LPL Financial Holdings Q4 2025 LPL Financial Holdings Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 LPL Financial Holdings Inc Earnings Call
Chief executive officer rich, steinmeier and president and Chief Financial Officer. Matt Adit rich and Matt will offer introductory remarks and then the call will be open for questions. The company would appreciate if analysts, would limit themselves to only 1 question to ask a follow-up, please re-enter the queue the company has posted its earnings, press release and supplementary information on the investor relations section of the company's website. Investor.pdf future financial, and operating results Outlook business strategies and plans, as well as other opportunities and potential risks. That management foresees such for looking statements, reflect Management's, current estimates or beliefs and are subject to known and unknown risks and uncertainties that may cause actual results or the timing of events to differ materially from those.
Expressed or implied in such forward-looking statements.
For more information about such risks and uncertainties the company, refers listeners to the disclosure set forth under the caption for looking statements in the earnings press release as well as the risk factors and other disclosures contained in the company's recent filings with the Securities and Exchange Commission.
During the call, the company will also discuss certain non-gaap Financial measures for a Reconciliation of such non-gaap Financial measures to the comparable. Gaap figures. Please refer to the company's earnings release, which can be found at
operator.
Everyone for joining our call.
It's a pleasure to speak with you again.
Before touching on our fourth quarter results, it was a milestone year for LL, as we significantly Advanced our key strategic priorities.
To reflect on a few of our key accomplishments.
We delivered industry-leading, organic asset, growth of 8%, including the onboarding of the retail wealth management, businesses of win, trust financial, and first horizon.
Which collectively Support over, 200 financial advisors managing roughly 34 billion dollars in client assets.
We completed the onboarding and integration of Atria wealth Solutions.
Converting 7, distinct broker dealers to the LPL platform.
We signed and closed, our acquisition of Commonwealth Financial Network.
Marking the largest deal in LPL history. Welcome to their home office staff and approximately 3,000 advisors to the LPL family.
We launched a national marketing campaign to elevate our brand with advisors and their clients.
We significantly Advanced our employee experience resulting in our highest Employee Engagement scores in nearly a decade.
We made meaningful progress. Driving improved, operating Leverage
Finally, our Collective efforts resulted in record, adjusted earnings per share of twenty dollars and 9 cents.
Okay. Now let's turn to our Q4 results.
In the quarter total assets increased to a record 2.4 trillion dollars driven by organic growth and higher Equity markets.
We attracted, organik net, new assets of 23, billion, representing a 4% annualized growth rate.
our fourth quarter business results, led to strong financial performance, with record adjusted, EPS, of 5.23, an increase of 23% from a year ago
Next, let's turn to our strategic plan and progress across our organic and inorganic initiatives.
Our vision is clear. We aspire to be the best firm in Wealth Management.
To do that. We are focused on 3 key priorities.
1 maintaining the client centricity of the firm was built on.
2 Emperors to deliver exceptionally for our advisors and their clients.
And 3 delivering improved, operating Leverage.
Richard Steinmeier: Marketing campaign to elevate our brand with advisors and their clients. We significantly advanced our employee experience, resulting in our highest employee engagement scores in nearly a decade. We made meaningful progress driving improved operating leverage. Finally, our collective efforts resulted in record adjusted earnings per share of $20.09. Okay, now let's turn to our Q4 results. In the quarter, total assets increased to a record $2.4 trillion, driven by organic growth and higher equity markets. We attracted organic net new assets of $23 billion, representing a 4% annualized growth rate. Our fourth quarter business results led to strong financial performance, with record adjusted EPS of $5.23, an increase of 23% from a year ago. Next, let's turn to our strategic plan and progress across our organic and inorganic initiatives.
Rich Steinmeier: Marketing campaign to elevate our brand with advisors and their clients. We significantly advanced our employee experience, resulting in our highest employee engagement scores in nearly a decade. We made meaningful progress driving improved operating leverage. Finally, our collective efforts resulted in record adjusted earnings per share of $20.09. Okay, now let's turn to our Q4 results. In the quarter, total assets increased to a record $2.4 trillion, driven by organic growth and higher equity markets. We attracted organic net new assets of $23 billion, representing a 4% annualized growth rate.
We significantly advanced our employee experience, resulting in our highest employee engagement scores in nearly a decade.
Effectively executing on. These Focus areas will help us sustain our industry-leading growth while advancing the efficiency and effectiveness of our model.
With that is context. Let's review a few highlights of our business growth.
We made meaningful progress driving improved operating leverage.
And finally, our collective efforts resulted in record adjusted earnings per share of $20 nine.
In Q4 recruited assets were 14 billion dollars, bringing our total for the year to 104 billion.
Okay, now, let's turn to our Q4 results.
Throughout the quarter, our pipelines continue to build and are near record levels.
In the quarter total assets increased to a record $2 four trillion drew.
Driven by organic growth and higher equity markets.
Recognizing that many opportunities are in the early and mid-stages we expect to pull through to improve over the course of the year as we reignite our industry-leading growth engine.
We attracted organic net new assets of $23 billion, representing a 4% annualized growth rate.
Our fourth quarter business results led to strong financial performance, with record adjusted EPS of $5.23, an increase of 23% from a year ago. Next, let's turn to our strategic plan and progress across our organic and inorganic initiatives. Our vision is clear: We aspire to be the best firm in wealth management. To do that, we are focused on three key priorities. One, maintaining the client centricity the firm was built on. Two, empowering our employees to deliver exceptionally for our advisors and their clients. And three, delivering improved operating leverage.
Our fourth quarter business results led to strong financial performance with record adjusted EPS of $5 23.
An increase of 23% from a year ago.
Next let's turn to our strategic plan and progress across our organic and inorganic initiatives.
With respect to our expanded affiliation models, Strategic Wealth independent employee. And our enhanced Raa offering, we delivered another solid quarter, recruiting roughly 1 billion dollars in US.
Richard Steinmeier: Our vision is clear: We aspire to be the best firm in wealth management. To do that, we are focused on three key priorities. One, maintaining the client centricity the firm was built on. Two, empowering our employees to deliver exceptionally for our advisors and their clients. And three, delivering improved operating leverage. Effectively executing on these focus areas will help us sustain our industry-leading growth while advancing the efficiency and effectiveness of our model. With that as context, let's review a few highlights of our business growth. In Q4, recruited assets were $14 billion, bringing our total for the year to $104 billion. Throughout the quarter, our pipelines continued to build and are near record levels.
Our vision is clear, we aspire to be the best firm in wealth management.
Turning to overall asset retention, it was 97% for Q4 and over the last 12 months.
To do that we are focused on three key priorities.
One maintaining the client centricity the firm was built on.
This is a testament to the continued efforts to enhance the advisor experience through the delivery of new capabilities and technology and the evolution of our service and operations project.
To empowering our employees to deliver exceptionally for our advisers and their clients.
And three delivering improved operating leverage.
Effectively executing on these focus areas will help us sustain our industry-leading growth while advancing the efficiency and effectiveness of our model. With that as context, let's review a few highlights of our business growth. In Q4, recruited assets were $14 billion, bringing our total for the year to $104 billion. Throughout the quarter, our pipelines continued to build and are near record levels. Recognizing that many opportunities are in the early and mid stages, we expect the pull-through to improve over the course of the year as we reignite our industry-leading growth engine.
Secondly, executing on these focus areas will help us sustain our industry, leading growth, while advancing the efficiency and effectiveness of our model.
as for Commonwealth, we are thrilled to be working closely with our new colleagues to develop the target, operating model and positioning for the Commonwealth value proposition within our suite of offerings,
The work is well underway and we remain on track to onboard the Commonwealth advisors in Q4.
With that as context, let's review a few highlights of our business growth.
In Q4 recruited assets were $14 billion, bringing our total for the year to $104 billion.
In parallel, in partnership with our Commonwealth colleagues, we remain focused on helping their advisors understand the benefits of staying with Commonwealth.
Throughout the quarter, our pipelines continue to build and our near record levels recognizing.
Ensuring each adviser has everything needed to complete their diligence and make an informed decision.
Richard Steinmeier: Recognizing that many opportunities are in the early and mid stages, we expect the pull-through to improve over the course of the year as we reignite our industry-leading growth engine. In our traditional markets, we added approximately $13 billion in assets during Q4, as we maintained our industry-leading capture rates of advisors in motion. With respect to our expanded affiliation models, strategic wealth, independent employee, and our enhanced RIA offering, we delivered another solid quarter, recruiting roughly $1 billion in assets. Turning to overall asset retention, it was 97% for Q4 and over the last 12 months. This is a testament to the continued efforts to enhance the advisor experience through the delivery of new capabilities and technology and the evolution of our service and operations functions.
Recognizing that many opportunities are in the early and mid stages.
We continue to expect roughly 90% retention of client assets.
We expect the pull through to improve over the course of the year as we reignite our industry leading growth engine.
As we get closer to onboarding later this year, our estimate will continue to firm up.
In our traditional markets, we added approximately $13 billion in assets during Q4, as we maintained our industry-leading capture rates of advisors in motion. With respect to our expanded affiliation models, strategic wealth, independent employee, and our enhanced RIA offering, we delivered another solid quarter, recruiting roughly $1 billion in assets. Turning to overall asset retention, it was 97% for Q4 and over the last 12 months.
In our traditional markets, we added approximately $13 billion in assets during Q4, as we maintained our industry leading capture rates of advisors in motion.
In closing, the fourth quarter was a Capstone on an outstanding year. This is a result of the dedication of our team and their unwavering commitment to our advisors
So, I want to thank everyone at LPL for their reference.
With respect to our expanded affiliation models strategic well independent employee and our enhanced our <unk> offering we delivered another solid quarter recruiting roughly $1 billion enough.
As we look ahead, we remain well, positioned
To serve as a critical partner to our advisors and institutions to continue delivering industry-leading, organic growth and to maximize long-term value for shareholders.
Turning to overall asset retention it was 97% for Q4 and over the last 12 months. This is a testament to the continued efforts to enhance the advisor experience through the delivery of new capabilities and technology and the evolution of our service and operations.
With that, I'll turn the call over to Matt, thanks, Rich, and I'm glad to speak with everyone on today's call.
This is a testament to the continued efforts to enhance the advisor experience through the delivery of new capabilities and technology and the evolution of our service and operations functions. As for Commonwealth, we are thrilled to be working closely with our new colleagues to develop the target operating model and positioning for the Commonwealth value proposition within our suite of offerings. The work is well underway, and we remain on track to onboard the Commonwealth advisors in Q4.
as we reflect on 2025, it's been a year of meaningful progress for LPL as we continue to execute against some of our key strategic priorities, which include advancing our efforts to drive improved, operating Leverage
Richard Steinmeier: As for Commonwealth, we are thrilled to be working closely with our new colleagues to develop the target operating model and positioning for the Commonwealth value proposition within our suite of offerings. The work is well underway, and we remain on track to onboard the Commonwealth advisors in Q4. In parallel, in partnership with our Commonwealth colleagues, we remain focused on helping their advisors understand the benefits of staying with Commonwealth, ensuring each advisor has everything needed to complete their diligence and make an informed decision. We continue to expect roughly 90% retention of client assets. As we get closer to onboarding later this year, our estimate will continue to firm up. In closing, the fourth quarter was a capstone on an outstanding year. This is a result of the dedication of our team and their unwavering commitment to our advisors.
As for Commonwealth, We are thrilled to be working closely with our new colleagues to develop the target operating model and positioning for the Commonwealth value proposition within our suite of offerings.
Through accommodation of increased efficiency in our business and refinements to pricing to ensure. It is aligned with the value we deliver
The work is well underway and we remain on track to onboard the Commonwealth advisers in Q4.
In parallel, in partnership with our Commonwealth colleagues, we remain focused on helping their advisors understand the benefits of staying with Commonwealth, ensuring each advisor has everything needed to complete their diligence and make an informed decision. We continue to expect roughly 90% retention of client assets. As we get closer to onboarding later this year, our estimate will continue to firm up. In closing, the fourth quarter was a capstone on an outstanding year. This is a result of the dedication of our team and their unwavering commitment to our advisors.
And driving further improvements to the advisor experienced by removing friction through investments in automation across our service operations and supervision.
In parallel in partnership with our <unk> colleagues, we remained focused on helping their advisors understand the benefits of staying with Commonwealth.
As we look ahead, we're encouraged by the opportunities in front of us, to better serve, our advisors and continue, strengthening our industry-leading value proposition.
Ensuring each adviser has everything needed to complete their diligence and making informed decisions.
Now, turning to a few highlights from our Q4 business results.
We continue to expect roughly 90% retention client assets as.
As we get closer to Onboarding later this year, our estimate will continue to firm up.
Total advisory and brokerage assets were 2.4 trillion up 2% from Q3 as continued, organic growth was complemented by higher Equity movements.
In closing the fourth quarter was a capstone on an outstanding year. This is a result of the dedication of our team and their unwavering commitment to our advisers.
Total organic, net. New assets were 23 billion and approximately 4% annualized growth rate.
Richard Steinmeier: I want to thank everyone at LPL for their efforts. As we look ahead, we remain well-positioned to serve as a critical partner to our advisors and institutions, to continue delivering industry-leading organic growth, and to maximize long-term value for shareholders. With that, I'll turn the call over to Matt.
I want to thank everyone at LPL for their efforts. As we look ahead, we remain well-positioned to serve as a critical partner to our advisors and institutions, to continue delivering industry-leading organic growth, and to maximize long-term value for shareholders. With that, I'll turn the call over to Matt.
So I want to thank everyone at LPL for thereof.
For the full year, total organic, net, new assets were 147 billion or an approximately 8% growth rate.
As we look ahead, we remain well positioned.
To serve as a critical partner to our advisors and institutions to continue delivering industry, leading organic growth and to maximize long term value for shareholders.
With that I'll turn the call over to Matt.
As for our Q4 financials, the combination of organic growth and expense discipline, led to adjusted pre-tax margin of approximately 36% and record adjusted EPS of 5.23.
Matthew Audette: Thanks, Rich, and I'm glad to speak with everyone on today's call. As we reflect on 2025, it's been a year of meaningful progress for LPL as we continue to execute against some of our key strategic priorities, which include advancing our efforts to drive improved operating leverage through a combination of increased efficiency in our business and refinements to pricing to ensure it is aligned with the value we deliver, driving further improvements to the advisor experience by removing friction through investments in automation across our service, operations, and supervision. As we look ahead, we're encouraged by the opportunities in front of us to better serve our advisors and continue strengthening our industry-leading value proposition. Now, turning to a few highlights from our Q4 business results.
Matt Audette: Thanks, Rich, and I'm glad to speak with everyone on today's call. As we reflect on 2025, it's been a year of meaningful progress for LPL as we continue to execute against some of our key strategic priorities, which include advancing our efforts to drive improved operating leverage through a combination of increased efficiency in our business and refinements to pricing to ensure it is aligned with the value we deliver, driving further improvements to the advisor experience by removing friction through investments in automation across our service, operations, and supervision.
Rich I'm glad to speak with everyone on today's call.
As we reflect on 2025, it's been a year of meaningful progress for LPL as we continued to execute against some of our key strategic priorities, which include advancing our efforts to drive improved operating leverage through a combination of increased efficiency in our business and refinements to pricing to ensure it is aligned with the value we deliver.
Gross profit was 1,542 Million up to 62 million sequentially.
As for the key drivers commission advisory fees that a payout were 453 million up 27 million from Q3.
Our payout rate was 88% up 53 basis points from Q3 due to the seasonal build in the production bonus.
And driving further improvements to the advisor experience by removing friction through investments in automation across our service operations and supervision.
As we look ahead, we're encouraged by the opportunities in front of us to better serve our advisors and continue strengthening our industry-leading value proposition. Now, turning to a few highlights from our Q4 business results. Total advisory and brokerage assets were $2.4 trillion, up 2% from Q3, as continued organic growth was complemented by higher equity. Total organic net new assets were $23 billion and approximately 4% annualized growth rate. For the full year, total organic net new assets were $147 billion or an approximately 8% growth rate.
With respect to client cache Revenue. It was 456 million up 14 million from Q3 as the sequential growth and balances more than offset. The impact of lower short-term interest rates.
As we look ahead, we're encouraged by the opportunities in front of us to better serve our advisers and continue strengthening our industry leading value proposition.
Now turning to a few highlights from our Q4 business results.
Overall client cash balances ended. The quarter at 61 billion up 5 billion, sequentially a strong outcome. Even when considering the typical Q4 seasonal bill,
Matthew Audette: Total advisory and brokerage assets were $2.4 trillion, up 2% from Q3, as continued organic growth was complemented by higher equity. Total organic net new assets were $23 billion and approximately 4% annualized growth rate. For the full year, total organic net new assets were $147 billion or an approximately 8% growth rate. As for our Q4 financial results, the combination of organic growth and expense discipline led to adjusted pre-tax margin of approximately 36% and record adjusted EPS of $5.23. Gross profit was $1.542 billion, up $62 million sequentially. As for the key drivers, commission advisory fees net of payout were $453 million, up $27 million from Q3.
Total advisory and brokerage assets were $2 four trillion up 2% from Q3 as continued organic growth was complemented by higher equity.
Within our ICA portfolio, the mix of fixed rate balance is end of the quarter at roughly 55% within our target range of 50 to 75%.
Total organic net new assets were <unk> 23 billion and approximately 4% annualized growth rate.
Looking more closely at a yield. It was 341 basis points in Q4.
For the full year total organic net new assets were 147 billion or an approximately 8% growth rate.
Down 10 voices points from Q3 driven by the impact of the October and December rate cuts.
As for our Q4 financial results, the combination of organic growth and expense discipline led to adjusted pre-tax margin of approximately 36% and record adjusted EPS of $5.23. Gross profit was $1.542 billion, up $62 million sequentially. As for the key drivers, commission advisory fees net of payout were $453 million, up $27 million from Q3. Our payout rate was 88%, up 53 basis points from Q3, due to the seasonal build in the production bonus.
As for our Q4 financial results the combination of organic growth and expense discipline led to adjusted pre tax margin of approximately 36% and record adjusted EPS of $5 23.
As we look ahead to q1, we expect the full quarter impact of the Q4 rate, cuts to lower our ICA, yield by roughly 10 basis points.
Gross profit was $1.542 billion up $62 million sequentially.
As for service and fee Revenue. It was 181 million in Q4 up 6 million from Q3 as a full quarter of Commonwealth, was partially offset by lower conference Revenue in Iraq?
As for the key drivers Commission advisory fees net of payout were $453 million up $27 million from Q3.
Looking ahead to q1, we expect first quarter service and fee Revenue to increase by approximately 25 million sequentially.
This is driven by 2 factors.
Matthew Audette: Our payout rate was 88%, up 53 basis points from Q3, due to the seasonal build in the production bonus. With respect to client cash revenue, it was $456 million, up $14 million from Q3, as the sequential growth and balances more than offset the impact of lower short-term interest rates. Overall, client cash balances ended the quarter at $61 billion, up $5 billion sequentially, a strong outcome even when considering the typical Q4 seasonal build. Within our ICA portfolio, the mix of fixed rate balances ended the quarter at roughly 55%, within our target range of 50 to 75%. Looking more closely at our ICA yield, it was 341 basis points in Q4, down 10 basis points from Q3, driven by the impact of the October and December rate cuts.
Our payout rate was 88% up 53 basis points from Q3 due to the seasonal build in the production bonus.
Revenue of approximately 10 million.
With respect to client cash revenue, it was $456 million, up $14 million from Q3, as the sequential growth and balances more than offset the impact of lower short-term interest rates. Overall, client cash balances ended the quarter at $61 billion, up $5 billion sequentially, a strong outcome even when considering the typical Q4 seasonal build. Within our ICA portfolio, the mix of fixed rate balances ended the quarter at roughly 55%, within our target range of 50 to 75%.
With respect to client cash revenues it was $456 million up $14 million from Q3, as the sequential growth and balances more than offset the impact of lower short term interest rates.
This is more than offset by the impact of the deep changes we announced last quarter, which will provide an ongoing quarterly benefit to service and fee revenue of roughly 35 million or 140 million annually.
Overall client cash balances ended the quarter at 61 billion up $5 billion sequentially, a strong outcome, even when considering the typical Q4 seasonal build.
Moving on to Q4 transaction Revenue, it was 75 million up 8 million from Q3 driven by increased trading volumes.
As we look ahead to q1 trading activity levels, remain roughly in line with Q4.
Within our ICA portfolio the mix of fixed rate balances ended the quarter at roughly 55% within our target range of 50% to 75%.
However, I would note there are 3 fewer trading days in q1. So we expect transaction Revenue to decline by a few million sequentially.
Looking more closely at our ICA yield, it was 341 basis points in Q4, down 10 basis points from Q3, driven by the impact of the October and December rate cuts. As we look ahead to Q1, we expect the full quarter impact of the Q4 rate cuts to lower our ICA yield by roughly 10 basis points. As for service and fee revenue, it was $181 million in Q4, up $6 million from Q3, as a full quarter of Commonwealth was partially offset by lower conference revenue in IRA fees. Looking ahead to Q1, we expect first quarter service and fee revenue to increase by approximately $25 million sequentially.
Looking more closely or ICA yield it was 341 basis points in Q4.
Now, let's turn to our acquisition of common law.
Down 10 basis points from Q3, driven by the impact of the October and December rate cuts.
As Rich mentioned, the transaction is progressing. Well, and we remain on track to on board in the fourth quarter.
Matthew Audette: As we look ahead to Q1, we expect the full quarter impact of the Q4 rate cuts to lower our ICA yield by roughly 10 basis points. As for service and fee revenue, it was $181 million in Q4, up $6 million from Q3, as a full quarter of Commonwealth was partially offset by lower conference revenue in IRA fees. Looking ahead to Q1, we expect first quarter service and fee revenue to increase by approximately $25 million sequentially. This is driven by two factors. First, a seasonal decline in conference revenue of approximately $10 million. This is more than offset by the impact of the fee changes we announced last quarter, which will provide an ongoing quarterly benefit to service and fee revenue of roughly $35 million or $140 million annually. Moving on to Q4 transaction revenue.
As we look ahead to Q1, we expect the full quarter impact of the Q4 rate cuts to lower our ICA yield by roughly 10 basis points.
As for the financials accounting for current client assets and cash balances as well as interest rates, we continue to estimate run rate. Ebita of approximately 425 million. Once fully integrated
As for service and fee revenue it was $181 million in Q4 up 6 million from Q3 as a full quarter of Commonwealth was partially offset by lower conference revenue in Iowa.
Next, let's move on to expenses. Starting with cor GNA.
Looking ahead to Q1, we expect first quarter service and fee revenue to increase by approximately $25 million sequentially.
It was 536 million in Q4 bringing her a full year. Core GNA to 1,852 million below the low end of our Outlook range reflecting progress. We've made driving greater efficiency and lowering our cost to serve.
This is driven by two factors. First, a seasonal decline in conference revenue of approximately $10 million. This is more than offset by the impact of the fee changes we announced last quarter, which will provide an ongoing quarterly benefit to service and fee revenue of roughly $35 million or $140 million annually. Moving on to Q4 transaction revenue. It was $75 million, up $8 million from Q3, driven by increased trading volumes. As we look ahead to Q1, trading activity levels remain roughly in line with Q4.
This is driven by two factors.
For the full year prior to the impact of credential Atria and Commonwealth.
First a seasonal decline in conference revenue of approximately $10 million.
This was more than offset by the impact of the fee changes, we announced last quarter, which will provide an ongoing quarterly benefit to servicing fee revenue of roughly $35 million or $140 million annually.
2025 poor GNA increased by approximately 4%, our lowest level of growth in several years.
In 2026, we plan to continue to invest in the business to deliver greater efficiencies and drive operating leverage as we scale.
Moving onto Q4 transaction revenue it was $75 million up 8 million from Q3, driven by increased trading volumes.
Matthew Audette: It was $75 million, up $8 million from Q3, driven by increased trading volumes. As we look ahead to Q1, trading activity levels remain roughly in line with Q4. However, I would note there are 3 fewer trading days in Q1, so we expect transaction revenue to decline by a few million sequentially. Now let's turn to our acquisition of Commonwealth. As Rich mentioned, the transaction is progressing well, and we remain on track to onboard in Q4. As for the financials, accounting for current client assets and cash balances, as well as interest rates, we continue to estimate run rate EBITDA of approximately $425 million once fully integrated. Next, let's move on to expenses, starting with core G&A.
Commonwealth, we expect core GNA growth of 4 and a half to 7%.
Or 1,775 million to 1 billion, 820 million.
As we look ahead to Q1 trading activity levels remain roughly in line with Q4.
However, I would note there are 3 fewer trading days in Q1, so we expect transaction revenue to decline by a few million sequentially. Now let's turn to our acquisition of Commonwealth. As Rich mentioned, the transaction is progressing well, and we remain on track to onboard in Q4. As for the financials, accounting for current client assets and cash balances, as well as interest rates, we continue to estimate run rate EBITDA of approximately $425 million once fully integrated. Next, let's move on to expenses, starting with core G&A.
However, I would note there are three fewer trading days in Q1, So we expect transaction revenue to decline by a few million dollars sequentially.
In addition, we'll have the full year impact of expenses related to Commonwealth which adds roughly 380 to 390 million.
This brings our overall expectation for 2026 core GNA to be in a range of 2,155 million.
Now, let's turn to our acquisition of Commonwealth.
To 2,210 million.
As rich mentioned the transaction is progressing well we remain on track to onboard in the fourth quarter.
As for the financials accounting for current client assets and cash balances as well as interest rates. We continue to estimate run rate EBITDA of approximately $425 million once fully integrated.
And to give you a sense of the near-term timing of this spec, as we look ahead to q1, we expect core GNA to be in a range of 540 to 560 million.
Next, I want to highlight a minor update to our management. P&l this quarter where we separate a TA loan amortization from promotional expense.
Next let's move on to expenses, starting with core G&A.
Matthew Audette: It was $536 million in Q4, bringing our full year Core G&A to $1,852 million, below the low end of our outlook range, reflecting progress we've made, driving greater efficiency and lowering our cost to serve. For the full year, prior to the impact of Prudential, Atria, and Commonwealth, 2025 Core G&A increased by approximately 4%, our lowest level of growth in several years. In 2026, we plan to continue to invest in the business to deliver greater efficiencies and drive operating leverage as we scale. Prior to Commonwealth, we expect Core G&A growth of 4.5% to 7%, or $1,775 million to $1,820 million.
It was $536 million in Q4, bringing our full year Core G&A to $1,852 million, below the low end of our outlook range, reflecting progress we've made, driving greater efficiency and lowering our cost to serve. For the full year, prior to the impact of Prudential, Atria, and Commonwealth, 2025 Core G&A increased by approximately 4%, our lowest level of growth in several years. In 2026, we plan to continue to invest in the business to deliver greater efficiencies and drive operating leverage as we scale. Prior to Commonwealth, we expect Core G&A growth of 4.5% to 7%, or $1,775 million to $1,820 million.
It was $536 million in Q4, bringing our full year core G&A to $1.852 billion below the low end of our outlook range, reflecting progress, we've made driving greater efficiency and lowering our cost to serve.
While this is not a new disclosure, we hope the updated placement allows you to more easily analyze our results.
so, looking at TA loan, amortization, it was 133 million in Q4 up, 28 million sequentially, driven by Commonwealth related transition, assistance, as well as our ongoing recruiting
For the full year prior to the impact of Prudential Atria and Commonwealth.
<unk> 2025 core G&A increased by approximately 4% our lowest level of growth in several years.
As we look ahead to q1, we expect ta loan, amortization to increase by roughly 5 million primarily driven by Commonwealth.
In 2026, we plan to continue to invest in the business to deliver greater efficiencies and drive operating leverage as we scale.
turning to promotional expense if totaled 76 million in the fourth quarter down, 21 million sequentially primarily driven by lower conference benefits
Prior to Commonwealth, We expect core G&A growth of four 5% to 7%.
Looking ahead to q1, we expect promotional expense to be roughly flat sequentially.
Starting to depreciation and amortization.
Or $1 billion $775 million to 1 billion 820 months.
It was 105 million in Q4 up, 5 million sequential.
Matthew Audette: In addition, we'll have the full year impact of expenses related to Commonwealth, which adds roughly $380 to $390 million. This brings our overall expectation for 2026 Core G&A to be in a range of $2.155 to $2.210 billion. To give you a sense of the near-term timing of this spend, as we look ahead to Q1, we expect Core G&A to be in a range of $540 to $560 million. Next, I want to highlight a minor update to our management P&L this quarter, where we separated TA Loan Amortization from promotional expense. While this is not a new disclosure, we hope the updated placement allows you to more easily analyze our results.
In addition, we'll have the full year impact of expenses related to Commonwealth, which adds roughly $380 to $390 million. This brings our overall expectation for 2026 Core G&A to be in a range of $2.155 to $2.210 billion. To give you a sense of the near-term timing of this spend, as we look ahead to Q1, we expect Core G&A to be in a range of $540 to $560 million. Next, I want to highlight a minor update to our management P&L this quarter, where we separated TA Loan Amortization from promotional expense.
In addition, we will have the full year impact of expenses related to Commonwealth, which adds roughly $380 to $390 million.
Looking ahead to q1. We expect appreciation in to increase by 5 million.
This brings our overall expectation for 2026 core G&A to be in a range of $2 billion 155 million.
As for interest expense, it was 106 million in Q4 roughly flat sequentially as increased usage of the revolver was offset by lower short-term interest rates.
To $2 billion 210 million.
Regarding Capital Management.
And to give you a sense of the near term timing of the spend as we look ahead to Q1, we expect core G&A to be in a range of $540 million to $560 million.
We ended Q4 with corporate cash or 470 million down 999 million from Q3.
Next I want to highlight a minor update to our management P&L this quarter, where we separated ta loan amortization from promotional expense.
As for our leverage ratio, it was 1.95 times at the end of Q4 near the midpoint of our target range.
While this is not a new disclosure, we hope the updated placement allows you to more easily analyze our results. So looking at TA loan amortization, it was $133 million in Q4, up $28 million sequentially, driven by Commonwealth-related transition assistance, as well as our ongoing recruiting. As we look ahead to Q1, we expect TA loan amortization to increase by roughly $5 million, primarily driven by Commonwealth. Turning to promotional expense, it totaled $76 million in the fourth quarter, down $21 million sequentially, primarily driven by lower conference spend.
While this is not a new disclosure we hope the updated placement allows you to more easily analyze our results.
Moving on to Capital deployment, our framework remains focused on allocated Capital aligned with the returns we generate.
Investing in organic growth. First and foremost.
Matthew Audette: So looking at TA loan amortization, it was $133 million in Q4, up $28 million sequentially, driven by Commonwealth-related transition assistance, as well as our ongoing recruiting. As we look ahead to Q1, we expect TA loan amortization to increase by roughly $5 million, primarily driven by Commonwealth. Turning to promotional expense, it totaled $76 million in the fourth quarter, down $21 million sequentially, primarily driven by lower conference spend. Looking ahead to Q1, we expect promotional expense to be roughly flat sequentially. Turning to depreciation and amortization, it was $105 million in Q4, up $5 million sequentially. Looking ahead to Q1, we expect depreciation and amortization to increase by $5 million. As for interest expense, it was $106 million in Q4, roughly flat sequentially, as increased usage of the revolver was offset by lower short-term interest rates.
So looking at Ta loan amortization, it was $133 million in Q4 up $28 million sequentially, driven by Commonwealth related transition assistance as well as our ongoing recruiting.
Pursuing m&a, were appropriate in returning excess Capital to shareholders.
As we look ahead to Q1, we expect Ta loan amortization to increase by roughly $5 million, primarily driven by Commonwealth.
In Q4 we continue to deploy capital in line with our priorities investing primarily in organic growth in m&a, where we advance the Commonwealth integration and continue to allocate Capital to our liquidity and succession solution.
Turning to promotional expense it totaled 76 million in the fourth quarter down 21 million sequentially, primarily driven by lower conference spend.
specific to share purchases a reminder that we pause BuyBacks following the announcement of the Commonwealth acquisition with a plan to revisit following the onboarding,
Looking ahead to Q1, we expect promotional expense to be roughly flat sequentially. Turning to depreciation and amortization, it was $105 million in Q4, up $5 million sequentially. Looking ahead to Q1, we expect depreciation and amortization to increase by $5 million. As for interest expense, it was $106 million in Q4, roughly flat sequentially, as increased usage of the revolver was offset by lower short-term interest rates. Regarding capital management, we ended Q4 with corporate cash of $470 million, down $99 million from Q3.
Looking ahead to Q1, we expect promotional expense to be roughly flat sequentially.
Turning to depreciation and amortization it was $105 million in Q4 up $5 million sequentially.
As we look ahead, we are ahead of schedule with leverage already at the midpoint of our target range. In the operational work to onboard Commonwealth. Well underway, there may be an opportunity to refine the timing of resuming share of BuyBacks later this year.
Looking ahead to Q1, we expect depreciation and amortization to increase by $5 million.
In closing, we delivered another quarter of strong business and financial results.
As for interest expense. It was 106 million in Q4, roughly flat sequentially as increased usage of the revolver. It was offset by lower short term interest rates.
Long-term shareholder value with that operator. Please open the call for questions.
Matthew Audette: Regarding capital management, we ended Q4 with corporate cash of $470 million, down $99 million from Q3. As for our leverage ratio, it was 1.95 times at the end of Q4, near the midpoint of our target range. Moving on to capital deployment. Our framework remains focused on allocated capital aligned with the returns we generate. Investing in organic growth first and foremost, pursuing M&A where appropriate, and returning excess capital to shareholders. In Q4, we continued to deploy capital in line with our priorities, investing primarily in organic growth and M&A, where we advanced the Commonwealth integration and continued to allocate capital to our liquidity and succession solution. Specific to share repurchases, a reminder that we paused buybacks following the announcement of the Commonwealth acquisition, with a plan to revisit following the onboarding.
Regarding capital management, we ended Q4 with corporate cash of $470 million down 99 million from Q3.
As for our leverage ratio, it was 1.95 times at the end of Q4, near the midpoint of our target range. Moving on to capital deployment. Our framework remains focused on allocated capital aligned with the returns we generate. Investing in organic growth first and foremost, pursuing M&A where appropriate, and returning excess capital to shareholders. In Q4, we continued to deploy capital in line with our priorities, investing primarily in organic growth and M&A, where we advanced the Commonwealth integration and continued to allocate capital to our liquidity and succession solution.
As for our leverage ratio was 195 times at the end of Q4 near the midpoint of our target range.
Certainly. And as a reminder, ladies and Gentlemen, please limit yourself to 1 question each, you may get back in the queue as time allows our. First question comes from the line as Stephen Chow from Wolfe research. Your question, please?
Hi, good afternoon. Uh Richard Matt thanks for taking my questions.
Moving on to capital deployment, our framework remains focused on allocated capital aligned with the returns we generate invest.
or 1 question just to hear from you, uh,
Investing in organic growth first and foremost pursuing M&A, where appropriate and returning excess capital to shareholders.
In Q4, we continued to deploy capital in line with our priorities investing primarily in organic growth and M&A, where we advanced the Commonwealth integration and continue to allocate capital to our liquidity and succession solution.
Specific to share repurchases, a reminder that we paused buybacks following the announcement of the Commonwealth acquisition, with a plan to revisit following the onboarding. As we look ahead, we are ahead of schedule, with leverage already at the midpoint of our target range, and the operational work to onboard Commonwealth well underway. There may be an opportunity to refine the timing of resuming share buybacks later this year. In closing, we delivered another quarter of strong business and financial results.
Specific to share repurchases, a reminder, that we paused buybacks following the announcement of the Commonwealth acquisition with a plan to revisit following the Onboarding.
Matthew Audette: As we look ahead, we are ahead of schedule, with leverage already at the midpoint of our target range, and the operational work to onboard Commonwealth well underway. There may be an opportunity to refine the timing of resuming share buybacks later this year. In closing, we delivered another quarter of strong business and financial results. As we look forward, we remain excited about the opportunities we have to continue to drive growth, deliver operating leverage, and create long-term shareholder value. With that, operator, please open the call for questions.
As we look ahead, we are ahead of schedule with leverage already at the mid point of our target range and the operational work to onboard Commonwealth well underway, there may be an opportunity to refine the timing of resuming share buybacks later this year.
Yeah, do as well. So I I did want to ask on Commonwealth for attention. Uh, there's been a fair amount of press coverage in recent weeks. Suggesting their attention was running, well below that 90% Target. So certainly pleased to see the 90% Target reaffirmed. Was hoping you could speak to what gives you confidence that you could still achieve that 90% asset retention figure and just given the near record recruiting pipeline that you cited, just speak to some of the actions that you're planning on taking to get Corps. Recruiting X Commonwealth back on track.
Yeah.
You want to? I'll start or you want to start? I'll start.
In closing, we delivered another quarter of strong business and financial results.
As we look forward, we remain excited about the opportunities we have to continue to drive growth, deliver operating leverage, and create long-term shareholder value. With that, operator, please open the call for questions.
As we look forward, we remain excited about the opportunities we have to continue to drive growth deliver operating leverage and create long term shareholder value with that operator. Please open the call for questions.
The retention Stephen. Um I think when you look at um retention right and it's based on assets, right? The assets we expect to land on our platform after the onboarding and Q4 um and that's our methodology. We consistently do that on our Acquisitions. Um, so I think when you uh and others um that are speaking here that are reading headlines about headcount departures. Um, just to give you a little color on that when you look at the advisor,
Operator: Certainly. And as a reminder, ladies and gentlemen, please limit yourselves to one question each. You may get back in the queue as time allows. Our first question comes from the line of Steven Chubak from Wolfe Research. Your question, please.
Operator: Certainly. And as a reminder, ladies and gentlemen, please limit yourselves to one question each. You may get back in the queue as time allows. Our first question comes from the line of Steven Chubak from Wolfe Research. Your question, please.
Certainly and as a reminder, ladies and gentlemen, please limit yourselves to one question. Each you may get back in the queue. As time allows our first question comes from the line of Steven <unk> from Wolfe Research. Your question. Please.
Steven Chubak: Hi, good afternoon, Rich and Matt. Thanks for taking my questions. Or one question.
Steven Chubak: Hi, good afternoon, Rich and Matt. Thanks for taking my questions. Or one question.
Hey, good afternoon, Richard Matt Thanks for taking my questions.
Or one question here from me.
Richard Steinmeier: Good to hear from you, Steven.
Rich Steinmeier: Good to hear from you, Steven.
Steven Chubak: Yes, you as well. So I, I did want to ask on Commonwealth retention. There's been a fair amount of press coverage in recent weeks suggesting the retention was running well below that 90% target. So certainly pleased to see the 90% target reaffirmed. Was hoping you could speak to what gives you confidence that you could still achieve that 90% asset retention figure. And just given the near record recruiting pipeline that you cited, just speak to some of the actions that you're planning on taking to get core recruiting ex-Commonwealth back on track.
Hi.
Steven Chubak: Yes, you as well. So I, I did want to ask on Commonwealth retention. There's been a fair amount of press coverage in recent weeks suggesting the retention was running well below that 90% target. So certainly pleased to see the 90% target reaffirmed. Was hoping you could speak to what gives you confidence that you could still achieve that 90% asset retention figure. And just given the near record recruiting pipeline that you cited, just speak to some of the actions that you're planning on taking to get core recruiting ex-Commonwealth back on track.
Yeah, you as well so I.
I did want to ask on Commonwealth for attention, there's been a fair amount of press coverage in recent weeks, suggesting the retention was running well below that 90% target. So certainly pleased to see the 90% target reaffirmed was hoping you could speak to what gives you confidence that you could still achieve that 90%.
Who have signed to stay with LPL so far. Um, we're now just over 80%. Um, and you look at those on average, they are larger. They are faster growing and they are higher producers than those that have decided to go elsewhere. So I think, when you, you get some noise, when you look at those headcount departures, but when you look at the advisors that have committed to stay with LPL with Commonwealth, it is an impressive group and we are really excited to welcome them on the platform as we on board in the fourth quarter.
So maybe just augment that just briefly is Matt. I think made it very clear on the asset retention and that we're retaining the larger advisors
Asset retention figure and just given the near record recruiting pipeline that you sided to speak to some of the actions that you're planning on taking to get core recruiting ex Commonwealth back on track.
Richard Steinmeier: Yeah. You want to... I'll start, or you want to start?
Rich Steinmeier: Yeah. You want to... I'll start, or you want to start?
Yeah, you want to or you want to start Australia I'll start with the retention Steven I think when you look at our retention rate and it's based on assets or the assets, we expect to land on our platform after the Onboarding in Q4.
Matthew Audette: I'll start. Yeah, I'll start with the retention, Steven. I think when you look at, retention, right, and it's based on assets, right? The assets we expect to land on our platform after the onboarding in Q4. And that's our methodology. We consistently do that on our acquisitions. So I think when you, and others, that are speaking here that are reading headlines about headcount departures, just to give you a little color on that, when you look at the advisors who have signed to stay with LPL so far, and we're now just over 80%, and you look at those, on average, they are larger, they are faster growing, and they are higher producers than those that have decided to go elsewhere.
Matt Audette: I'll start. Yeah, I'll start with the retention, Steven. I think when you look at, retention, right, and it's based on assets, right? The assets we expect to land on our platform after the onboarding in Q4. And that's our methodology. We consistently do that on our acquisitions.
I think there are still advisors who are making their decisions over the course of the balance of the next couple of months and maybe even through the next couple of quarters. Um and we are deeply connected between Commonwealth and LPL to help educate them on the continuing of the value proposition of Commonwealth. Um and we are very confident that by keeping the community intact safeguarding, their experience, their culture, their capabilities, and their leadership that will ultimately win the day.
And that's where methodology, we consistently do that on our acquisitions. So I think when you are.
And quite honestly, those are the conversations that we're having as folks have gone through a very elongated due diligence process. They are coming back to having much more productive conversations now than we were even having at the beginning.
um,
So I think when you, and others, that are speaking here that are reading headlines about headcount departures, just to give you a little color on that, when you look at the advisors who have signed to stay with LPL so far, and we're now just over 80%, and you look at those, on average, they are larger, they are faster growing, and they are higher producers than those that have decided to go elsewhere.
As, and so maybe.
And others that are speaking here that are reading headlines about head count departures.
Just to give you a little color on that when you look at the advisers, who have signed to stay with LPL So far.
Parting shot on that Stephen overall. We are thrilled with this transaction. We love the way. The teams are coming together. We are excited about the prospects for our go to market strategy and the integrated firm.
We're now just over 80%.
Now, you mentioned
You look at those on average they are larger there are faster growing and they are higher producers than those that have decided to go elsewhere. So I think when you you get some noise. When you look at those head count departures, but when you look at the advisors that have committed to stay with LPL with Commonwealth. It is an impressive group and we were really excited to welcome them on the platform as we onboard in the fourth quarter.
um,
And maybe 1 last thing. I will mention that.
Matthew Audette: So I think when you get some noise when you look at those headcount departures, but when you look at the advisors that have committed to stay with LPL, with Commonwealth, it is an impressive group, and we are really excited to welcome them on the platform as we onboard in Q4.
So I think when you get some noise when you look at those headcount departures, but when you look at the advisors that have committed to stay with LPL, with Commonwealth, it is an impressive group, and we are really excited to welcome them on the platform as we onboard in Q4. So maybe just to augment that just briefly, as Matt, I think, made it very clear on the asset retention and that we're retaining the larger advisors. I think there are still advisors who are making their decisions over the course of the balance of the next couple of months, and maybe even through the next couple of quarters.
as Matt said,
Richard Steinmeier: So maybe just to augment that just briefly, as Matt, I think, made it very clear on the asset retention and that we're retaining the larger advisors. I think there are still advisors who are making their decisions over the course of the balance of the next couple of months, and maybe even through the next couple of quarters. And we are deeply connected between Commonwealth and LPL to help educate them on the continuing of value proposition of Commonwealth. And we are very confident that by keeping the community intact, safeguarding their experience, their culture, their capabilities, and their leadership, that will ultimately win the day. And quite honestly, those are the conversations that we're having. As folks have gone through a very elongated due diligence process, they're coming back to having much more productive conversations now than we were even having at the beginning.
So maybe just augment that just briefly Matt I think made it very clear on the asset retention and that we're retaining the larger advisors.
Last quarter, we updated you that we had advisors representing nearly 80% of assets, have signed their agreements to say with Commonwealth. And as of today, that is improved to the low 80% range of advisors representing low, 80% range of assets, have signed agreements to stay with common law,
There are still advisers, who are making their decisions over the course of the balance of the next couple of months, maybe even through the next couple of quarters.
And we are deeply connected between Commonwealth and LPL to help educate them on the continuing of value proposition of Commonwealth. And we are very confident that by keeping the community intact, safeguarding their experience, their culture, their capabilities, and their leadership, that will ultimately win the day. And quite honestly, those are the conversations that we're having. As folks have gone through a very elongated due diligence process, they're coming back to having much more productive conversations now than we were even having at the beginning.
And we are deeply connected between conwell and LPL to help educate them on the continuing of the value proposition of Commonwealth.
As for achieving getting back on track and recruiting, I think it needs to be noted that many of our top recruiters have been focused on Commonwealth retention efforts. And as we approach the conversion with more Commonwealth advisors completing their diligence signs, our recruiters are getting back to their organic recruiting efforts.
And we are very confident that by keeping the community impact safeguarding their experience their culture their capabilities and their leadership that will ultimately win the day.
Quite honestly those are the conversations that we're having as folks have gone through a very elongated due diligence process. They are coming back to having much more productive conversations now than we were even having at the beginning.
So looking ahead, we should gradually return to more normalized, recruiting outcomes driven by increased in weight. Increase win rates in traditional markets with our unmatched value. Proposition further, penetrating the wire and Regional employee advisor space. Where there is growing awareness of our solution and we continue to narrow the gap.
Richard Steinmeier: And so maybe a parting shot on that, Steven. Overall, we are thrilled with this transaction. We love the way the teams are coming together. We are excited about the prospects for our go-to-market strategy and the integrated firm. Now, you mentioned. And maybe one last thing, I will mention that, as Matt said, last quarter, we updated you that we had advisors representing nearly 80% of assets have signed their agreements to stay with Commonwealth. And as of today, that has improved to the low 80% range of advisors representing low 80% range of assets have signed agreements to stay with Commonwealth. As for achieving getting back on track and recruiting, I think it needs to be noted that many of our top recruiters have been focused on Commonwealth retention efforts.
<unk>.
And so maybe a parting shot on that, Steven. Overall, we are thrilled with this transaction. We love the way the teams are coming together. We are excited about the prospects for our go-to-market strategy and the integrated firm. Now, you mentioned. And maybe one last thing, I will mention that, as Matt said, last quarter, we updated you that we had advisors representing nearly 80% of assets have signed their agreements to stay with Commonwealth. And as of today, that has improved to the low 80% range of advisors representing low 80% range of assets have signed agreements to stay with Commonwealth.
And so maybe.
Parting shot on that even overall, we are thrilled with this transaction we love the way. The teams are coming together, we are excited about the prospects for our go to market strategy and the integrated firm.
On capabilities and of note there, over the last couple of years, we have grown our capture of wirehouse and region employee advisors from 9% of all advisors in motion to. Now up above 11% of all advisors in motion,
And augmenting that.
Now you mentioned.
And maybe one last thing I will mention that.
As Matt said.
Last quarter, we updated you that we had advisers, representing nearly 80% of assets assign their agreements to stay with Commonwealth and as of today that has improved to the low 80% range of advisors, representing low 80% range of assets have signed agreements to stay with Commvault.
Our liquidity and succession Solutions, create an important part of the value proposition from new advisors join. So they'll have an option when they're ready to transition their business. If you couple that with low attrition and steady contribution from same store sales, it sets us up really well to sustain mid to high single digit growth over the long term.
Well said, thanks so much for taking my question.
Thank you. And our next question comes from the line of Alexander posting from Goldman. Sachs your question, please.
As for achieving getting back on track and recruiting, I think it needs to be noted that many of our top recruiters have been focused on Commonwealth retention efforts. As we approach the conversion, with more Commonwealth advisors completing their diligence sign, our recruiters are getting back to their organic recruiting efforts.
As for achieving getting back on track and recruiting I think it needs to be noted that many of our top recruiters have been focused on commvault retention efforts and as we approach the conversion with more Commonwealth advisers, completing their diligence sign our recruiters are getting back to the organic recruiting effort.
Richard Steinmeier: As we approach the conversion, with more Commonwealth advisors completing their diligence sign, our recruiters are getting back to their organic recruiting efforts. Looking ahead, we should gradually return to more normalized recruiting outcomes, driven by increased headcount, increased win rates in traditional markets with our unmatched value proposition, further penetrating the wirehouse and regional employee advisor space, where there is growing awareness of our solution, and we continue to narrow the gap on capabilities. Of note there, over the last couple of years, we have grown our capture of wirehouse and regional employee advisors from 9% of all advisors in motion, to now up above 11% of all advisors in motion.
Looking ahead, we should gradually return to more normalized recruiting outcomes, driven by increased headcount, increased win rates in traditional markets with our unmatched value proposition, further penetrating the wirehouse and regional employee advisor space, where there is growing awareness of our solution, and we continue to narrow the gap on capabilities. Of note there, over the last couple of years, we have grown our capture of wirehouse and regional employee advisors from 9% of all advisors in motion, to now up above 11% of all advisors in motion.
So looking ahead, we should gradually returned to more normalized recruiting outcomes driven by increase in weight.
Increased win rates in traditional markets with our unmatched value proposition.
Further penetrating the wire and regional employee advisor space, where there is growing awareness of our solution and we continue to narrow the gap.
Hey, good afternoon, thanks for the question as well. Um, maybe building on that a little bit. Matt, I heard you. Uh, reaffirm your uh Eva doc contribution of 425 million once everything's on boarded um maybe help unpack that a little bit because given just the assets have grown due to Market largely and you're still on track to 90 and you highlighted, you're running I guess in the low 80s now, uh, why is it in the 425 higher? Uh, there are other puts and takes we need to consider or you guys are just looking to revisit that, uh, once all the full, uh, once the assets are full on boarded, I just want to kind of better understand the market to market impact, and all of that.
On capabilities and of note there over the last couple of years, we have grown our capture of wire House regional employee advisors from 9% of all advisors in motion, it's now up above 11% of all advisors in motion.
Richard Steinmeier: And augmenting that, our liquidity and succession solutions create an important part of the value proposition for new advisors to join, so they'll have an option when they're ready to transition their business. If you couple that with low attrition and steady contribution from same-store sales, it sets us up really well to sustain mid to high single digit growth over the long term.
And augmenting that, our liquidity and succession solutions create an important part of the value proposition for new advisors to join, so they'll have an option when they're ready to transition their business. If you couple that with low attrition and steady contribution from same-store sales, it sets us up really well to sustain mid to high single digit growth over the long term.
Yeah, there's just yeah, you've got assets that have gone up a bit, um Alex but you've also got another interest rate cut. Um, and when you look at the cash sweep at um, at Commonwealth that built up in in December, that's already gone back into the marketplace. So those those things kind of net offset, each other. And that's why we're still at at roughly 425.
And augmenting that.
Our liquidity and succession solutions create an important part of the value proposition from new advisors joined so they'll have an option when they are ready to transition their business. If you couple that with low attrition and steady contribution from same store sales.
Understood. Okay, thanks.
Thank you. And our next question comes from the line of Dan Fannon from Jeffrey's your question, please?
US up really well for sustained mid to high single digit growth over the long term.
Steven Chubak: Well said. Thanks so much for taking my question.
Steven Chubak: Well said. Thanks so much for taking my question.
Well thanks, so much for taking my question.
Operator: Thank you. And our next question comes from the line of Alexander Blostein from Goldman Sachs. Your question, please.
Operator: Thank you. And our next question comes from the line of Alexander Blostein from Goldman Sachs. Your question, please.
Thank you and our next question comes from the line of Alexander <unk> from Goldman Sachs. Your question. Please.
Alex Blostein: Hey, good afternoon. Thanks for the question as well. Maybe building on that a little bit, Matt, I heard you reaffirm your EBITDA contribution of $425 million once everything's onboarded. Maybe help unpack that a little bit, because given just the assets have grown due to market largely, and you're still on track to 90, and you highlighted you're running, I guess, in the low 80s now, why isn't the 425 higher? Are there other puts and takes we need to consider, or you guys are just looking to revisit that, once the assets are fully onboarded? I just want to kind of better understand the mark-to-market impact and all of that.
Alexander Blostein: Hey, good afternoon. Thanks for the question as well. Maybe building on that a little bit, Matt, I heard you reaffirm your EBITDA contribution of $425 million once everything's onboarded. Maybe help unpack that a little bit, because given just the assets have grown due to market largely, and you're still on track to 90, and you highlighted you're running, I guess, in the low 80s now, why isn't the 425 higher? Are there other puts and takes we need to consider, or you guys are just looking to revisit that, once the assets are fully onboarded? I just want to kind of better understand the mark-to-market impact and all of that.
Hey, good afternoon, thanks for the question as well.
Uh, thanks. So wanted to follow up, just on the growth Outlook and enrich. You had mentioned uh, reigniting the growth engine at LPL. So is it just time in the timing of this, in terms of getting back to regular recruiting? Or can you talk to the industry Dynamics and advisors in motion and, you know, kind of the recruiting backlog today versus where it maybe was a year ago and and
Building on that a little bit Matt I heard you reaffirm your EBITDA contribution now for $25 million once everything's on boarded.
Just kind of thinking more about the acceleration, whether that could be more of a first half dynamic or you think it's really closer towards that onboarding of the Commonwealth assets.
Maybe help unpack that a little bit because given just the assets have grown due to market largely and you're still on track to 90, and you highlighted you're running I guess in the low eighties now.
Why is it in the 425 higher are there other puts and takes we need to consider or you guys are just looking to revisit that once all the full once the assets are fully on board. It I just wanted to kind of better understand the mark to market impact and all of that.
Matthew Audette: Yeah, there's just... Yeah, you've got assets have gone up a bit, Alex, but you've also got another interest rate cut. And when you look at the cash sweep at Commonwealth that built up in December, that's already gone back into the marketplace. So those things kind of net offset each other, and that's why we're still at roughly 4.25%.
Matt Audette: Yeah, there's just... Yeah, you've got assets have gone up a bit, Alex, but you've also got another interest rate cut. And when you look at the cash sweep at Commonwealth that built up in December, that's already gone back into the marketplace. So those things kind of net offset each other, and that's why we're still at roughly 4.25%.
Yeah, there's just yeah, you've got assets have gone up a bit Alex but you've also got another interest rate cut.
And when you look at the cash we bet.
At Commonwealth that built up in December that's already gone back into the marketplace. So those kind of those things kind of net offset each other and that's why we're still at roughly 425.
Alex Blostein: Understood. Okay, thanks.
Alexander Blostein: Understood. Okay, thanks.
Understood Okay. Thanks.
Operator: Thank you. And our next question comes from the line of Dan Fannon from Jefferies. Your question, please.
Operator: Thank you. And our next question comes from the line of Dan Fannon from Jefferies. Your question, please.
Thank you and our next question comes from the line of Dan Fannon from Jefferies. Your question. Please.
Daniel Fannon: Thanks. Wanted to follow up just on the growth outlook. And Rich, you had mentioned reigniting the growth engine at LPL. Is it just time, and the timing of this in terms of getting back to regular recruiting, or can you talk to the industry dynamics-
Thanks, So wanted to follow up just on the growth outlook and rich you had mentioned a reigniting the growth engine that LPL. So.
Dan Fannon: Thanks. Wanted to follow up just on the growth outlook. And Rich, you had mentioned reigniting the growth engine at LPL. Is it just time, and the timing of this in terms of getting back to regular recruiting, or can you talk to the industry dynamics-... and Advisors in Motion and, you know, kind of the recruiting backlog today versus where it maybe was a year ago. And, and just kind of thinking more about the acceleration, whether that could be more of a first half dynamic, or you think it's really closer towards that onboarding of the Commonwealth assets?
Yeah, I appreciate it Dan. There's a lot in there. So maybe let's start with the recruiting environment. First, I will tell you, we paid very close attention to the advisors in motion. Um, and relative to Historic Norms, we still see that advisor movement remains tempered relative to Historic levels. Now, look truth, there is that there are events in the marketplace that can drive that turn to higher levels and that 1 right now is probably the acquisition of Commonwealth. And so, we're participating there, obviously dedicating recruiters, um, a recruiting event where you're trying to educate 3,000. Advisors is a very large event for us. Um, and so we dedicated and ring fenced, a set of our most sophisticated and, and, and most senior recruiters and working against that. And as I alluded to and as you referenced, um, as we get more signs and and you mentioned where we're at, um, those recruiters get the chance to Pivot back to their organic re recruiting pipeline. But as I noted earlier, um, when you start building those pipelines, you're going to build into the earlier stage.
Is it just time and the timing of this in terms of getting back to the regulator of recruiting or can you talk to the industry dynamics.
Stages, as you think about a stage progression pipeline.
Michael Cho: ... and Advisors in Motion and, you know, kind of the recruiting backlog today versus where it maybe was a year ago. And, and just kind of thinking more about the acceleration, whether that could be more of a first half dynamic, or you think it's really closer towards that onboarding of the Commonwealth assets?
Advisors in motion and kind of the recruiting backlog today versus where it maybe it was a year ago and it was kind of thinking more about the acceleration whether that could be more a first half dynamic where you think its really closer towards that onboarding.
The Commonwealth assets.
Richard Steinmeier: Yeah. I appreciate it, Sam. There's a lot in there. So maybe let's start with the recruiting environment first. I will tell you, we pay very close attention to the Advisors in Motion. And relative to historic norms, we still see that advisor movement remains tempered relative to historic levels. Now, look, truth there is that there are events in the marketplace that can drive that churn to higher levels, and that one right now is probably the acquisition of Commonwealth. And so we're participating there, obviously, dedicating recruiters. A recruiting event where you're trying to educate 3,000 advisors is a very large event for us. And so we dedicated and ring-fenced a set of our most sophisticated and most senior recruiters in working against that.
Rich Steinmeier: Yeah. I appreciate it, Sam. There's a lot in there. So maybe let's start with the recruiting environment first. I will tell you, we pay very close attention to the Advisors in Motion. And relative to historic norms, we still see that advisor movement remains tempered relative to historic levels. Now, look, truth there is that there are events in the marketplace that can drive that churn to higher levels, and that one right now is probably the acquisition of Commonwealth. And so we're participating there, obviously, dedicating recruiters.
Yeah I appreciate it and there's a lot in there so maybe let's start with the recruiting environment first I will tell you we pay very close attention to the advisors in motion and.
And relative to historic norms, we still see that advisor movement remains tempered relative to historic levels now.
And so while our pipelines continue to build through Q4 and they are near record levels, um, they're loaded towards that early and mid stages and so that takes time and we've alluded to on calls in the past, you get different durations of how long a cycle time is for a recruiting event. And they vary from independent advisor 1099, direct to our our supported models, in Strategic Wealth, in linsco have longer lead times. And so when that will pull through is a function of the mix of those advisors and how they get through their diligence and decision-making. But we expect that, pull through to continue to improve over the course of the year. Um,
Truth. There is that there are events in the marketplace that can drive that churn to higher levels than that one right now is probably the acquisition of Commonwealth and so we're participating there obviously dedicating recruiters.
A recruiting event where you're trying to educate 3,000 advisors is a very large event for us. And so we dedicated and ring-fenced a set of our most sophisticated and most senior recruiters in working against that. And as I alluded to, and as you referenced, as we get more signs, and you mentioned where we're at, those recruiters get the chance to pivot back to their organic recruiting pipeline. But as I noted earlier, when you start building those pipelines, you're going to build into the earlier stages as you think about a stage progression pipeline.
Recruiting event, where you're trying to educate 3000 advisors is a very large event for us.
So we dedicated and ring fenced inside of our most sophisticated and most senior recruiters and working against that.
Richard Steinmeier: And as I alluded to, and as you referenced, as we get more signs, and you mentioned where we're at, those recruiters get the chance to pivot back to their organic recruiting pipeline. But as I noted earlier, when you start building those pipelines, you're going to build into the earlier stages as you think about a stage progression pipeline. And so while our pipelines continue to build through Q4, and they are near record levels, they're loaded towards that early and mid stages. And so that takes time. And we've alluded to on calls in the past, you get different durations of how long a cycle time is for a recruiting event, and they vary from independent advisor, 1099 direct, to our supported models in strategic wealth, and Linsco have longer lead times.
I alluded to and as you referenced.
As we get more sign and you mentioned where we're at.
And maybe if we think about the environment that we're in, I think you've heard it on some of the other calls as well. It's a competitive environment right now. Um competitors, remain aggressive, um we've seen ta levels Spike up, most notably right after the Commonwealth announcement um and we see those ta levels staying elevated in the marketplace. And so typically in the wake of several interests Cuts, we would have expected some moderation, in ta, and that really hasn't happened rates. Have remained high in absolute terms. And so, from our perspective, nothing about our approach has changed. We stayed disciplined on returns.
Those recruiters get the chance to pivot back to the organic recruiting pipeline, but as I noted earlier.
When you start building those pipelines youre going to build into the earlier stages as you think about our stage progression pipeline.
And so while our pipelines continue to build through Q4, and they are near record levels, they're loaded towards that early and mid stages. And so that takes time. And we've alluded to on calls in the past, you get different durations of how long a cycle time is for a recruiting event, and they vary from independent advisor, 1099 direct, to our supported models in strategic wealth, and Linsco have longer lead times. And so when that will pull through is a function of the mix of those advisors and how they get through their diligence and decision making.
And so while our pipelines continue to build through Q4 and they are near record levels.
They're loaded towards that early or mid stages. So that takes time and we've alluded to on calls in the past you get different duration of how long the cycle time is or our recruiting event.
Uh with ta being a part of the conversation, but really not the driver of decisions and as a reminder advisors in motions priorities continue to be 1 capacity service culture um 2 on going economics and then third up front economics. So as you put that all together, I think as recruiting activity normalizes, we'd expect organic growth to pick up as those pipelines convert. Positioning us to reignite and sustain industry-leading organic growth over time.
Great. Thank you.
From independent adviser and 99 direct to.
<unk> are supported models and strategic well, let's go have longer lead times and so when that will pull through as a function of the mix of those advisors and how they get through their diligence in decision, making but we expect that pull through to continue to improve over the course of the year.
Richard Steinmeier: And so when that will pull through is a function of the mix of those advisors and how they get through their diligence and decision making. But we expect that pull-through to continue to improve over the course of the year. And maybe if we think about the environment that we're in, I think you've heard it on some of the other calls as well; it's a competitive environment right now. Competitors remain aggressive. We've seen TA levels spike up, most notably right after the Commonwealth announcement. And we see those TA levels staying elevated in the marketplace. And so typically in the wake of several interest cuts, we would have expected some moderation in TA, and that really hasn't happened. Rates have remained high in absolute terms. And so from our perspective, nothing about our approach has changed.
Thank you. And our next question comes from the line of Craig. Susan Faller from Bank of America. Your question, please.
But we expect that pull-through to continue to improve over the course of the year. And maybe if we think about the environment that we're in, I think you've heard it on some of the other calls as well; it's a competitive environment right now. Competitors remain aggressive. We've seen TA levels spike up, most notably right after the Commonwealth announcement. And we see those TA levels staying elevated in the marketplace. And so typically in the wake of several interest cuts, we would have expected some moderation in TA, and that really hasn't happened. Rates have remained high in absolute terms.
And maybe if we think about the environment that we're in I think you've heard it on some of the other calls as well, it's a competitive environment right now.
Competitors remain aggressive we've seen ta levels spike up most notably right after the Commonwealth announcement.
And where does that go? Is there an opportunity to generate more Roi on that maybe in alts insurance and, and probably eventually back in the cash sweep.
And we see those ta level staying elevated in the marketplace and so typically in the wake of several interest cuts we would've expected some moderation in ta and that really hasn't happened rates have remained high in absolute terms and so from our perspective nothing about our approach has changed we stayed disciplined on returns.
Kudos Craig on the the detail historical file there. I thought he would have called on historical footnote 14 but I think look,
And so from our perspective, nothing about our approach has changed. We stayed disciplined on returns, with TA being a part of the conversation, but really not the driver of decisions. As a reminder, Advisors in Motion's priorities continue to be, one, capabilities, technology, service, culture. Two, ongoing economics, and then third, upfront economics. As you put that all together, I think as recruiting activity normalizes, we'd expect organic growth to pick up as those pipelines convert, positioning us to reignite and sustain industry-leading organic growth over time.
Richard Steinmeier: We stayed disciplined on returns, with TA being a part of the conversation, but really not the driver of decisions. As a reminder, Advisors in Motion's priorities continue to be, one, capabilities, technology, service, culture. Two, ongoing economics, and then third, upfront economics. As you put that all together, I think as recruiting activity normalizes, we'd expect organic growth to pick up as those pipelines convert, positioning us to reignite and sustain industry-leading organic growth over time.
With Ta being part of the conversation, but really not the driver of decisions and as a reminder, advisors and motions priorities continue to be one capabilities technology service culture.
Two ongoing economics, and then third upfront economics, so as when you put that all together I think as recruiting activity normalizes, we'd expect organic growth to pick up as those pipelines convert positioning us to reignite and sustained industry, leading organic growth over time.
Michael Cho: Great. Thank you.
Dan Fannon: Great. Thank you.
Great. Thank you.
Operator: Thank you. And our next question comes from the line of Craig Siegenthaler from Bank of America. Your question, please.
Operator: Thank you. And our next question comes from the line of Craig Siegenthaler from Bank of America. Your question, please.
Thank you and our next question comes from the line of Craig Siegenthaler.
Bank of America. Your question please.
Craig Siegenthaler: Thanks. Good evening, everyone. My question is on footnote 15 from the historical file. You disclosed purchase money market funds there, and it looks like they might be finally at a ceiling. So I'm wondering, do you expect liquidity to start to run there with a few more Fed cuts? And where does that go? Is there an opportunity to generate more ROA on that, maybe in alts, insurance, and probably eventually back in the cash sweep?
Craig Siegenthaler: Thanks. Good evening, everyone. My question is on footnote 15 from the historical file. You disclosed purchase money market funds there, and it looks like they might be finally at a ceiling. So I'm wondering, do you expect liquidity to start to run there with a few more Fed cuts? And where does that go? Is there an opportunity to generate more ROA on that, maybe in alts, insurance, and probably eventually back in the cash sweep?
Thanks. Good evening, everyone. My question is on footnote 15 from the historical file you.
Yeah, there you go. I think so. What you're hitting on is is the kind of the cash equivalents and how much money they're they're in either purchase money markets or short-term bond funds, and treasuries and I think we saw those bills, um, throughout this cycle, those balances collectively, uh, or, or in excess so purchase money market plus those other, um, categories treasury short-term bond funds in excess of cash, we balances overall. Um, and I think as, um, the rate environment comes down as you see those things, um, um, advisors get their clients back in the marketplace. I think it's very natural that those are the types of funds that will go back into place. So, um, there, there's more than just purchase money markets in that category. But I think it's, uh, it gives you a good sentiment on, um, where advisors are putting their clients, um, as, as cash yields come down, uh, and the equity markets and and other opportunities even on The Brokerage side, like, annuities and things are are opportunistic. So, I think that's what you see driving, uh, the movements there.
You disclosed purchase money market funds, there and it looks like they might be finally at a ceiling. So I'm wondering do you expect liquidity to start to run there with a few more fed cuts and where does that go is there an opportunity to generate more ROI on that maybe in all its insurance and probably eventually back in the cash sweep.
Thank you. And our next question comes from the line of Michael toe from JP Morgan your question, please.
Matthew Audette: Kudos, Craig, on the detailed historical file there.
Matt Audette: Kudos, Craig, on the detailed historical file there.
And kudos Craig on the detailed historical file there I thought you would have called on historical footnote 14 there.
Richard Steinmeier: I thought he would have called on historical footnote 14.
Rich Steinmeier: I thought he would have called on historical footnote 14.
Matthew Audette: Yeah, we'll cover that. We'll cover that. But I think-
Matt Audette: Yeah, we'll cover that. We'll cover that. But I think-
Okay.
But I think that'll be more like what Atlas.
Craig Siegenthaler: That'll be next quarter.
Craig Siegenthaler: That'll be next quarter.
Matthew Audette: Yeah, there you go. I think so what you're hitting on is the kind of the cash equivalents and how much money they're in either purchase money markets or short-term bond funds and treasuries. And I think we saw those build throughout this cycle. Those balances collectively are in excess of purchase money market funds plus other categories, treasuries, short-term bond funds, in excess of cash sweep balances overall. And I think as the rate environment comes down, as you see those things, advisors get their clients back in the marketplace, I think it's very natural that those are the types of funds that will go back into play.
Matt Audette: Yeah, there you go. I think so what you're hitting on is the kind of the cash equivalents and how much money they're in either purchase money markets or short-term bond funds and treasuries. And I think we saw those build throughout this cycle. Those balances collectively are in excess of purchase money market funds plus other categories, treasuries, short-term bond funds, in excess of cash sweep balances overall.
Yeah. There you go I think whats youre hitting on is kind of the cash equivalents and how much money, they're there in either purchase money markets or short term bond funds in treasuries and I think we saw those build.
Hey, good evening, rich, man. Thanks for. Thanks for taking my question here. Um, I I just want to touch on Commonwealth uh, as well just want more from an, I guess an integration perspective. I mean, you close the deal, maybe 4 or 5 months ago and wondering, you know, can you just talk through the the progress of integration and preparing for the onboarding ahead and you keep takeaways? You you'd highlight or anything that might influence priorities for the for the broader LPL organization. Looking ahead, thanks.
Yeah. Hey thanks, Michael. It's good to have you. Um,
Throughout this cycle those balances collectively.
<unk> are in excess of purchase money market plus those other categories Treasury short term bond funds in excess of cash we balances overall.
And I think as the rate environment comes down, as you see those things, advisors get their clients back in the marketplace, I think it's very natural that those are the types of funds that will go back into play.So, there's more than just purchase money market funds in that category, but I think it gives you a good sentiment on where advisors are putting their clients as cash yields come down and the equity markets and other opportunities, even on the brokerage side, like annuities and things, are opportunistic. So I think that's what you see driving the movements there.
And I think as the rate environment comes down as you see those things.
Advisers get their clients back into the marketplace like it's very natural that those are the types of funds that will go back into place. So.
Matthew Audette: So, there's more than just purchase money market funds in that category, but I think it gives you a good sentiment on where advisors are putting their clients as cash yields come down and the equity markets and other opportunities, even on the brokerage side, like annuities and things, are opportunistic. So I think that's what you see driving the movements there.
There's more than just purchase money markets in that category, but I think it's a it gives you a good sentiment on.
Where advisors are putting their clients.
As cash yields come down.
The equity markets and other opportunities either on the brokerage side like annuities and things are opportunistic. So I think that's what you see driving the movements there.
So integration is going really well. Um, and I would note here 1 of the things that over the last 5 to 7 years, we have done a lot is Major integration events if you think through MNT, um, beimo, uh, true stage, uh, what Ellen Reed, Atria, there's a number of large events that we have gone through and credential that have critical builds across in many of those instances above. 100 million dollars in Dev, sometimes above $200 million in debt. And so as we look into calm wealth, we have scoped before we went into this, um, transaction, we had scoped all of the capabilities that we needed to build that would benefit not only Commonwealth advisors, as they come onto the platform, but all of our advisors and institutions. The, the scoping of that work is completed. We have
Okay.
Operator: Thank you. And our next question comes from the line of Michael Cho from J.P. Morgan. Your question, please.
Operator: Thank you. And our next question comes from the line of Michael Cho from J.P. Morgan. Your question, please.
Thank you and our next question comes from the line of Michael <unk> from J P. Morgan Your question. Please.
Michael Cho: Hey, good evening, Rich, Matt. Thanks for, thanks for taking my question here. I just wanted to touch on Commonwealth, as well, just from more from an, I guess, an integration perspective. I mean, you closed the deal maybe 4 or 5 months ago, and I was wondering, you know, can you just talk through the progress of integration and preparing for the onboarding ahead? Any key takeaways you'd highlight or anything that might influence priorities for the broader LPL organization looking ahead? Thanks.
Michael Cho: Hey, good evening, Rich, Matt. Thanks for, thanks for taking my question here. I just wanted to touch on Commonwealth, as well, just from more from an, I guess, an integration perspective. I mean, you closed the deal maybe 4 or 5 months ago, and I was wondering, you know, can you just talk through the progress of integration and preparing for the onboarding ahead? Any key takeaways you'd highlight or anything that might influence priorities for the broader LPL organization looking ahead? Thanks.
Hey, good evening rich, Matt. Thanks for thanks for taking my question here.
Wanted to touch on Commonwealth as well just want more from an.
Integration perspective, I mean, you've closed the build a four or five months ago and I'm wondering can you just talk to the progress of integration and preparing for the Onboarding ahead any key takeaways you can highlight or anything that influences priorities for the broader LCL organization looking ahead. Thanks.
Our model build. Um, we've begun Dev already, uh, and some of the complexity of the dev. There is what actually drove and elongated time frame for the conversion. Uh, we're feeling really good about our ability to deliver against that capability development and for advisors to experience it. And I think we've referenced some of this before, but in Commonwealth is exceptional in the delivery of their service experience. And some of that is a large part of that is informed by the the way they receive feedback. That is a difference from the way our construction of our
Richard Steinmeier: Yeah. Hey, thanks, Michael. It's good to have you. So integration is going really well. And I would note here, one of the things that over the last 5 to 7 years we have done a lot is major integration events. If you think through M&T, BMO, TruStage, Waddell & Reed, Atria, there's a number of large events that we have gone through, and Prudential, that have critical builds across, in many of those instances, above $100 million in debt, sometimes above $200 million in debt. And so as we look into Commonwealth, we have scoped. Before we went into this transaction, we had scoped all of the capabilities that we needed to build that would benefit not only Commonwealth advisors as they come onto the platform, but all of our advisors and institutions.
Rich Steinmeier: Yeah. Hey, thanks, Michael. It's good to have you. So integration is going really well. And I would note here, one of the things that over the last 5 to 7 years we have done a lot is major integration events. If you think through M&T, BMO, TruStage, Waddell & Reed, Atria, there's a number of large events that we have gone through, and Prudential, that have critical builds across, in many of those instances, above $100 million in debt, sometimes above $200 million in debt. And so as we look into Commonwealth, we have scoped.
Yeah, Hey, Thanks, Michael it's good to have you.
So integration is going really well.
I would note here one of the things that over the last five to seven years, we have done a lot is major integration events. If you think through empty.
BMO true stage Waddell <unk> Reed.
There is a number of large events that we have gone through and Prudential that have critical builds across and many of those instances above $100 million in dev, sometimes above $200 million in depth and so as we look into Commonwealth. We have scope before we went into this transaction we had scoped all of the.
Before we went into this transaction, we had scoped all of the capabilities that we needed to build that would benefit not only Commonwealth advisors as they come onto the platform, but all of our advisors and institutions. The scoping of that work is completed. We have our model build. We've begun dev already, and some of the complexity of the dev there is what actually drove an elongated timeframe for the conversion. We're feeling really good about our ability to deliver against that capability development and for our advisors to experience it.
<unk> that we needed to build that would benefit not only Commonwealth advisers as they come onto the platform, but all of our advisors and institutions.
Richard Steinmeier: The scoping of that work is completed. We have our model build. We've begun dev already, and some of the complexity of the dev there is what actually drove an elongated timeframe for the conversion. We're feeling really good about our ability to deliver against that capability development and for our advisors to experience it. And I think we've referenced some of this before, but I mean, Commonwealth is exceptional in the delivery of their service experience, and some of that is, a large part of that is informed by the way they receive feedback. That is a difference from the way our construction of our workstation was set up.
The scoping of that work is completed we have our model built we've begun Dev already.
Workstation was set up. And so we're building an incredibly robust read feedback ingestion engine, that allows us to actually get feedback from advisors this prioritize that disposition it to folks, to work on that, and then execute against that, making it a frictionless environment kind of 1 day at a time. Um, 1 of the other things they have is a, a fantastic, um, single, uh, relationship agreement across multiple account structures that we've had to go through a pretty significant build and we're in the middle of that build, um, to build that, which will be benefited by all of our advisors. And so there is a list and that includes householding repricing, um, uh, uh, restructuring, the pricing construct of some of our advisory platforms as well. So we have a good, uh, understanding of the build that's there. We have a great understanding of the capabilities that we'll be delivered. And now part of that is now moving into the definition of that Target State operating model which I alluded to earlier, we are in the middle of the articulation of that Target State operating model.
And some of the complexity of the Dev there is what actually drove an elongated time frame for the conversion.
Feeling really good about our ability to deliver against that capability development and for our advisors to experience. It I think we've referenced some of this before but in Commonwealth is exceptional and the delivery of their service experience and some of that is a large part of that is informed by the way. They receive feedback that is a difference from the way our construction of our.
And I think we've referenced some of this before, but I mean, Commonwealth is exceptional in the delivery of their service experience, and some of that is, a large part of that is informed by the way they receive feedback. That is a difference from the way our construction of our workstation was set up. So we're building an incredibly robust real-time feedback ingestion engine that allows us to actually get feedback from advisors, prioritize that, disposition it to folks to work on that, and then execute against that, making it a frictionless environment, kind of one day at a time.
<unk>.
Workstation was set up and so we're building an incredibly robust read feedback ingestation engine that allows us to actually get feedback from advisers.
Richard Steinmeier: So we're building an incredibly robust real-time feedback ingestion engine that allows us to actually get feedback from advisors, prioritize that, disposition it to folks to work on that, and then execute against that, making it a frictionless environment, kind of one day at a time. One of the other things they have is a fantastic single relationship agreement across multiple account structures that we've had to go through a pretty significant build, and we're in the middle of that build, to build that, which will be benefited by all of our advisors. There is a list, and that includes householding, repricing, restructuring the pricing construct of some of our advisory platforms as well. We have a good understanding of the build that's there.
Prioritize that disposition it to folks to work on that and then execute against that making it a frictionless environment kind of one day at a time.
We feel great about the combined value proposition, that will result from the 2 firms.
Right. Thanks b****.
One of the other things they have is a fantastic single relationship agreement across multiple account structures that we've had to go through a pretty significant build, and we're in the middle of that build, to build that, which will be benefited by all of our advisors. There is a list, and that includes householding, repricing, restructuring the pricing construct of some of our advisory platforms as well. We have a good understanding of the build that's there.
One of the other things they have is a fantastic.
Single relationship agreement across multiple account structures that we've had to go through a pretty significant build and we're in the middle of that build to build that which will be benefited by all of our advisers and so there is a list and that includes household in repricing.
Thank you. And our next question comes from the line of Ben Buddhist from barklay. Your question, please.
Restructuring the pricing construct with some of our advisory platforms as well. So we have a good understanding of the build that's there we have a great understanding of the capabilities that will be delivered and now part of that is now moving into the definition of that target state operating model, which I alluded to earlier, we are in the middle of the articulation of that target state operating model.
Richard Steinmeier: We have a great understanding of the capabilities that will be delivered, and now part of that is now moving into the definition of that target state operating model, which I alluded to earlier. We are in the middle of the articulation of that target state operating model, working deeply with Wayne Bloom and his team to make sure that we are keeping Commonwealth, Commonwealth. That we are keeping the folks who serve the Commonwealth advisors, the same people, and giving them the tools and capabilities to deliver the exceptional service that has resulted in 12 consecutive J.D. Power Awards, for independent advisor satisfaction, a record in the industry. Thought is that we build those capabilities so that they can keep going to number 13 and 14 and 15, and while they do that, we increase our ability to serve with distinction, just like Commonwealth does today.
We have a great understanding of the capabilities that will be delivered, and now part of that is now moving into the definition of that target state operating model, which I alluded to earlier. We are in the middle of the articulation of that target state operating model, working deeply with Wayne Bloom and his team to make sure that we are keeping Commonwealth, Commonwealth.
Working deeply with Wayne Bloom and his team to make sure that we're keeping Commonwealth Commonwealth that we're keeping the folks who serve the Commonwealth advisers, the same people and giving them the tools and capabilities to deliver the exceptional service that has resulted in 12 consecutive J D Power Awards.
That we are keeping the folks who serve the Commonwealth advisors, the same people, and giving them the tools and capabilities to deliver the exceptional service that has resulted in 12 consecutive J.D. Power Awards, for independent advisor satisfaction, a record in the industry. Thought is that we build those capabilities so that they can keep going to number 13 and 14 and 15, and while they do that, we increase our ability to serve with distinction, just like Commonwealth does today.
Hi, uh, good evening, and thank you for taking the question. Um, I think earlier in the Q&A Rich, you were talking about an increased win rate of advisors in motion coming from the wires. Just curious, if you could unpack a little bit more, what's going on there? It seems like some of the both, the media coverage and commentary for some of the bigger Banks is that they're looking to get more aggressive. Whether it's on, you know, recruiting ta packages, whatever it may be. So you know what, what do you attribute to sort of the recent success? You know, how important do you see, uh, some of the pieces that are being built out, you know, Securities back lending and the alts platform and things like that. That, you know, are expected to be in place by the end of the year as, as improving that position. And, you know, again, you talked about competition, broadly, but how would you describe the state of competition with, you know, that group of competitors? Specifically, thank you.
yeah, thanks been so, um, if we go back, what underpins that movement of us, improving our capture rates in that wire and, um,
Independent advisor satisfaction a record in the industry thought is that we build those capabilities. So that they can keep going to number 13, and 14 and 15 and while they do that we increase our ability to serve with distinction just like all of US today. So all of that taken together, we feel really good about our understanding of what needs to be done we feel good about our ability.
And Regional employee channel. The first is that
Richard Steinmeier: So all of that taken together, we feel really good about our understanding of what needs to be done. We feel good about our ability to execute and deliver, and we feel great about the combined value proposition that will result from the two firms.
So all of that taken together, we feel really good about our understanding of what needs to be done. We feel good about our ability to execute and deliver, and we feel great about the combined value proposition that will result from the two firms.
<unk> to execute and deliver and we feel great about the combined value proposition that will result from the two firms.
on balance, you've got a macro Tailwind there for you, we have seen a crossover that as advisers, move out of wires and W2, channels, more. Broadly historically had been that. They moved from 1 W2 channel to another 1 w22nd.
Benjamin Budish: Great. Thanks, Rich.
Michael Cho: Great. Thanks, Rich.
Alright, thanks, guys.
Operator: Thank you. And our next question comes to the line of Benjamin Budish from Barclays. Your question, please.
Operator: Thank you. And our next question comes to the line of Benjamin Budish from Barclays. Your question, please.
Thank you and our next question comes from the line of Ben boost from Barclays. Your question. Please hi.
Benjamin Budish: Hi, good evening, and thank you for taking the question. I think earlier in the Q&A, Rich, you were talking about an increased win rate of Advisors in Motion coming from the wires. Just curious if you could unpack a little bit more what's going on there. It seems like some of the both the media coverage and commentary with some of the bigger banks is that they're looking to get more aggressive, whether it's on, you know, recruiting, TA packages, whatever it may be. So, you know, what, what do you attribute to sort of the recent success?
Ben Budish: Hi, good evening, and thank you for taking the question. I think earlier in the Q&A, Rich, you were talking about an increased win rate of Advisors in Motion coming from the wires. Just curious if you could unpack a little bit more what's going on there. It seems like some of the both the media coverage and commentary with some of the bigger banks is that they're looking to get more aggressive, whether it's on, you know, recruiting, TA packages, whatever it may be. So, you know, what, what do you attribute to sort of the recent success?
Hi, good evening and thank you for taking the question.
I think earlier in the Q&A Rich you were talking about an increased win rate.
And most of that coming from the wires. Just curious if you could unpack a little bit more what's going on there. It seems like some of the both the media coverage and commentary from some of the bigger banks is that they're looking to get more aggressive whether it's on recruiting ta packages whatever it may be so what do you attribute to sort of the recent success how important do you see some of the pieces that are being built out.
W2 Channel when they're making a move that has crossed the threshold of more than 50% of advisors that are in. W2 channels, making a move actually moved to an independent construct for us. We are the leading player for folks, who want to run their own Independent Business because we have multiple affiliation models. The second stage in our journey was that we introduced
Affiliation models several years ago that made it more attractive for folks who are in a W2 construct to move to independence with support on their side. So that was the
Benjamin Budish: You know, how important do you see some of the pieces that are being built out, you know, securities-based lending and the alts platform, things like that, that, you know, are expected to be in place by the end of the year as improving that position? And, you know, again, you talked about competition broadly, but how would you describe the state of competition with, you know, that group of competitors specifically? Thank you.
You know, how important do you see some of the pieces that are being built out, you know, securities-based lending and the alts platform, things like that, that, you know, are expected to be in place by the end of the year as improving that position? And, you know, again, you talked about competition broadly, but how would you describe the state of competition with, you know, that group of competitors specifically? Thank you.
Securities backed lending in the old platform and things like that that are expected to be in place by the end of the year is improving that position and you know again, you talked about competition broadly, but how would you describe the state of competition with that group of competitors specifically thank you.
Theory to the case in the construction of our Strategic Wealth. Offering that helps 1099 advisors set up move and have a support mechanism around them with um, incredible support, as well as our W2 Channel introduction Lindo.
Richard Steinmeier: Yeah, thanks, Ben. So, if we go back, what underpins that movement of us improving our capture rates in that wire and regional employee channel? The first is that on balance, you've got a macro tailwind there for you. We've seen a crossover that as advisors move out of wires and W-2 channels more broadly, historically, it had been that they moved from one W-2 channel to another... One W-2 firm to another W-2 firm. What you've seen is increasingly year in and year out, the percentage of advisors that are in a W-2 channel when they're making a move, that has crossed the threshold of more than 50% of advisors that are in W-2 channels making a move, actually move to an independent construct.
Rich Steinmeier: Yeah, thanks, Ben. So, if we go back, what underpins that movement of us improving our capture rates in that wire and regional employee channel? The first is that on balance, you've got a macro tailwind there for you. We've seen a crossover that as advisors move out of wires and W-2 channels more broadly, historically, it had been that they moved from one W-2 channel to another... One W-2 firm to another W-2 firm.
Yeah, I think so.
No.
If we go back what underpins that movement of us improving our capture rates in that wire and.
And regional employee channel the first is that.
But on balance you've got a macro tailwind there for you we have seen a crossover that as advisors a move out of wires and W. Two channels more broadly historically had been that they move from one W. Two channel to another one W. Two firm to another W. Two firm what you've seen is increasingly year in and year out the percentage of advisers that are in a W. Two.
What you've seen is increasingly year in and year out, the percentage of advisors that are in a W-2 channel when they're making a move, that has crossed the threshold of more than 50% of advisors that are in W-2 channels making a move, actually move to an independent construct. For us, we are the leading player for folks who want to run their own independent business because we have multiple affiliation models.
Channel when Theyre, making a move that has crossed the threshold of more than 50% of advisors that are in W. Two channels, making a move actually move to an independent construct for US we are the leading player or folks who want to run their own independent business. Because we have multiple affiliation models second stage in our journey was that we introduced affiliate.
Beyond that what we had was and we reference this kind of pretty consistently in the quarters is we still have some capability gaps relative to product set, lending and some high, net worth capabilities and we are steadily knocking those down 1 at a time. And our consideration rate continues to go up. So what we find is that advisors are increasingly willing to get into conversations with us and they may be getting there because of the linsco channel, they may be getting there because of Strategic Wealth. And ultimately, they'll land across the gamut of either establishing their own ra, which we support in our own W, independent employee, W2 Channel. And a supported independence Channel or in a direct 1099 affiliation on our corporate Ria. So we have more affiliation Landings.
Richard Steinmeier: For us, we are the leading player for folks who want to run their own independent business because we have multiple affiliation models. The second stage in our journey was that we introduced affiliation models several years ago that made it more attractive for folks who are in a W-2 construct to move to independence with support on their side. That was the theory to the case in the construction of our strategic wealth offering that helps ten ninety-nine advisors set up, move, and have a support mechanism around them with incredible support, as well as our W-2 channel introduction, Linsco. Now, beyond that, what we had was, and we referenced this kind of pretty consistently in the quarters, is we still had some capability gaps relative to product set, lending, and some high net worth capabilities.
The second stage in our journey was that we introduced affiliation models several years ago that made it more attractive for folks who are in a W-2 construct to move to independence with support on their side. That was the theory to the case in the construction of our strategic wealth offering that helps ten ninety-nine advisors set up, move, and have a support mechanism around them with incredible support, as well as our W-2 channel introduction, Linsco.
<unk> model several years ago that made it more attractive for folks who are in a W. Two construct to move to independents with support on their side that was the <unk>.
Theory to the case in the construction of our strategic wealth offering that helps and 99 advisers set up move and have a support mechanism around them with.
Incredible support as well as our W. Two channel introduction Lindsey.
Spots than any other firm and maybe lastly, to leg into that we have added, uh, a national brand campaign that highlights and makes more clear to end investors. And we've seen an improvement of aided and unaided brand awareness, both of our firm um for both end investors as well as advisors. Lastly Commonwealth is a very validating event to our position in the marketplace. They are a premium brand, they have Premium capabilities and they have the best advisors in the industry. The leadership of that firm chose us as the best firm to support those advisors and that made more W2, advisors stand up and take notice of this firm as a leading firm in Wealth Management,
Now, beyond that, what we had was, and we referenced this kind of pretty consistently in the quarters, is we still had some capability gaps relative to product set, lending, and some high net worth capabilities. And we are steadily knocking those down one at a time, and our consideration rate continues to go up. So what we find is that advisors are increasingly willing to get into conversations with us, and they may be getting there because of the Linsco channel.
Now.
Beyond that what we had was we referenced is kind of pretty consistently in the quarters as we still have some capability gaps relative to product set lending and some high net worth capabilities and we are steadily knocking those down one at a time and our consideration rate continues to go up so what we find is that advisers are increasingly.
All right. That was very comprehensive. Thank you rich.
Thank you. And our next question comes from the line of Brendan Hawkins from BMO Capital markets your question please.
Richard Steinmeier: And we are steadily knocking those down one at a time, and our consideration rate continues to go up. So what we find is that advisors are increasingly willing to get into conversations with us, and they may be getting there because of the Linsco channel. They may be getting there because of strategic wealth, and ultimately they'll land across the gamut of either establishing their own RIA, which we support in our own W- independent employee W-2 channel, in a supported independence channel, or in a direct ten ninety-nine affiliation on our corporate RIA. So we have more affiliation landing spots than any other firm.
Willing to get into conversations with us and they may be getting there because of the links go channel. They may be getting there because of strategic well and ultimately they'll land across the gamut of either establishing their own raw, which we support in our own W. Independent employee W. Two channel and are supported independents channel or in a direct 10 99 affiliation on our.
They may be getting there because of strategic wealth, and ultimately they'll land across the gamut of either establishing their own RIA, which we support in our own W- independent employee W-2 channel, in a supported independence channel, or in a direct ten ninety-nine affiliation on our corporate RIA. So we have more affiliation landing spots than any other firm.
Corporate <unk>.
We have more affiliation landing spots than any other firm and maybe lastly to leg into that we have added a national brand campaign that highlights and makes more clear to end investors and we've seen an improvement of aided and unaided brand awareness both of our firm.
Richard Steinmeier: And maybe lastly, to leg into that, we have added a national brand campaign that highlights and makes more clear to end investors, and we've seen an improvement of aided and unaided brand awareness, both of our firm, for both end investors as well as advisors. Lastly, Commonwealth is a very validating event to our position in the marketplace. They are a premium brand, they have premium capabilities, and they have the best advisors in the industry. The leadership of that firm chose us as the best firm to support those advisors, and that made more W-2 advisors stand up and take notice of this firm as a leading firm in wealth management.... All right, that was very comprehensive. Thank you, Rich.
And maybe lastly, to leg into that, we have added a national brand campaign that highlights and makes more clear to end investors, and we've seen an improvement of aided and unaided brand awareness, both of our firm, for both end investors as well as advisors. Lastly, Commonwealth is a very validating event to our position in the marketplace. They are a premium brand, they have premium capabilities, and they have the best advisors in the industry.
Market on how net new assets are progressing here to start out the year and and maybe an update on cash balances.
Brand, and I'll start with how January is going so far. Um,
For both and investors as well as advisors lastly.
Commonwealth has a very validating event to our position in the marketplace. They are a premium brand they have premium capabilities and they have the best advisors in the industry.
The leadership of that firm chose us as the best firm to support those advisors, and that made more W-2 advisors stand up and take notice of this firm as a leading firm in wealth management....
The leadership of that firm chose us as the best firm to support those advisors and that made more W. Two advisers stand up and take notice of this firm as a leading firm in wealth management.
Ben Budish: All right, that was very comprehensive. Thank you, Rich.
Alright that was very comprehensive thank you rich.
Um, for 2 factors or 2 Reasons, uh, the year end slowdown that you see in December, um, second half of the December. There's really no recruiting that could come on board. Uh, and then it takes a couple weeks into January to ramp up both recruiting same store, Etc. So January is usually pretty low and then you get as you move into February and March it builds
Operator: Thank you. And our next question comes from the line of Brennan Hawken from BMO Capital Markets. Your question, please.
Operator: Thank you. And our next question comes from the line of Brennan Hawken from BMO Capital Markets. Your question, please.
Thank you and our next question comes from the line of Brennan Hawken from BMO capital markets. Your question. Please.
Brennan Hawken: Good afternoon, Rich and Matt. Thank you for taking my question. Sort of a two-parter here. So I know that Commonwealth is in focus. You've spoken to allocating your best recruiters to task, and of course, it takes time for net new asset pipelines to rebuild. So how long do you think it would take to start to see, you know, regular way net new assets revert to the rates that are more in line with your strong track record of growth? And then do you think it's possible we could get maybe a mark to market on how net new assets are progressing here to start out the year, and maybe an update on cash balances?
Brennan Hawken: Good afternoon, Rich and Matt. Thank you for taking my question. Sort of a two-parter here. So I know that Commonwealth is in focus. You've spoken to allocating your best recruiters to task, and of course, it takes time for net new asset pipelines to rebuild. So how long do you think it would take to start to see, you know, regular way net new assets revert to the rates that are more in line with your strong track record of growth? And then do you think it's possible we could get maybe a mark to market on how net new assets are progressing here to start out the year, and maybe an update on cash balances?
Good afternoon, rich and Matt. Thank you for taking my question.
That's sort of a two parter here. So I know that Commonwealth is in focus you've got spoke to allocating your best recruiters to task and of course. It takes time for net new asset pipelines to rebuild so how long do you think it would take to start to see.
Um, and then you also have advisory fees that primarily in the first month of the quarter and as we're getting bigger and bigger on the advisory side, um, you know, 58, you know, 59, Nish percent. Um, advisory now, um, that's a bigger number that hits in the first quarter. You put all that together and we're around 2 and a half percent, uh, organic growth in January, again with the expectation that then February and March builds.
Regular way net new assets revert to the rates that are more in line with your strong track record of growth.
And then do you think it's possible we could get maybe a mark to market on how net new assets are progressing here to start out the year and maybe an update on cash balances.
Matthew Audette: Yeah, I'll start, Brennan. I'll start with how January is going so far. When you look at... Maybe to start with organic growth. And I think as I've mentioned in the prepared remarks, and I think you know well, January is usually one of the slowest months of organic growth for the year, for two factors or two reasons. The year-end slowdown that you see in December, second half of December, there's really no recruiting that can come on board. And then it takes a couple of weeks into January to ramp up both recruiting, same store, et cetera. So January is usually pretty low, and then you get, as you move into February and March, it builds. And then you also have advisory fees that hit primarily in the first month of the quarter.
Matt Audette: Yeah, I'll start, Brennan. I'll start with how January is going so far. When you look at... Maybe to start with organic growth. And I think as I've mentioned in the prepared remarks, and I think you know well, January is usually one of the slowest months of organic growth for the year, for two factors or two reasons. The year-end slowdown that you see in December, second half of December, there's really no recruiting that can come on board. And then it takes a couple of weeks into January to ramp up both recruiting, same store, et cetera.
Yeah, I'll start Brian and I'll start with how January has gone so far.
When you look at it maybe to start with organic growth.
I think as a as I've mentioned in her prepared remarks.
And I think you know well January is usually one of the slowest months of organic growth for the year for two factors are two reasons.
On the cash sweep side. Um, I'd say there's, you know, a couple days remaining but I'd give you the headline that January is shaping up a bit better than you would typically see um, you do have that same seasonal on advisory fees um, which are around 2 and a half billion dollars so that comes out of cash, uh, directly during uh, during the month, but outside of that. Um, the Q4 buildup that we saw largely in December, um, largely remains so cash balance is beyond fees or or down roughly a billion. Uh, so you put all that together and balances are down around 3 and a half billion, which would put overall cash sweep at roughly 57 and a half, uh, and just to give context. So, if you look at that Q4, bill, that largely happened, uh, or almost entirely happened, uh, in December, uh, we're sitting right now, 3 billion above November levels, so hopefully that gives you a sense as to kind of how stick
The year end slowdown that you see in December 2nd half of the December Theres really no recruiting that could come on board.
The cash has been uh this year as opposed to, as opposed to Prior years.
And then it takes a couple of weeks into January to ramp up both recruiting same store et cetera. So January is usually pretty low and then you get as you move into February and March it builds.
Um, maybe Rich. I'll give it back to you on the
Timing of organic growth question? Yeah.
So January is usually pretty low, and then you get, as you move into February and March, it builds. And then you also have advisory fees that hit primarily in the first month of the quarter. As we're getting bigger and bigger on the advisory side, you know, 58, you know, 59-ish% advisory now, that's a bigger number that hits in the first quarter. You put all that together, and we're around 2.5% organic growth in January. Again, with the expectation that then February and March builds.
And then you also have advisory fees that hit primarily in the first months of the quarter and as we're getting bigger and bigger on the advisory side.
Matthew Audette: As we're getting bigger and bigger on the advisory side, you know, 58, you know, 59-ish% advisory now, that's a bigger number that hits in the first quarter. You put all that together, and we're around 2.5% organic growth in January. Again, with the expectation that then February and March builds. On the cash sweep side, I'd say there's, you know, a couple of days remaining, but I'd give you the headline that January is shaping up a bit better than you would typically see. You do have that same seasonal on advisory fees, which are around $2.5 billion. So that comes out of cash directly during the month. But outside of that, the Q4 buildup that we saw, largely in December, largely remains.
<unk> 50, 859 Nish percent advisory now.
That's a bigger number that hits in the first quarter, you put all that together and we're around two 5% organic growth in January again with the expectation that then February and March builds.
So I think Brandon the, the way to think about this is as we alluded to, um, we sit in the low 80s, in terms of AUM assets that are committed to join. And that's a, not a complete proxy as Matt had alluded to for the actual number of advisors based on the fact that we have larger advisor joining. But what you'd see there is as we started, you know in April
We had a real.
On the cash sweep side, I'd say there's, you know, a couple of days remaining, but I'd give you the headline that January is shaping up a bit better than you would typically see. You do have that same seasonal on advisory fees, which are around $2.5 billion. So that comes out of cash directly during the month. But outside of that, the Q4 buildup that we saw, largely in December, largely remains. So cash balances beyond fees are down roughly $1 billion. So you put all that together, and balances are down around $3.5 billion, which would put overall cash sweep at roughly $57.5 billion.
On the cash sweep side.
shift of our recruiters into that event, and
I'd say, there's you know a couple of days remaining but I'd give you. The headline that January is shaping up a bit better than you would typically see.
You do have that same seasonal on advisory fees, which were around two and a half billion dollar. So that comes out of cash directly during during the months, but outside of that the Q4 buildup that we saw largely in December.
Largely remains so cash balances beyond fees are down roughly $1 billion.
Matthew Audette: So cash balances beyond fees are down roughly $1 billion. So you put all that together, and balances are down around $3.5 billion, which would put overall cash sweep at roughly $57.5 billion. And just to give context, if you look at that Q4 build, that largely happened, or almost entirely happened, in December. We're sitting right now $3 billion above November levels. So hopefully that gives you a sense as to kind of how sticky the cash has been this year, as opposed to prior years. Maybe, Rich, I'll give it back to you on the timing of organic growth question.
So you put all that together and balances are down around $3 5 billion, which would put overall cash sweep at roughly 57 and a half.
And just to give context, if you look at that Q4 build, that largely happened, or almost entirely happened, in December. We're sitting right now $3 billion above November levels. So hopefully that gives you a sense as to kind of how sticky the cash has been this year, as opposed to prior years. Maybe, Rich, I'll give it back to you on the timing of organic growth question.
To give context. So if you look at that Q4 build that largely happened almost entirely happened in December.
We're sitting right now 3 billion above November levels. So hopefully that gives you a sense as to kind of how sticky the cash has been this year as opposed to as opposed to prior years.
We are now moving towards the tail end of that event, the issue that you have at hand is that the lead times for recruiting, um, for an independent adviser going from 1, FM to the next. Usually sit between 3 to 6 months and so once you enter pipeline, you can think about that as the time frame for most center of gravity decisions to make to move from firm to firm. But as you get into larger advisors, especially as they're considering supported models like lindco, um, if they're establishing their own ra as well, um, or our Strategic Wealth, you're often times with those larger teams looking at pipeline, you know, decision-making to conversion that sits center of gravity between 6 months to a year. So it really does depend on the mix makeup of what we have in pipeline as we alluded. Um, we've seen
Maybe Richard I'll give it to you on the timing.
Timing of organic growth question, Yeah, So I think Brendan.
Richard Steinmeier: Yeah. So I think, Brennan, the way to think about this is, as we alluded to, we sit in the low eighties in terms of AUM, assets that are committed to join, and that's not a complete proxy, as Matt had alluded to, for the actual number of advisors, based on the fact that we have larger advisors joining. But what you'd see there is, as we started, you know, in April, we had a real shift of our recruiters into that event, and we are now moving towards the tail end of that event. The issue that you have at hand is that the lead times for recruiting, for an independent advisor going from one firm to the next, usually sit between 3 to 6 months.
Rich Steinmeier: Yeah. So I think, Brennan, the way to think about this is, as we alluded to, we sit in the low eighties in terms of AUM, assets that are committed to join, and that's not a complete proxy, as Matt had alluded to, for the actual number of advisors, based on the fact that we have larger advisors joining. But what you'd see there is, as we started, you know, in April, we had a real shift of our recruiters into that event, and we are now moving towards the tail end of that event.
A way to think about this is as we alluded to.
We sit in the low <unk> in terms of.
Assets that are committed to join that's not a complete proxy as Matt had alluded to for the actual number of advisors based on the fact that we have larger advisors, joining but what you'd see there is as we started in April.
Really nice pipeline build, um, especially into the first couple of stages of our Pipeline and what it takes is a little bit of time, especially with those seasoned recruiters to progress those through the pipeline. So as we alluded to it's going to occur during the course of this year and I'm probably giving an answer that is more precise than that at this moment. In time I probably can't do that.
Got it. Thanks for taking my question.
Thank you. And our next question comes from the line out.
We had a real shift.
Shift of our recruiters into that event.
Devin Ryan from Citizens Bank, your question, please.
We are now moving towards the tail end of that event. The issue that you have at hand is that the lead times for recruiting for.
The issue that you have at hand is that the lead times for recruiting, for an independent advisor going from one firm to the next, usually sit between 3 to 6 months. So once you enter pipeline, you can think about that as the time frame for most center of gravity decisions to make to move from firm to firm.
Or an independent advisor going from one firm to the next usually set between three to six months and so once you enter our pipeline you can think about that is the timeframe for most center of gravity decisions to make to move from firm to firm, but as you get into larger advisors, especially as Theyre considering supported models like Lindsay go.
Richard Steinmeier: So once you enter pipeline, you can think about that as the time frame for most center of gravity decisions to make to move from firm to firm. But as you get into larger advisors, especially as they're considering supported models like Linsco, if they're establishing their own RIA as well, or our strategic wealth, you're oftentimes with those larger teams looking at pipeline, you know, decision-making to conversion that sits center of gravity between six months to a year. So it really does depend on the mix makeup of what we have in pipeline. As we alluded, we've seen really nice pipeline build, especially into the first couple stages of our pipeline. And what it takes is a little bit of time, especially with those seasoned recruiters, to progress those through the pipeline.
But as you get into larger advisors, especially as they're considering supported models like Linsco, if they're establishing their own RIA as well, or our strategic wealth, you're oftentimes with those larger teams looking at pipeline, you know, decision-making to conversion that sits center of gravity between six months to a year. So it really does depend on the mix makeup of what we have in pipeline. As we alluded, we've seen really nice pipeline build, especially into the first couple stages of our pipeline.
They are establishing their own or I E as well.
Or our strategic well, you're often times with those larger team looking at pipeline.
All right, great. I every time that um, want to shift to the Enterprise channel uh and um credentials specifically, now that we're um a little bit over a year passed that integration and just would love to dig in a little bit more around. You know, some of the learnings I'm sure you have a lot more data today on how that's going. So it would just be great if you could give any proof points to us on how it's going, you know, what type of acceleration and growth, are you, or are they seeing? Um, and then just how it sets you up for maybe more in the insurance Channel. I'm, I'm curious. If you're seeing interest from other parties as these maybe positive anecdotes start to make, make their way to the market. Thanks.
Decision, making to conversion that center of gravity between six months to a year. So it really does depend on the mix makeup of what we have in pipeline as we alluded we've seen really nice pipeline build.
Especially into the first couple of stages of our pipeline and what it takes is a little bit of time, especially with those seasoned recruiters to progress those through the pipeline. So as we alluded to it's going to occur during the course of this year and I'm, probably giving an answer that is more precise than that at this moment in time I probably can't do that.
And what it takes is a little bit of time, especially with those seasoned recruiters, to progress those through the pipeline.So as we alluded to, it's going to occur during the course of this year, and I'm probably giving an answer that is more precise than that at this moment in time. I, I probably can't do that.
Richard Steinmeier: So as we alluded to, it's going to occur during the course of this year, and I'm probably giving an answer that is more precise than that at this moment in time. I, I probably can't do that.
Brennan Hawken: Got it. Thanks for taking my question.
Brennan Hawken: Got it. Thanks for taking my question.
Got it thanks for taking my question.
Operator: Thank you. And our next question comes from the line of Devin Ryan from Citizens Bank. Your question, please.
Operator: Thank you. And our next question comes from the line of Devin Ryan from Citizens Bank. Your question, please.
Thank you and our next question comes from the line of.
Devin Ryan from citizens Bank your question. Please.
Devin Ryan: Great. Hi, Rich and Matt. Want to shift to the enterprise channel, and Prudential specifically now that we're a little bit over a year past that integration. And just would love to dig in a little bit more around, you know, some of the learnings. I'm sure you have a lot more data today on how that's going, so it would just be great if you could give any proof points to us on how it's going, you know, what type of acceleration and growth are you or are they seeing? And then just how it sets you up for maybe more in the insurance channel. I'm curious if you're seeing interest from other parties as these maybe positive anecdotes start to make their way to the market. Thanks.
Devin Ryan: Great. Hi, Rich and Matt. Want to shift to the enterprise channel, and Prudential specifically now that we're a little bit over a year past that integration. And just would love to dig in a little bit more around, you know, some of the learnings. I'm sure you have a lot more data today on how that's going, so it would just be great if you could give any proof points to us on how it's going, you know, what type of acceleration and growth are you or are they seeing? And then just how it sets you up for maybe more in the insurance channel.
Great Hi, Matt.
Wanted to shift to the enterprise channel.
Do you have the ability to be a little bit outspoken here? Mostly because we would never break news for our partners. But in the fourth quarter, Prudential announced that their advisor. Headcount growth had accelerated 9% year to date.
Prudential, specifically now that we're a little bit over a year past that integration and just would love to dig in a little bit more around some of the learnings I'm sure you have a lot more data today on how that's going so which would be great. Do you have any proof points to us on how it's going what type of acceleration of growth are you are they seeing.
And then just how it sets you up for maybe more in the insurance channel Im curious if youre seeing interest from other parties are these maybe positive anecdotes start to make their way to market. Thanks.
I'm curious if you're seeing interest from other parties as these maybe positive anecdotes start to make their way to the market. Thanks.
Matthew Audette: Yeah. Hey, thanks, Devin. So just as a reminder, we brought on through 2024 in November, where they added about $67 billion in assets. And we knew as we were in discussions, Pru has a fantastic wealth franchise, and they were always bullish on their outlook for the wealth management business, and they were looking for ways to further advance the business. We got into that partnership, and we had quite a bit of build to build in terms of the capability sets. And as we built those capability sets, it positions us well to be able to work with other insurance-
Rich Steinmeier: Yeah. Hey, thanks, Devin. So just as a reminder, we brought on through 2024 in November, where they added about $67 billion in assets. And we knew as we were in discussions, Pru has a fantastic wealth franchise, and they were always bullish on their outlook for the wealth management business, and they were looking for ways to further advance the business. We got into that partnership, and we had quite a bit of build to build in terms of the capability sets.
Yeah, Hey, thanks, Kevin.
So just as a reminder, we brought on through.
<unk> 24 in November.
Were they added about $67 billion in assets and we knew as we were in discussion.
<unk> has a fantastic well franchise and they were always bullish on their outlook for the wealth management business.
And they were looking for ways to further advance the business.
And they had roughly 3 billion in nna and that was in the fourth quarter. Not the completion of the fourth quarter and I can tell you, I was with them. Over the holidays, they are incredibly bullish on their franchise. They have a fantastic sales infrastructure. Their leadership structure is very strong. They develop new advisors, really well and they're backlog of other insurance-based. Advisors looking at potential continues to grow. We have had really great results as we partner with them in recruiting to their franchise. Um, in terms of our pipeline, I think this is where you get. I mentioned this a couple of times before a signature event and a signature partnership. I would call this very akin to our MNT Bank, where MNT plowed and took a Leap of Faith with us to plow, into new territory of a larger Bank wealth. Outsourcing that really moved from. Why are you doing that to? Why aren't you doing that? And I think those are the discussions we're beginning to get into, but I think there just needs to be a recognition. We have a
We got into that.
Partnership and we had quite a bit of build to build in terms of the capability sets.
And as we built those capability sets, it positions us well to be able to work with other insurance- ... firms and or product manufacturers. But I actually do have the ability to be a little bit outspoken here, mostly because we would never break news for our partners. But in Q4, Prudential announced that their advisor headcount growth had accelerated 9% year to date, and they had roughly $3 billion in NNA, and that was in Q4, not the completion of Q4. And I can tell you, I was with them over the holidays. They are incredibly bullish on their franchise.
And as we built those capabilities that it positions us well to be able to work with other insurance.
Recognition that other firms, there's some trepidation to get into those conversations because credential really broke the mold in how they partnered with us.
Richard Steinmeier: ... firms and or product manufacturers. But I actually do have the ability to be a little bit outspoken here, mostly because we would never break news for our partners. But in Q4, Prudential announced that their advisor headcount growth had accelerated 9% year to date, and they had roughly $3 billion in NNA, and that was in Q4, not the completion of Q4. And I can tell you, I was with them over the holidays. They are incredibly bullish on their franchise. They have a fantastic sales infrastructure. Their leadership structure is very strong. They develop new advisors really well, and their backlog of other insurance-based advisors looking at Prudential continues to grow. We have had really great results as we partner with them in recruiting to their franchise.
<unk> <unk> product manufacturers, but I actually do have the ability to be a little bit outspoken here, mostly because we would never break news for our partners, but in the fourth quarter Prudential announced that their advisor head count growth at accelerated 9% year to date and they have roughly $3 billion in M&A and that was in the fourth quarter not the completion of the fourth quarter and I can tell.
I think I can speak pretty clearly for them when we both are incredibly happy about the results and think that their franchise is very strong and positions them incredibly externally. I'm so proud of being able to be a partner of approve and we're looking forward to having further conversations with, you know, I think a number of firms have begun exploratory conversations but more Progressive conversations.
U I was with them over the holidays. They are incredibly bullish on their franchise. They are a fantastic sales infrastructure. Their leadership structure is very strong they develop new advisers really well and their backlog of other insurance based advisors looking at potential continues to grow we have had really great results as we partner.
All right, great. Thank you.
They have a fantastic sales infrastructure. Their leadership structure is very strong. They develop new advisors really well, and their backlog of other insurance-based advisors looking at Prudential continues to grow. We have had really great results as we partner with them in recruiting to their franchise. In terms of our pipeline, I think this is where you get, I mentioned this a couple of times before, a signature event and a signature partnership.
Thank you, thank you. And our next question comes from the line of Bill cats from TDC your question, please.
With them in recruiting to their franchise.
Richard Steinmeier: In terms of our pipeline, I think this is where you get, I mentioned this a couple of times before, a signature event and a signature partnership. I would call this very akin to our M&T Bank, where M&T plowed and took a leap of faith with us to plow into new territory of a larger bank wealth outsourcing that really moved from, "Why are you doing that?" to, "Why aren't you doing that?" I think those are the discussions we're beginning to get into, but I think there just needs to be a recognition. We have a recognition that other firms, there's some trepidation to get into those conversations because Prudential really broke the mold in how they partnered with us.
In terms of our pipeline I think this is where you get I mentioned, a couple of times before a signature event and the signature partnership I.
I would call this very akin to our M&T Bank, where M&T plowed and took a leap of faith with us to plow into new territory of a larger bank wealth outsourcing that really moved from, "Why are you doing that?" to, "Why aren't you doing that?" I think those are the discussions we're beginning to get into, but I think there just needs to be a recognition. We have a recognition that other firms, there's some trepidation to get into those conversations because Prudential really broke the mold in how they partnered with us.
<unk> called this very akin to our MNT bank were empty cloud and took a leap of faith with us to plow into new territory of a larger bank, while outsourcing that really moved from why are you doing that to why arent you doing that and I think those are the discussions we're beginning to get into it but I think theyre just needs to be a wreck.
Great. Uh, thank you very much and happy anniversary since someone else has said that um uh just a couple of maybe interconnected questions. Um, Matt you alluded to um possibility of accelerating the uh, sort of capital deployment, that you run a little bit ahead in terms of operationally and your leverage ratios. Can you give us a sense of what mile post we should be looking at to potentially think about maybe starting to reincorporate um, Capital return. Um, and then just on the, uh, interest rate management side of the equation, you're sort of running at the lower end of your fix the float. How are you thinking about that shape? As you look into the new year? Given the forward curves are relatively stable from here. Thank you.
Yeah.
what, uh,
We have a recognition that other firms, there's some trepidation to get into those conversations because prudential really broke the mold and how they partnered with us.
What anniversary Bill? I know what he's talking about. So first off.
Richard Steinmeier: I think I can speak pretty clearly for them when we both are incredibly happy about the results and think that their franchise is very strong and positions them incredibly externally. I'm so proud of being able to be a partner of Pru, and we're looking forward to having further conversations with, you know, I think a number of firms have begun exploratory conversations, but more progressed conversations.
I think I can speak pretty clearly for them when we both are incredibly happy about the results and think that their franchise is very strong and positions them incredibly externally. I'm so proud of being able to be a partner of Pru, and we're looking forward to having further conversations with, you know, I think a number of firms have begun exploratory conversations, but more progressed conversations.
I think I can speak pretty clearly for them. When we both are incredibly happy about the results and think that they're franchise is very strong and positions them incredibly externally I'm, so proud of being able to be a partner of Peru, and we're looking forward to having further conversations with you know I think a number of firms have begun exploratory conversations but.
He's super generous, like that's a very thoughtful person. We always knew that about Bill but appreciate it. Bill, he's talked. He thinks that this is uh 1 year anniversary of my first earnings call, I think, but it was actually Q3 a couple of weeks after oh was that a bill?
More progress conversations.
Matthew Audette: All right, that's great. Thank you.
Matt Audette: All right, that's great. Thank you.
Alright, great. Thank you.
Operator: Thank you. And our next question comes from the line of Bill Katz from TD Cowen. Your question, please.
Operator: Thank you. And our next question comes from the line of Bill Katz from TD Cowen. Your question, please.
Thank you and our next question comes from the line of Bill Katz from TD Count Your question. Please.
Bill Katz: Great. Thank you very much, and happy anniversary, since no one else has said that. Just a couple of maybe interconnected questions. Matt, you alluded to possibility of accelerating the sort of capital deployment that you're running a little bit ahead on in terms of operationally and your leverage ratios. Can you give us a sense of what mileposts we should be looking at to potentially think about maybe starting to reincorporate capital return? And then just on the interest rate management side of the equation, you're sort of running at the lower end of your fixed to float. How are you thinking about that shape as you look into the new year, given the forward curves are relatively stable from here? Thank you.
Bill Katz: Great. Thank you very much, and happy anniversary, since no one else has said that. Just a couple of maybe interconnected questions. Matt, you alluded to possibility of accelerating the sort of capital deployment that you're running a little bit ahead on in terms of operationally and your leverage ratios. Can you give us a sense of what mileposts we should be looking at to potentially think about maybe starting to reincorporate capital return?
Great. Thank you very much and happy anniversary since no one else has said that.
It was yeah they muted all yeah. Oh look at you super thoughtful. My anniversary was in August so my wife would you know that that's the 1. Yeah. Well very good bill. All right, so on your 2-part question. So I think on on uh, share a purchases. Um, I think in in just to level set on, on our expectations, initially, when we announced the acquisition of Commonwealth, um, it was about making sure that we got our leverage down back down to 2 times. Um, and that at that point, um, we would revisit Capital returns
Just a couple maybe interconnected questions, Matt you alluded to.
Possibility of accelerating the sort of capital deployment net you're right a little bit ahead in terms of operationally and your leverage ratios can you.
Give us a sense of what Mileposts, we should be looking at to potentially think about maybe starting to reincorporate capital return.
And then just on the interest rate management side of the equation, you're sort of running at the lower end of your fixed to float. How are you thinking about that shape as you look into the new year, given the forward curves are relatively stable from here? Thank you.
And then just on the interest rate management side of the equation, you're sort of running at the lower end of your fixed to float how are you thinking about that shape as you look into the new year given the forward curves are relatively stable from here. Thank you.
Richard Steinmeier: Yeah. What, what anniversary, Bill?
Rich Steinmeier: Yeah. What, what anniversary, Bill?
Yeah.
Um, and then given the timing of our of Commonwealth on boarding, uh, in Q4 that Q4 that implied, we'd look at it in Q4. And I think, um, as we've talked about today being ahead of plans, on the diverging side, um, which is good, um, and the Commonwealth on boarding, while the timeline hasn't changed, the prep is going well. Um, I think I would, I would take this as we're looking at. You know, whether we can start those, share purchases earlier. I would range that and say, maybe a quarter earlier is what we're thinking, uh, but I would just underscore, we've still got some work to do, uh, to really refine that, uh, and we'll give an update in a future quarter, but I think just given where Leverage is
Uh huh.
What anniversary, but I know what I'm talking about.
Matthew Audette: I know what he's talking about. So first off, he's super generous. Like, that's a very thoughtful person. We always knew that about Bill, but appreciate it, Bill. He thinks that this is the 1-year anniversary of my first earnings call, I think, but it was actually Q3, a couple of weeks after.
Matt Audette: I know what he's talking about. So first off, he's super generous. Like, that's a very thoughtful person. We always knew that about Bill, but appreciate it, Bill. He thinks that this is the 1-year anniversary of my first earnings call, I think, but it was actually Q3, a couple of weeks after.
First off.
Super generous.
That's a very thoughtful person, we always knew that about bill, but I appreciate it bill he's talked he thinks that this is a one year anniversary of my first earnings call. I think it was actually Q3, a couple of weeks after that was that it bill.
Richard Steinmeier: Oh, was that it, Bill?
Rich Steinmeier: Oh, was that it, Bill?
Matthew Audette: It was?
Matt Audette: It was? Yeah, they muted on.
It wasn't that the mirador, yeah, I'll look at choose Super thoughtful my anniversary was in August So my wife would.
Richard Steinmeier: Yeah, they muted on.
Matthew Audette: Yeah. Oh, look at you, super thoughtful.
Rich Steinmeier: Yeah. Oh, look at you, super thoughtful.
Richard Steinmeier: My anniversary was in August.
Matt Audette: My anniversary was in August.
Matthew Audette: Yeah.
Rich Steinmeier: Yeah.
Richard Steinmeier: So, if my wife would, you know, that's, that's the one.
Matt Audette: So, if my wife would, you know, that's, that's the one.
That's the ones are well.
Matthew Audette: Sure. Okay. Yeah. Well, very good, Bill. All right, so on your two-part question. So I think on share purchases, I think just to level set on our expectations, initially, when we announced the acquisition of Commonwealth, it was about making sure that we got our leverage down, back down to 2 times, and at that point, we would revisit capital returns. And given the timing of Commonwealth onboarding in Q4, that implied we'd look at it in Q4. And I think, as we've talked about today, being ahead of plans on the deleveraging side, which is good, and the Commonwealth onboarding, while the timeline hasn't changed, the prep is going well.
Rich Steinmeier: Sure. Okay. Yeah. Well, very good, Bill. All right, so on your two-part question. So I think on share purchases, I think just to level set on our expectations, initially, when we announced the acquisition of Commonwealth, it was about making sure that we got our leverage down, back down to 2 times, and at that point, we would revisit capital returns. And given the timing of Commonwealth onboarding in Q4, that implied we'd look at it in Q4.
Well very good belt. So in your two part question, so I think on share.
Share repurchases.
In just a level set on our expectations initially when we announced the acquisition of Commonwealth.
It was about making sure that we got our leverage down back down to two times.
Uh, I wanted to at least give it indication as to as to where our thinking was, um, with respect to, uh, second part of your question on, uh, fixed, uh, fixed rate sweep. Um, no change in plan and approach their, um, it really is about that year-end build that you see, in Q4, that's really what drove that down. Um, as the stability of those cash balances really lands in this quarter, and as I talked about, uh, for January so far, it's being a little bit stickier than it has in Prior years. Um, then we'll kind of move into the fixed rate Market, um, typically Landing, you know, and that low 6 low to mid 60%, where we typically are. Um, so that would be the plans for q1, uh, that fit that that that being in the that 55% zone or, you know, mid to Upper 50% Zone was really about just the year-end build up in December.
Thank you, both.
And at that point, we would revisit capital returns.
Yep.
Given the timing of all of Commonwealth Onboarding.
<unk> sure that Q4 that imply we'd look at it in Q4 and I think.
Next question comes from the line of Michael Cyprus from Morgan Stanley. Your question, please.
And I think, as we've talked about today, being ahead of plans on the deleveraging side, which is good, and the Commonwealth onboarding, while the timeline hasn't changed, the prep is going well. I think I would, I would take this as we're looking at, you know, whether we can start those share purchases earlier. I would range that and say maybe a quarter earlier is what we're thinking. But I would just underscore, we've still got some work to do, to really refine that. And we'll give an update in a future quarter.
As we've talked about today being ahead of plans on the deleveraging side.
Which is good in it.
Commonwealth Onboarding, while the timeline hasnt changed the prep is going well.
Matthew Audette: I think I would, I would take this as we're looking at, you know, whether we can start those share purchases earlier. I would range that and say maybe a quarter earlier is what we're thinking. But I would just underscore, we've still got some work to do, to really refine that. And we'll give an update in a future quarter. But I think just given where leverage is, I wanted to at least give an indication as to, as to where our thinking was. With respect to, the second part of your question on, fixed, fixed rate sweep, no change in plan and approach there. It really is about that year-end build that you see in Q4. That's really what drove that down.
I think I would I would take this as we're looking at whether we can start those share repurchases earlier I would range that and say maybe a quarter earlier is what we're thinking but I would just underscore we've still got some work to do.
To really refine that and we'll give an update in a future quarter, but I think just given where leverage is I wanted to least give an indication as to as to where our thinking was.
But I think just given where leverage is, I wanted to at least give an indication as to, as to where our thinking was. With respect to, the second part of your question on, fixed, fixed rate sweep, no change in plan and approach there. It really is about that year-end build that you see in Q4. That's really what drove that down. As the stability of those cash balances really lands in this quarter, and as I talked about, for January so far, it's being a little bit stickier than it has in prior years, then we'll kind of move into the fixed rate market, typically landing, you know, in that low- to mid-60%, where we typically are.
With respect to second part of your question on fixed fixed rate sweep.
Oh hey, good afternoon. Thanks for taking the question. Uh, just wanted to ask around core GNA. I think that your guide applies underlying core GNA growth of 4 and a half to 7% which is a bit of an acceleration from the underlying 4% you put up and and and 25. Um so just hoping you could elaborate on what's driving that acceleration into 26 maybe speak to some of the areas you're investing in across 26 here and maybe if you could also just update us on some of the initiatives that you have across expanding technology capabilities broadening out the platform for advisor. Just what are your priorities here at 26 around that. Thank you.
yeah, you bet I mean I think just to, you know, build a little bit of context on
No change in plan and approach there. It really is about that year end build that you see in Q4, that's really what drove that down.
Matthew Audette: As the stability of those cash balances really lands in this quarter, and as I talked about, for January so far, it's being a little bit stickier than it has in prior years, then we'll kind of move into the fixed rate market, typically landing, you know, in that low- to mid-60%, where we typically are. So that would be the plans for Q1. That being in that 55% zone or, you know, mid- to upper-50% zone, is really about just the year-end build up in December.
As the stability of those cash balances really lands in this quarter and as I talked about.
January so far it's being a little bit stickier than it has in prior years.
Then we will kind of move into the fixed rate market typically landing in that low <unk> low to mid 60%, where we typically are.
So that would be the plans for Q1. That being in that 55% zone or, you know, mid- to upper-50% zone, is really about just the year-end build up in December.
That would be the plans for Q1.
That fit that being in that 55% zone or mid to upper 50% zone. It was really about just a year end buildup in December.
Bill Katz: Thank you both.
Bill Katz: Thank you both.
Thank you both.
Richard Steinmeier: Yep.
Rich Steinmeier: Yep.
Yes.
Operator: Thank you. And our next question comes from the line of Michael Cyprys from Morgan Stanley. Your question, please.
Operator: Thank you. And our next question comes from the line of Michael Cyprys from Morgan Stanley. Your question, please.
Thank you and our next question comes from the line of Michael Cyprus from Morgan Stanley. Your question. Please.
Uh, or reflect a little bit on 2025, um, because our initial outlook for 2025 was 6 to 8%. Um, and even that range would, if you look back at the last 4 or 5 years, would have been the lowest, uh, growth rate. Um, and, uh, to the, you know, the premise or the point of your question, we ended up Landing much lower than that at 4%. Um, which has that, that next year's guide, 4 and a half to 7, be a little bit of an increase, but I, I'd underscore that that is about, um, what we're able to deliver in 2025. Um, that is the lowest growth rate in quite some time, but it really was driven by the cost efficiency work that we were able to deploy, um, and things that are our recurring recurring Savings in structural improvements, um, to how we operate and I think, uh, getting to your, your question on 2026.
Michael Cyprys: Oh, hey, good afternoon. Thanks for taking the question. I just wanted to ask around Core G&A. I think that your guide implies underlying Core G&A growth of 4.5% to 7%, which is a bit of an acceleration from the underlying 4% you put up in 2025. So just hoping you could elaborate on what's driving that acceleration into 2026. Maybe speak to some of the areas you're investing in across 2026 here, and maybe if you could also just update us on some of the initiatives that you have across expanding technology capabilities, broadening out the platform for advisors. Just what are your priorities here at 2026 around that? Thank you.
Michael Cyprys: Oh, hey, good afternoon. Thanks for taking the question. I just wanted to ask around Core G&A. I think that your guide implies underlying Core G&A growth of 4.5% to 7%, which is a bit of an acceleration from the underlying 4% you put up in 2025. So just hoping you could elaborate on what's driving that acceleration into 2026. Maybe speak to some of the areas you're investing in across 2026 here, and maybe if you could also just update us on some of the initiatives that you have across expanding technology capabilities, broadening out the platform for advisors.
Good afternoon. Thanks for taking the question just wanted to ask around core G&A I think that your guide implies underlying core G&A growth growth of four 5% to 7%, which is a bit of an acceleration from the underlying 4% you put up in.
25, so just hoping you could elaborate on what's driving that acceleration into 'twenty six maybe speak to some of the areas you're investing in across 26 here and maybe if you could also just update us on some of the initiatives that you have across expanding technology capabilities broadening out the platform per advisor just what are your priorities here in 'twenty six around that thank you.
Uh, in that 4 and a half to 7. I think we're we we're we're focused on doing a lot of the same, but I would say balancing making sure we're continuing to drive Investments or make investments that really improve. Um, our offering and drive growth and at the same time continuing to make additional Investments, that can really drive a efficiency and scale in the business. I think we're in the early stages of the opportunity. We set, we have to make investments that. Oh, not only allow us to scale better.
Just what are your priorities here at 2026 around that? Thank you.
Richard Steinmeier: Yeah, you bet. I mean, I think just to, you know, build a little bit of context on, or reflect a little bit on 2025, because our initial outlook for 2025 was 6 to 8%. And even that range would, if you look back at the last 4 or 5 years, would have been the lowest, growth rate. And, to the, you know, the premise or the point of your question, we ended up landing much lower than that at 4%.
Rich Steinmeier: Yeah, you bet. I mean, I think just to, you know, build a little bit of context on, or reflect a little bit on 2025, because our initial outlook for 2025 was 6 to 8%. And even that range would, if you look back at the last 4 or 5 years, would have been the lowest, growth rate. And, to the, you know, the premise or the point of your question, we ended up landing much lower than that at 4%.... which has that next year's guide, 4.5 to 7, be a little bit of an increase. But I'd, I'd underscore that that is about what we're able to deliver in 2025.
Yeah, you bet and I think just to build a little bit of context on.
Or reflect a little bit on 2025, because our initial outlook for 2025 was 6% to 8%.
Even that range, but if you look back at the last four or five years would've been the lowest growth rate.
And to the premise you are the point of your question, we ended up landing much lower than that at 4%.
Matthew Audette: ... which has that next year's guide, 4.5 to 7, be a little bit of an increase. But I'd, I'd underscore that that is about what we're able to deliver in 2025. That is the lowest growth rate in quite some time. And it really was driven by the cost efficiency work that we were able to deploy, and things that are recurring savings and structural improvements to how we operate.
Which has that that next year's guide for five to seven be a little bit of an increase but I would underscore that that is about.
What we're able to deliver in 2025 that is the lowest growth rate in quite some time and it really was driven by the cost efficiency work that we were able to deploy it.
That is the lowest growth rate in quite some time. And it really was driven by the cost efficiency work that we were able to deploy, and things that are recurring savings and structural improvements to how we operate. I think, getting to your question on 2026, and at 4.5 to 7, I think we're focused on doing a lot of the same, but I would say balancing, making sure we're continuing to drive investments or make investments that really improve our offering and drive growth, and at the same time continuing to make additional investments that can really drive us efficiency and scale in the business.
And things that are recurring recurring savings in structural improvements.
Two how we operate and I think.
Matthew Audette: I think, getting to your question on 2026, and at 4.5 to 7, I think we're focused on doing a lot of the same, but I would say balancing, making sure we're continuing to drive investments or make investments that really improve our offering and drive growth, and at the same time continuing to make additional investments that can really drive us efficiency and scale in the business. I think we're in the early stages of the opportunity we have, to make investments that will not only allow us to scale better, but also improve the client experience. And I think what you see in that range of even if you look at the midpoint of the range, that still would be one of our lowest growth rates in quite some time.
Getting to your question on 2026 and at four five to seven I think where we're focused on doing a lot of the same but I would say balancing.
But also improve the client experience. Um, and I think what you see in that range of even if you look at the midpoint of the range, uh, that still would be 1 of our lowest growth rates in quite some time. Um, and I think what it reflects is the opportunities that we have to really drive that growth. Um, and I think even when you look at the range, it is a little bit wider than we typically do 4 and a half to 7. So, 2 and a half points versus 2 and that that's also just reflected of the number of initiatives that we have from an automation standpoint from an AI standpoint. Um and you know that the the Precision with which you can predict, when those hit right those things could shift out something that's going to come in Q2 maybe it comes in Q3 that could impact uh the current year a little bit. But I would just underscore our confidence from a run rate standpoint of the opportunity set. We have in front of us to continue to drive efficiencies that improve the bottom line, but also improve our client experience. Um, it's a long list, we're excited about it and I think that's what you see reflected in that guide.
Making sure we're continuing to drive investments or make investments that really improve.
Our offering and drive growth and at the same time continuing to make additional investments that can really drive efficiency and scale in the business. I think we are in the early stages of the opportunity set we have to make investments that will not only allow us to scale better.
I think we're in the early stages of the opportunity we have, to make investments that will not only allow us to scale better, but also improve the client experience. And I think what you see in that range of even if you look at the midpoint of the range, that still would be one of our lowest growth rates in quite some time. And I think what it reflects is the opportunities that we have to really drive that growth. And I think even when you look at the range, it is a little bit wider than we typically do, 4.5 to 7, so 2.5 points versus 2.
But also improve the client experience.
And I think what you see in that range of even if you looked at the midpoint of the range that still would be one of our lowest growth rates in quite some time.
Thank you. And our next question comes from the line of Jeff. Schmitt from William. Blair your question, please. Hi. Good afternoon. Um, for the liquidity and succession solution. Um, and I think you spent a little over 50 million in the quarter, how do the Returns on that look compared to traditional m&a and recruiting? I mean are the are the multiple flat lower and m&a? I know, recruiting you've kind of pointed to that being, maybe 3, maybe 4 times in this environment. So where does that sort of shake out?
Matthew Audette: And I think what it reflects is the opportunities that we have to really drive that growth. And I think even when you look at the range, it is a little bit wider than we typically do, 4.5 to 7, so 2.5 points versus 2. And that's also just reflective of the number of initiatives that we have from an automation standpoint, from an AI standpoint, and, you know, the, the, the precision with which you can predict when those hit, right? Those things could shift out something that's going to come in Q2, maybe it comes in Q3. That could impact the current year a little bit.
And I think what it reflects is the opportunities that we have to really drive that growth.
And I think even when you look at the range. It is a little bit wider than we typically do for five to seven so $2 five points versus two in that that's also just reflected of the number of initiatives that we have from an automation standpoint from an AI standpoint.
And that's also just reflective of the number of initiatives that we have from an automation standpoint, from an AI standpoint, and, you know, the, the, the precision with which you can predict when those hit, right? Those things could shift out something that's going to come in Q2, maybe it comes in Q3. That could impact the current year a little bit. But I would just underscore our confidence from a run rate standpoint of the opportunity set we have in front of us to continue to drive efficiencies that improve the bottom line, but also improve our client experience.
And the the precision with which you can predict when those hit right those things could shift out something that's going to come in Q2, maybe it comes in Q3 that could impact the current year, a little bit, but I would just underscore our confidence from a run rate standpoint of the opportunity set we have in front of us to continue to drive efficiencies.
Matthew Audette: But I would just underscore our confidence from a run rate standpoint of the opportunity set we have in front of us to continue to drive efficiencies that improve the bottom line, but also improve our client experience. It's a long list. We're excited about it, and I think that's what you see reflected in that guide.
That improved the bottom line, but also improve our client experience.
It's a long list. We're excited about it, and I think that's what you see reflected in that guide.
It's a long list, we're excited about it and I think that's what you see reflected in that guidance.
Yeah. The Jeff on Ellen asks like from a from our our target m&a range that we we typically operate in is that 6 to 8 times um and LNS operates right in that range. Um, but I think a couple things that I think are a little bit different when you think about LNS, not only, uh, the quality of earnings, right? The economics that you're acquiring, for 6 to 8 times in LNS, um, is is 100%. Recurring non-cash sweep? Uh, I'm earning. So there's a higher quality there. Um, and then I think that the Strategic benefits of just really, when you think about the life cycle of something that goes through an LNS from acquiring it um to helping transition to the Next Generation. Uh, helping them get to a place where they've grown and earned back the ability to buy back that practice. Um, and during that entire time, working with them in our lindco model uh to really position them to to Really you use us as a leverage point on nearly everything.
Operator: Thank you. Our next question comes from the line of Jeff Schmitt from William Blair. Your question, please.
Operator: Thank you. Our next question comes from the line of Jeff Schmitt from William Blair. Your question, please.
Thank you and our next question comes from the line of Jeff Schmitt from William Blair. Your question. Please.
Jeff Schmitt: Hi, good afternoon. For the Liquidity and Succession solution, and I think you spent a little over $50 million in the quarter, how do the returns on that look compared to traditional M&A and recruiting? I mean, are the multiples a lot lower in M&A? I know recruiting, you've kind of pointed to that being maybe 3, maybe 4 times in this environment. So where does that sort of shake out?
Jeff Schmitt: Hi, good afternoon. For the Liquidity and Succession solution, and I think you spent a little over $50 million in the quarter, how do the returns on that look compared to traditional M&A and recruiting? I mean, are the multiples a lot lower in M&A? I know recruiting, you've kind of pointed to that being maybe 3, maybe 4 times in this environment. So where does that sort of shake out?
Good afternoon.
The liquidity and succession solution.
You've spent a little over $50 million in the quarter.
How do the returns on that look compared to traditional M&A and recruiting.
Are the multiples a lot lower in M&A I know recruiting you've kind of pointed to that being maybe three maybe four times in this environment, So where does that sort of shake out.
There's that's uh, 100% non-cash weave economics that you're acquiring.
Matthew Audette: Yeah, Jeff, on LNS, like, from our target M&A range that we typically operate in, is at 6 to 8 times. And LNS operates right in that range. But I think a couple of things that I think are a little bit different when you think about LNS, not only the quality of earnings, right? The economics that you're acquiring for 6 to 8 times in LNS is 100% recurring non-cash sweep earnings. So there's a higher quality there. And then I think the strategic benefits of just really when you think about the life cycle of something that goes through an LNS, from acquiring it to helping transition to the next generation, helping them get to a place where they've grown and earn back the ability to buy back that practice.
Rich Steinmeier: Yeah, Jeff, on LNS, like, from our target M&A range that we typically operate in, is at 6 to 8 times. And LNS operates right in that range. But I think a couple of things that I think are a little bit different when you think about LNS, not only the quality of earnings, right? The economics that you're acquiring for 6 to 8 times in LNS is 100% recurring non-cash sweep earnings. So there's a higher quality there.
Yeah, the javelin Elena like from a from our target M&A range that we typically operated is at six to eight times.
Okay, great. Thank you.
L. A N S operates right in that range, but I think a couple of things that I think we're a little bit different when you think about <unk> not only are the.
Thank you. And our next question comes from the line of Wilma Burgers from Raymond James, your question, please?
Hey, good evening. Um, do you think there's
The quality of earnings right. The economics that you are acquiring for six to eight times and O&M.
Some interest rates where we'll start to see more cash build and if so, are we starting to approach that level?
Is 100% recurring noncash we.
Earnings So there is a higher quality there.
And then I think the strategic benefits of just really when you think about the life cycle of something that goes through an LNS, from acquiring it to helping transition to the next generation, helping them get to a place where they've grown and earn back the ability to buy back that practice. And during that entire time, working with them in our Linsco model, to really position them to really use us as a leverage point on nearly everything except for focusing on their clients and being able to grow them.
And maybe you could just talk a little bit about uh the rate Cuts in 4225 and how that may or may not have contributed to some Bill in the quarter. Thanks.
And then I think the strategic benefits of just really when you think about the lifecycle of something that goes through on a <unk> from acquiring it to.
yeah, I think when when you look at Cash Cash, balances and I think we have been
To helping transition to the next generation, helping them get to a place where they've grown and earn back the ability to buy back that practice endure.
Matthew Audette: And during that entire time, working with them in our Linsco model, to really position them to really use us as a leverage point on nearly everything except for focusing on their clients and being able to grow them. When you just think about, you know, the practice in any LNS opportunity, the practice we acquired, versus once it is now fully in the hands of the next generation, you know, they're set up to be, you know, more efficient, faster growing, and a higher quality advisor practice as well. So there's a lot of benefits that just go beyond the pure economics, but to underscore the economics, it's the same range, 6 to 8 times, but it's a higher quality earnings because that's 100% non-cash sweep economics that you're acquiring.
And during that entire time working with them in our <unk> model to really position them to really use us as a leverage point on nearly everything except for focusing on their clients and being able to grow them. When you just think about the practice and any LMS opportunity in the practice, we acquired versus once it is now fully.
When you just think about, you know, the practice in any LNS opportunity, the practice we acquired, versus once it is now fully in the hands of the next generation, you know, they're set up to be, you know, more efficient, faster growing, and a higher quality advisor practice as well. So there's a lot of benefits that just go beyond the pure economics, but to underscore the economics, it's the same range, 6 to 8 times, but it's a higher quality earnings because that's 100% non-cash sweep economics that you're acquiring.
In the hands of the next generation.
They're set up to be more efficient faster growing and higher quality adviser practices, well theres a lot of benefits that just go beyond the pure economics, but underscore the economics at the same range six to eight times.
But it's a higher quality earnings because that's.
100% noncash, we economics that you acquired.
Um, when you think about the operational nature of them and where just looking at the fourth quarter, um, and that build, um, that you typically that you typically see and you saw in December, kind of kind of putting those Dynamics aside, like when you look at the average balances per account. Um, they've been, they've been quite stable for quite some time. And they'll, you know, rounding to about 5,000 of manage an account. We've really reached those levels. Um, and I think that's why you saw that bigger than typical build in the month of December. Um, so to get to your point, I think when we, when we look ahead, um, as rates come down and kind of, where do we think cash? Sweep is going, and I think there's a bias to being stable to up, just giving us at the levels. Um, that are really necessary to, to manage the account. We've seen that, we've seen that stability for for a few quarters. Last couple quarters.
Jeff Schmitt: Okay, great. Thank you.
Jeff Schmitt: Okay, great. Thank you.
Okay, great. Thank you.
Operator: Thank you. Our next question comes from the line of Wilma Burdis from Raymond James. Your question, please.
Operator: Thank you. Our next question comes from the line of Wilma Burdis from Raymond James. Your question, please.
Thank you and our next question comes from the line of <unk> from Raymond James Your question. Please.
Wilma Burdis: Hey, good evening. Do you think there's some level of short-term interest rates where we'll start to see more cash build? And if so, are we starting to approach that level? And maybe you could just talk a little bit about the rate cuts in Q4 2025 and how that may or may not have contributed to some build in the quarter. Thanks.
Wilma Burdis: Hey, good evening. Do you think there's some level of short-term interest rates where we'll start to see more cash build? And if so, are we starting to approach that level? And maybe you could just talk a little bit about the rate cuts in Q4 2025 and how that may or may not have contributed to some build in the quarter. Thanks.
Hey, good evening.
There's some level of short term interest rates, where we will start to see more cash build and if so are we starting to approach that level.
That average balance per account is actually grown. Um, so I think that's a dynamic there. Um, you know, the, the individual rate cut in or cut or 2 in the quarter? Uh, well, I don't think that typically would would uh, would really drive that. I think what moved cash balances in the quarter is that that seasonal build for rebalancing and tasks lost harvesting and things like that.
Thank you.
And maybe you can just talk a little bit about the rate cuts in <unk> 25, and how that may or may not have contributed to some bill in the quarter. Thanks.
Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Rich steinmeier for any further remarks.
Matthew Audette: Yeah, I think when you look at cash balances, and I think we have been, when you think about the operational nature of them, and we're just looking at the fourth quarter, in that build that you typically see and you saw in December, kind of putting those dynamics aside. Like, when you look at the average balances per account, they've been quite stable for quite some time, and those, you know, rounding to about $5,000, which I think when you think about the cash necessary to manage an account, we've really reached those levels. I think that's why you saw that bigger than typical build in the month of December.
Rich Steinmeier: Yeah, I think when you look at cash balances, and I think we have been, when you think about the operational nature of them, and we're just looking at the fourth quarter, in that build that you typically see and you saw in December, kind of putting those dynamics aside. Like, when you look at the average balances per account, they've been quite stable for quite some time, and those, you know, rounding to about $5,000, which I think when you think about the cash necessary to manage an account, we've really reached those levels. I think that's why you saw that bigger than typical build in the month of December.
Yeah, I think when when you look at cash cash balances and I think we have been.
Thank you all for joining us. We look forward to speaking with you again, in April, have a good night.
When you think about the operational nature of them and we're just looking at the fourth quarter and that build that you typically you typically see and you saw in December kind of kind of putting those dynamics aside like when you look at the average balances per account they've.
Thank you, ladies and gentlemen, if you participation in today's conference, this does conclude the program. You may now disconnect good day.
They've been they've been quite stable for quite some time in the rounding to about $5000, which I think when you think about the cash necessary to manage an account we've really reached those levels.
And I think that's why you saw that bigger than typical build in the month of December.
Matthew Audette: So to get to your point, I think when we, when we look ahead, as rates come down and kind of where do we think cash sweep is going, I think there is a bias to being stable to up, just given it's at the levels that are really necessary to, to manage the account. We've seen that, we've seen that stability for, for a few quarters. Last couple of quarters, that average balance per account has actually grown. So I think that's the dynamic there. You know, the, the individual rate cut in, cut or two in the quarter, Wilma, I don't think that typically would, would, would really drive that. I think what moved cash balances in the quarter is that, that seasonal build for rebalancing, tax-loss harvesting, and things like that.
So to get to your point, I think when we, when we look ahead, as rates come down and kind of where do we think cash sweep is going, I think there is a bias to being stable to up, just given it's at the levels that are really necessary to, to manage the account. We've seen that, we've seen that stability for, for a few quarters. Last couple of quarters, that average balance per account has actually grown. So I think that's the dynamic there.
So to get to your point I think when we when we look ahead as rates come down and kind of where do we think cash sweep is going I think there is a bias to being stable to up just given its at the levels.
That are really necessary to manage the account we've seen that we've seen that stability for a few quarters last couple of quarters that average balance per account has actually grown.
So I think that's the dynamic there.
You know, the, the individual rate cut in, cut or two in the quarter, Wilma, I don't think that typically would, would, would really drive that. I think what moved cash balances in the quarter is that, that seasonal build for rebalancing, tax-loss harvesting, and things like that.
The individual rate cut in a cut or two in the quarter are women I don't think that typically would what would really drive that I think what move cash balances in the quarter is that seasonal build for rebalancing and tax loss harvesting and things like that.
Wilma Burdis: Thank you.
Wilma Burdis: Thank you.
Thank you.
Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Rich Steinmeier for any further remarks.
Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Rich Steinmeier for any further remarks.
Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to rich for any further remarks.
Matthew Audette: Thank you all for joining us. We look forward to speaking with you again in April. Have a good night.
Rich Steinmeier: Thank you all for joining us. We look forward to speaking with you again in April. Have a good night.
Thank you all for joining US we look forward to speaking with you again in April have a good night.
Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
