By Andrew Welsch

LPL Financial reported second quarter earnings that missed Wall Street estimates as expenses grew more quickly than revenue. Analysts' discussion on the company's earnings call quickly turned the future and LPL's acquisition of Commonwealth Financial Network, which LPL said it now expects to close Friday Aug. 1. CEO Rich Steinmeier struck an optimistic note, saying LPL is on track to meet its advisor retention goals.

For the quarter ending June 30, LPL reported earnings per share of $3.40, up 5% from a year ago. Analysts had expected the wealth management company to report EPS of $3.52, according to FactSet.

LPL's second-quarter revenue was $3.8 billion, in line with Wall Street estimates. For the same period a year ago, LPL reported EPS of $3.23 and revenue of $2.9 billion. On an adjusted basis, LPL reported second-quarter EPS of $4.51 compared with Wall Street expectations of $4.23.

LPL's stock was up 1.08% in after-hours trading. Shares of LPL ended Thursday down 0.82% compared with a 0.37% decline for the S&P 500.

LPL's expenses rose 33% year over year to $3.5 billion due partly to higher promotional and marketing spending as well as borrowing costs. Revenue increased 31%, with a large jumps in commission and advisory revenue.

LPL has become one of the nation's largest wealth management companies through aggressive advisor recruiting and acquisitions. Earlier this year, the San Diego-based company said it would acquire Commonwealth, an independent broker-dealer, that has approximately 2,900 financial advisors and $285 billion of brokerage and advisory assets. On Thursday, LPL said that it expects to move the advisors and client accounts to its platform in the fourth quarter of 2026.

The success of the acquisition will hang on LPL's ability to retain the advisors and their clients. When advisors switch firms, they typically take clients with them. LPL is targeting a retention rate of 90%. Rival firms are trying to recruit Commonwealth advisors to their platforms and in many cases offering lucrative signing bonuses.

Steinmeier, who has led LPL since October, told analysts on the earnings call that LPL's leadership has been making its case to Commonwealth advisors for why they should stay on with LPL after the acquisition closes. LPL executives and recruiting staff have been meeting with advisors in person and hosting them at LPL corporate offices.

"We have had four months of fever-pitched engagement and we have gotten to better know the [Commonwealth] leadership team, advisors, and employees," Steinmeier said.

He credited Commonwealth's "setting the standard for advisor service," and reiterated that LPL intends to maintain Commonwealth's brand and community. Commonwealth CEO Wayne Bloom will join the LPL management committee as a managing director, the company said Thursday. "As we have stated continually, we are committed to maintaining that advisor experience and brand, and in fact improving it with our capabilities," Steinmeier said.

So far, only a few Commonwealth advisors have left to join competitors or launch their own registered investment advisory firms. Steinmeier acknowledged not all advisors would stay, but repeated that LPL is on track to meet its 90% retention goal. "I feel good," he said. "We have engaged with so many Commonwealth advisors."

Market roller coaster. LPL's assets got a boost from market appreciation and customers adding more money their accounts. Total advisory and brokerage assets increased 28% year over year to $1.9 trillion, according to the company. Organic net new assets came in at $21 billion for the quarter, representing 5% annualized growth, according to LPL. That compares with $29 billion for the same period in 2024.

The second quarter is typically a challenging one for asset-gathering because clients withdraw money from accounts to pay taxes in April. This year presented additional challenges as U.S. stocks plunged due to President Donald Trump's tariff announcements, and then rebounded after he delayed implementation of some tariffs. Other brokerage and wealth management companies reported a surge in investor trading activity as customers bought the dip.

Write to Andrew Welsch at andrew.welsch@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 31, 2025 18:47 ET (22:47 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.