LPL Financial shares declined after the firm reported second-quarter earnings that fell short of analyst expectations, driven by a sharp increase in expenses that outpaced revenue growth.
The earnings call quickly shifted focus to the firm’s pending acquisition of Commonwealth Financial Network, a major strategic move slated to close Friday, August 1.
CEO Rich Steinmeier remained upbeat, emphasizing that LPL is on track to hit key advisor retention targets—crucial as it integrates nearly 2,900 advisors and $285 billion in assets from Commonwealth.
For the quarter ended June 30, LPL posted GAAP earnings per share of $3.40, a 5% increase year over year, but short of the $3.52 consensus estimate from FactSet. Adjusted EPS, which removes certain one-time items, came in at $4.51, beating the $4.23 analysts had forecast.
Revenue hit $3.8 billion, up from $2.9 billion a year ago, matching analyst projections. Still, shares dropped 4.1% in early Friday trading, amid a broader market pullback following a weaker-than-expected jobs report. The S&P 500 was down 1.4%, and the Vanguard Financials ETF lost 2.3%.
LPL’s expenses jumped 33% year over year to $3.5 billion, driven by increases in marketing, advisor transition support, and higher borrowing costs. Meanwhile, revenue rose 31%, helped by a strong increase in commission and advisory income.
The firm continues to grow its advisor base aggressively through recruitment and M&A. Earlier this year, LPL announced plans to acquire Commonwealth, a well-established independent broker-dealer known for its advisor-centric service culture. Integration is expected to begin in earnest in Q4 2026, when advisor and client accounts will migrate to LPL’s platform.
Advisor retention is key to the deal’s long-term success. LPL is targeting a 90% retention rate and is under pressure as competing firms try to lure away Commonwealth advisors with hefty transition packages.
“We’re four months into a period of intense advisor engagement,” said Steinmeier on the earnings call. “We’ve spent that time deepening relationships with Commonwealth’s leadership, advisors, and team members.”
LPL has emphasized that it intends to preserve the Commonwealth brand and culture post-acquisition. Commonwealth CEO Wayne Bloom will join LPL as a managing director and serve on its management committee, reinforcing continuity. “Commonwealth has set the bar for advisor service, and we’re committed to not just maintaining but enhancing that experience with our broader capabilities,” Steinmeier said.
So far, advisor attrition has been limited, with only a small number leaving for competitors or to launch independent RIAs. Steinmeier acknowledged that not every advisor will remain post-transition, but expressed confidence in achieving the 90% retention goal. “We’ve engaged with so many Commonwealth advisors, and I feel good about where we are,” he said.
On the asset side, LPL benefited from market gains and continued client contributions. Total assets under administration rose 28% year over year to $1.9 trillion. Net new assets totaled $21 billion for the quarter, representing a 5% annualized growth rate—down from $29 billion in the second quarter of 2024.
The April tax season typically results in client outflows, and this year’s asset gathering was further complicated by volatility in equity markets. U.S. stocks dipped after President Trump announced new tariffs but quickly rebounded following a partial delay in implementation. That volatility triggered increased trading across brokerage platforms, with some investors stepping in to buy the dip.
For advisors, LPL’s results reflect both the firm’s momentum and the headwinds it faces. Advisors on the platform may benefit from expanded capabilities and deeper resources as LPL integrates Commonwealth. But the rising expense base and pressure to retain newly acquired advisors highlight execution risk in the quarters ahead.
As the wealth management industry continues to consolidate, LPL's success will hinge on its ability to scale without compromising the advisor experience—a challenge that will demand both operational discipline and strategic clarity.
