital would be less than minimum requirements. Additionally, certain withdrawals require the approval of the SEC and the Financial Industry Regulatory Authority (“FINRA”) to the extent they exceed defined levels, even though such withdrawals would not cause net capital to be less than minimum requirements. Net capital and the related net capital requirement may fluctuate on a daily basis.


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LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the net capital position of the Company’s primary broker-dealer subsidiary (in thousands):
March 31, 2024
LPL Financial LLC
Net capital$328,479 
Less: required net capital18,070 
Excess net capital$310,409 
The Company’s subsidiary, PTC, also operates in a highly regulated industry and is subject to various regulatory capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on PTC’s operations.
As of March 31, 2024, LPL Financial and PTC met all capital adequacy requirements to which they were subject.

NOTE 15 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT RISK
AND CONCENTRATIONS OF CREDIT RISK
LPL Financial may offer loans to new and existing advisors and institutions to facilitate their relationship with LPL Financial, transition to LPL Financial’s platform or fund business development activities. LPL Financial may incur losses if advisors or institutions do not fulfill their obligations with respect to these loans. To mitigate this risk, LPL Financial evaluates the performance and creditworthiness of the advisor or institution prior to offering repayable loans.
LPL Financial’s client securities activities are transacted on either a cash or margin basis. In margin transactions, LPL Financial extends credit to the advisor’s client, subject to various regulatory and internal margin requirements, which is collateralized by cash and securities in the client’s account. As clients write options contracts or sell securities short, LPL Financial may incur losses if the clients do not fulfill their obligations and the collateral in the clients’ accounts is not sufficient to fully cover losses that clients may incur from these strategies. To control this risk, LPL Financial monitors margin levels daily and clients are required to deposit additional collateral, or reduce positions, when necessary.
LPL Financial is obligated to settle transactions with brokers and other financial institutions even if its advisors’ clients fail to meet their obligation to LPL Financial. Clients are required to complete their transactions on the settlement date, generally two business days after the trade date. If clients do not fulfill their contractual obligations, LPL Financial may incur losses. In addition, the Company occasionally enters into certain types of contracts to fulfill its sale of when-issued securities. When-issued securities have been authorized but are contingent upon the actual issuance of the security. LPL Financial has established procedures to reduce this risk by generally requiring that clients deposit cash or securities into their account prior to placing an order.
LPL Financial may at times hold equity securities on both a long and short basis that are recorded on the condensed consolidated statements of financial condition at market value. While long inventory positions represent LPL Financial’s ownership of securities, short inventory positions represent obligations of LPL Financial to deliver specified securities at a contracted price, which may differ from market prices prevailing at the time of completion of the transaction. Accordingly, both long and short inventory positions may result in losses or gains to LPL Financial as market values of securities fluctuate. To mitigate the risk of losses, long and short positions are marked-to-market daily and are continuously monitored by LPL Financial.
NOTE 16 - SUBSEQUENT EVENTS
The Board declared a cash dividend of $0.30 per share on LPLFH’s outstanding common stock to be paid on June 4, 2024 to all stockholders of record on May 21, 2024.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
We maintain trading securities and securities sold, but not yet purchased in order to facilitate client transactions, to meet a portion of our clearing deposit requirements at various clearing organizations, to track the performance of our research models and in connection with our dividend reinvestment program. Trading securities are included in investment securities while securities sold, but not yet purchased are included in other liabilities on the condensed consolidated statements of financial condition and can include mutual funds, money market funds, debt securities and equity securities. We enter into market risk sensitive instruments for purposes other than trading, which are included in other assets on the condensed consolidated statements of financial condition and can include deferred compensation plan assets invested in life insurance, money market and other mutual funds, investments in fractional shares held by customers, and other non-traded real estate investment trusts. Changes in the value of our market risk sensitive instruments may result from fluctuations in interest rates, credit ratings of the issuer, equity prices or a combination of these factors.
In facilitating client transactions, our trading securities and securities sold, but not yet purchased generally involve mutual funds, including dividend reinvestments. Our positions held are based upon the settlement of client transactions, which are monitored by our Trading and Operations department.
Positions held to meet clearing deposit requirements consist of U.S. government securities and equity securities. The amount of securities deposited depends upon the requirements of the clearing organization. The level of securities deposited is monitored by the settlements group within our Trading and Operations department.
Our Research department develops model portfolios that are used by advisors in developing client portfolios. We maintain securities owned in internal accounts based on these model portfolios to track the performance of our Research department. At the time a portfolio is developed, we purchase the securities in that model portfolio in an amount equal to the account minimum, which varies by product.
In addition, we are subject to market risk resulting from operational risk events, which can require customer trade corrections. We also bear market risk on the fees we earn that are based on the market value of advisory and brokerage assets, as well as assets on which trailing commissions are paid and assets eligible for sponsor payments.
As of March 31, 2024, the fair value of our trading securities was $43.4 million and securities sold, but not yet purchased were not material. The fair value of market risk sensitive instruments entered into for other than trading purposes included within other assets was $941.9 million as of March 31, 2024. See Note 5 - Fair Value Measurements, within the notes to the condensed consolidated financial statements for information regarding the fair value of trading securities; securities sold, but not yet purchased; and other assets associated with our client facilitation activities.
Interest Rate Risk
We are exposed to risk associated with changes in interest rates. As of March 31, 2024, $1.4 billion of our outstanding debt was subject to floating interest rate risk. While our senior secured term loan is subject to increases in interest rates, we do not believe that a short-term change in interest rates would have a material impact on our net income given revenue generated by our client cash balances, which is generally subject to the same, but off-setting, interest rate risk.
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The following table summarizes the impact of increasing interest rates on our interest expense from the variable portion of our debt outstanding, calculated using the projected average outstanding balance over the subsequent twelve-month period (in thousands):
 
Outstanding Balance at
March 31, 2024
Annual Impact of an Interest Rate(†) Increase of
 10 Basis25 Basis50 Basis100 Basis
Corporate Debt and Other BorrowingsPointsPointsPointsPoints
Term Loan B$1,024,525 $1,021 $2,551 $5,103 $10,205 
Revolving Credit Facility401,000 401 1,003 2,005 4,010 
Variable Rate Debt Outstanding$1,425,525 $1,422 $3,554 $7,108 $14,215 
____________________
(†) Our interest rate for our Term Loan B is locked in for one, two, three, six or twelve months as allowed under the Credit Agreement. At the end of the selected periods, the rates will be locked in at the then current rate. The effect of these interest rate locks are not included in the table above.
See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.
We offer our advisors and their clients two FDIC insured bank sweep vehicles and a client cash account (“CCA”) that are interest rate sensitive. Our FDIC insured sweep vehicles include an (1) insured cash account (“ICA”) for individuals, trusts, sole proprietorships and entities organized or operated to make a profit, such as corporations, partnerships, associations, business trusts and other organizations and (2) an insured deposit cash account (“DCA”) for advisory individual retirement accounts. Clients earn interest on deposits in the ICA and the DCA while we earn a fee. The fees we earn from cash held in the ICA are based primarily on prevailing interest rates in the current interest rate environment, and are therefore subject to interest rate risk. The fees we earn from the DCA are calculated as a per account fee, and such fees increase as the federal funds target rate increases, subject to a cap.
The Company places ICA sweep overflow into the CCA. These deposits are either used to fund client margin lending or placed in third-party bank or investment accounts, both of which are segregated under federal or other regulations, where they are held as cash or invested in short-term U.S. treasury bills. We earn interest income on these bank deposits and investments in short-term U.S. treasury bills and pay interest to clients on these CCA balances, which are sensitive to prevailing interest rates. This interest income and expense is included in interest income, net in the condensed consolidated statements of income. Changes in interest rates and fees for the deposit sweep vehicles are monitored by our Rate Setting Committee (the “RSC”), which governs and approves any changes to our fees. By meeting promptly around the time of Federal Open Market Committee meetings, or for other market or non-market reasons, the RSC considers financial risk of the deposit sweep vehicles relative to other products into which clients may move cash balances.
Credit Risk
Credit risk is the risk of loss due to adverse changes in a borrower’s, issuer’s or counterparty’s ability to meet its financial obligations under contractual or agreed upon terms. We are subject to credit risk from certain loans extended to advisors and institutions when we extend loans with repayment terms to facilitate advisors’ and institutions’ transition to our platform or to fund business development activities. We are also subject to credit risk when a forgivable loan to an advisor or institution converts to repayable upon advisor or institution termination or change in agreed upon terms.
Credit risk also arises when collateral posted with LPL Financial by clients to support margin lending or derivative trading is insufficient to meet clients’ contractual obligations to LPL Financial. Our credit exposure in these transactions consists primarily of margin accounts, through which we extend credit to advisors’ clients collateralized by securities in the clients’ accounts. Under many of these agreements, we are permitted to sell, repledge or loan these securities held as collateral and use these securities to enter into securities lending arrangements or to deliver to counterparties to cover short positions.
As our advisors execute margin transactions on behalf of their clients, we may incur losses if clients do not fulfill their obligations, the collateral in the clients’ accounts is insufficient to fully cover losses from such investments and our advisors fail to reimburse us for such losses. Our losses on margin accounts were not material during the three months ended March 31, 2024 and 2023. We monitor exposure to industry sectors and individual securities and perform analyses on a regular basis in connection with our margin lending activities. We adjust our margin requirements if we believe our risk exposure is not appropriate based on market conditions.
We are subject to concentration risk if we extend large loans to or have large commitments with a single counterparty, borrower or group of similar counterparties or borrowers, or if we accept a concentrated position as
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collateral for a margin loan. Receivables from and payables to clients and stock borrowing and lending activities are conducted with a large number of clients and counterparties and potential concentration is monitored. We seek to limit this risk through review of the underlying business and the use of limits established by senior management taking into consideration factors including current market conditions, the financial strength of the counterparty, the size of the position or commitment, the expected duration of the position or commitment and other positions or commitments outstanding.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.
Change in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the first quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION

Item 1. Legal Proceedings
From time to time, we have been subjected to and are currently subject to legal and regulatory proceedings arising out of our business operations, including lawsuits, arbitration claims, and inquiries, investigations and enforcement proceedings initiated by the SEC, FINRA and state securities regulators, as well as other actions and claims. See Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements for additional information.
Item 1A. Risk Factors
There have been no material changes in the information regarding the Company’s risks, as set forth under Part I, “Item 1A. Risk Factors” in the Company’s 2023 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below sets forth information regarding repurchases, reported on a trade date basis, during the three months ended March 31, 2024:
PeriodTotal Number of Shares PurchasedWeighted-Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Programs
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (millions)(1)
January 1, 2024 through January 31, 2024296,145$236.39 296,145$830.0 
February 1, 2024 through February 29, 2024—$— —$830.0 
March 1, 2024 through March 31, 2024—$— —$830.0 
Total296,145296,145
(1) On September 21, 2022, the Board authorized a $2.1 billion increase to the amount available for repurchases of LPLFH’s issued and outstanding common shares. See Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information.
The repurchases may be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including transactions with affiliates, with the timing of purchases and the amount of shares purchased generally determined at the discretion of the Company within the constraints of the Credit Agreement, applicable laws and consideration of the Company’s general liquidity needs.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended March 31, 2024, certain of our officers (as defined in Rule 16a-1(f) under the Exchange Act) entered into contracts, instructions or written plans for the purchase or sale of our common stock that are intended to satisfy the affirmative defense conditions specified in Rule 10b5-1(c) under the Exchange Act (“Rule 10b5-1 trading arrangements”). The table below sets forth certain information regarding such Rule 10b5-1 trading arrangements:
OfficerDate of Plan AdoptionCommencement of Trading Period
Termination of Trading Period(1)
Maximum Number of Securities to be Purchased or Sold Pursuant to the Rule 10b5-1 Trading ArrangementsPurchase or Sale
Dan Arnold, President and Chief Executive OfficerMarch 13, 2024June 14, 2024September 12, 202420,000Sale
(1) Represents the outside termination date pursuant to terms of each applicable plan. The agreement governing the applicable plan may terminate earlier pursuant to its terms in certain circumstances outside of the control of the applicable officer, including if all trades under the plan are completed prior to the termination of the trading period.
Item 6. Exhibits
3.1 
3.2 
3.3 
3.4 
22.1 
31.1 
31.2 
32.1 
32.2 
101.SCHInline XBRL Taxonomy Extension Schema*
101.CALInline XBRL Taxonomy Extension Calculation*
101.LABInline XBRL Taxonomy Extension Label*
101.PREInline XBRL Taxonomy Extension Presentation*
101.DEFInline XBRL Taxonomy Extension Definition*
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
____________________
*Filed herewith.
**Furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
LPL Financial Holdings Inc.
 
Date:May 2, 2024By:  /s/ DAN H. ARNOLD
  Dan H. Arnold
  
President and Chief Executive Officer
  
Date:May 2, 2024By:  /s/ MATTHEW J. AUDETTE
  Matthew J. Audette
  
Chief Financial Officer and Head of Business Operations

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