LPL Financial Holdings Inc.LPLA
LPL Financial Holdings Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
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Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
There have been no transfers of assets or liabilities between these fair value measurement classifications during the years ended December 31, 2025 or 2024.
The Company’s fair value measurements are evaluated within the fair value hierarchy based on the nature of inputs used to determine the fair value at the measurement date. At December 31, 2025 and 2024, the Company had the following financial assets and liabilities that are measured at fair value on a recurring basis:
Cash Equivalents — The Company’s cash equivalents primarily include money market funds and U.S. government obligations, which are short term in nature with readily determinable values derived from active markets.
Cash Equivalents Segregated Under Federal or Other Regulations — The Company’s cash equivalents segregated under federal or other regulations include U.S. treasury bills, which are short term in nature with readily determinable values derived from active markets.
Restricted Cash— The Company’s restricted cash is primarily composed of U.S. government obligations and money market funds which are short term in nature with readily determinable values derived from active markets.
Trading Securities and Securities Sold, But Not Yet Purchased — The Company’s trading securities consist of house account model portfolios established and managed for the purpose of benchmarking the performance of its fee-based advisory platforms and temporary positions resulting from the processing of client transactions.
The Company uses prices obtained from independent third-party pricing services to measure the fair value of its trading securities. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. In general, these quoted prices are derived from active markets for identical assets or liabilities. When quoted prices in active markets for identical assets and liabilities are not available, the quoted prices are based on similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. For negotiable certificates of deposit and treasury securities, the Company utilizes market-based inputs, including observable market interest rates that correspond to the remaining maturities or the next interest reset dates. At December 31, 2025 and 2024, the Company did not adjust prices received from the independent third-party pricing services.
Other Assets — The Company’s other assets include: (1) deferred compensation plan assets that are invested in life insurance, money market and other mutual funds, which are actively traded and valued based on quoted market prices, and (2) certain non-traded real estate investment trusts, which are valued using quoted prices for identical or similar securities and other inputs that are observable or can be corroborated by observable market data.
Fractional Shares — The Company’s investment in fractional shares held by customers is reflected in other assets while the related purchase obligation for such shares is reflected in other liabilities. The Company uses prices obtained from independent third-party pricing services to measure the fair value of its investment in fractional shares held by customers and the related repurchase obligation. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. At December 31, 2025 and 2024, the Company did not adjust prices received from the independent third-party pricing services.
Contingent Consideration — The Company measures contingent consideration liabilities at fair value at the acquisition date, as applicable, and thereafter on a recurring basis using unobservable (Level 3) inputs. These contingent consideration liabilities are reflected in other liabilities. See Note 2 - Summary of Significant Accounting Policies and Note 4 - Acquisitions for additional information.
Level 3 Recurring Fair Value Measurements
The Company determines the fair value for its contingent consideration obligations using probability weighted and Monte-Carlo simulation models. Contingent payments are estimated by applying significant unobservable inputs, including forecasted growth rates applied to project future revenue or asset growth, conversion or retention rates, and discount rates which are based on the cost of debt and equity. These projections are measured against the performance targets specified in each respective acquisition agreement, which may include growth in assets under management, net new assets, asset conversion or retention, or revenue growth. Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement.
The following tables summarize inputs used in the measurement of contingent consideration (dollars in thousands):
| Quantitative Information About Level 3 Fair Value Measurements | ||||||||||||||||||||
| December 31, 2025 | Type | Valuation Techniques | Unobservable Inputs | Range | ||||||||||||||||
| $ | 115,464 | Contingent Consideration | Monte-Carlo Simulation Model | Forecasted Growth Rates | 1.3 | % | - | 26.0 | % | |||||||||||
| Discount Rate | 12.0 | % | - | 17.9 | % | |||||||||||||||
Equivalency Rate(1) | 4.7 | % | - | 5.9 | % | |||||||||||||||
| 8,574 | Contingent Consideration | Probability Weighted Expected Return Method | Equivalency Rate(1) | 5.3 | % | - | 5.3 | % | ||||||||||||
Conversion Rate | — | % | - | 100.0 | % | |||||||||||||||
| $ | 124,038 | |||||||||||||||||||
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(1)Equivalency rate is defined as the prevailing market interest rate used to discount future payments.
| Quantitative Information About Level 3 Fair Value Measurements | ||||||||||||||||||||
| December 31, 2024 | Type | Valuation Techniques | Unobservable Inputs | Range | ||||||||||||||||
| $ | 170,343 | Contingent Consideration | Monte-Carlo Simulation Model | Forecasted Growth Rates | 2.0 | % | - | 29.5 | % | |||||||||||
| Discount Rate | 10.5 | % | - | 18.0 | % | |||||||||||||||
Equivalency Rate(1) | 4.9 | % | - | 5.8 | % | |||||||||||||||
| 26,555 | Contingent Consideration | Probability Weighted Expected Return Method | Equivalency Rate(1) | 5.7 | % | - | 5.7 | % | ||||||||||||
Conversion Rate | — | % | - | 100.0 | % | |||||||||||||||
| $ | 196,898 | |||||||||||||||||||
The following table summarizes the changes in fair value for the Company’s Level 3 liabilities during the periods presented (in thousands):
Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
Balance - January 1 | $ | 196,898 | $ | 118,844 | ||||
Additions and purchase accounting adjustments | (3,593) | 97,333 | ||||||
| Payments | (93,430) | (61,000) | ||||||
| Fair value adjustments | 24,163 | 41,721 | ||||||
Balance - December 31 | $ | 124,038 | $ | 196,898 | ||||
Recurring Fair Value Measurements
The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):
| December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | ||||||||||
| Assets | ||||||||||||||
| Cash equivalents | $ | 104,377 | $ | — | $ | — | $ | 104,377 | ||||||
| Cash equivalents segregated under federal or other regulations | 821,334 | — | — | 821,334 | ||||||||||
Restricted cash | 127,585 | — | — | 127,585 | ||||||||||
| Investment securities - trading: | ||||||||||||||
| U.S. treasury obligations | 40,029 | — | — | 40,029 | ||||||||||
| Mutual funds | 33,559 | — | — | 33,559 | ||||||||||
| Equity securities | 2,505 | — | — | 2,505 | ||||||||||
| Debt securities | — | 15 | — | 15 | ||||||||||
| Total investment securities - trading | 76,093 | 15 | — | 76,108 | ||||||||||
| Other assets: | ||||||||||||||
| Deferred compensation plan | 1,097,514 | — | — | 1,097,514 | ||||||||||
Fractional shares - investment(1) | 371,683 | — | — | 371,683 | ||||||||||
| Other investments | — | 2,423 | — | 2,423 | ||||||||||
| Total other assets | 1,469,197 | 2,423 | — | 1,471,620 | ||||||||||
| Total assets at fair value | $ | 2,598,586 | $ | 2,438 | $ | — | $ | 2,601,024 | ||||||
| Liabilities | ||||||||||||||
| Other liabilities: | ||||||||||||||
| Securities sold, but not yet purchased: | ||||||||||||||
| Equity securities | $ | 174 | $ | — | $ | — | $ | 174 | ||||||
| Total securities sold, but not yet purchased | 174 | — | — | 174 | ||||||||||
Fractional shares - repurchase obligation(1) | 371,683 | — | — | 371,683 | ||||||||||
Contingent consideration | — | — | 124,038 | 124,038 | ||||||||||
| Total other liabilities | 371,857 | — | 124,038 | 495,895 | ||||||||||
| Total liabilities at fair value | $ | 371,857 | $ | — | $ | 124,038 | $ | 495,895 | ||||||
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(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s DRIP.
The following table summarizes the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (in thousands):
| December 31, 2024 | Level 1 | Level 2 | Level 3 | Total | ||||||||||
| Assets | ||||||||||||||
| Cash equivalents | $ | 53,672 | $ | — | $ | — | $ | 53,672 | ||||||
| Cash equivalents segregated under federal or other regulations | 672,164 | — | — | 672,164 | ||||||||||
Restricted cash | 100,368 | — | — | 100,368 | ||||||||||
| Investment securities - trading: | ||||||||||||||
| Mutual funds | 13,627 | — | — | 13,627 | ||||||||||
| U.S. treasury obligations | 28,511 | — | — | 28,511 | ||||||||||
| Money market funds | 110 | — | — | 110 | ||||||||||
| Equity securities | 8 | — | — | 8 | ||||||||||
| Debt securities | — | 11 | — | 11 | ||||||||||
| Total investment securities — trading | 42,256 | 11 | — | 42,267 | ||||||||||
| Other assets: | ||||||||||||||
| Deferred compensation plan | 856,843 | — | — | 856,843 | ||||||||||
Fractional shares - investment(1) | 278,683 | — | — | 278,683 | ||||||||||
| Other investments | — | 3,989 | — | 3,989 | ||||||||||
| Total other assets | 1,135,526 | 3,989 | — | 1,139,515 | ||||||||||
| Total assets at fair value | $ | 2,003,986 | $ | 4,000 | $ | — | $ | 2,007,986 | ||||||
| Liabilities | ||||||||||||||
| Other liabilities: | ||||||||||||||
| Securities sold, but not yet purchased: | ||||||||||||||
| Equity securities | 151 | — | — | 151 | ||||||||||
| Debt securities | — | 18 | — | 18 | ||||||||||
| Total securities sold, but not yet purchased | 151 | 18 | — | 169 | ||||||||||
Fractional shares - repurchase obligation(1) | 278,683 | — | — | 278,683 | ||||||||||
Contingent consideration | — | — | 196,898 | 196,898 | ||||||||||
| Total other liabilities | 278,834 | 18 | 196,898 | 475,750 | ||||||||||
| Total liabilities at fair value | $ | 278,834 | $ | 18 | $ | 196,898 | $ | 475,750 | ||||||
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(1)Investment in and related repurchase obligation for fractional shares resulting from the Company’s DRIP.
Fair Value of Financial Instruments Not Measured at Fair Value
The following tables summarize the carrying values, fair values and fair value hierarchy level classification of financial instruments that are not measured at fair value (in thousands):
| December 31, 2025 | Carrying Value | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
| Assets | |||||||||||||||||
| Cash | $ | 933,001 | $ | 933,001 | $ | — | $ | — | $ | 933,001 | |||||||
| Cash segregated under federal or other regulations | 970,730 | 970,730 | — | — | 970,730 | ||||||||||||
| Restricted cash | 97,713 | 97,713 | — | — | 97,713 | ||||||||||||
| Receivables from clients, net | 803,206 | — | 803,206 | — | 803,206 | ||||||||||||
| Receivables from brokers, dealers and clearing organizations | 70,897 | — | 70,897 | — | 70,897 | ||||||||||||
Advisor repayable loans, net(1) | 406,793 | — | — | 335,050 | 335,050 | ||||||||||||
| Other receivables, net | 1,203,539 | — | 1,203,539 | — | 1,203,539 | ||||||||||||
| Investment securities - held-to-maturity securities | 15,420 | — | 15,520 | — | 15,520 | ||||||||||||
| Other assets: | |||||||||||||||||
Deferred compensation plan(2) | 10,038 | 10,038 | — | — | 10,038 | ||||||||||||
| Securities borrowed | 1,789 | — | 1,789 | — | 1,789 | ||||||||||||
Other investments(3) | 7,874 | — | 7,874 | — | 7,874 | ||||||||||||
| Total other assets | 19,701 | 10,038 | 9,663 | — | 19,701 | ||||||||||||
| Liabilities | |||||||||||||||||
| Client payables | $ | 2,308,275 | $ | — | $ | 2,308,275 | $ | — | $ | 2,308,275 | |||||||
| Payables to brokers, dealers and clearing organizations | 150,520 | — | 150,520 | — | 150,520 | ||||||||||||
| Corporate debt and other borrowings, net | 7,258,694 | — | 7,420,447 | — | 7,420,447 | ||||||||||||
| December 31, 2024 | Carrying Value | Level 1 | Level 2 | Level 3 | Total Fair Value | ||||||||||||
| Assets | |||||||||||||||||
| Cash | $ | 913,407 | $ | 913,407 | $ | — | $ | — | $ | 913,407 | |||||||
| Cash segregated under federal or other regulations | 925,085 | 925,085 | — | — | 925,085 | ||||||||||||
| Restricted cash | 19,356 | 19,356 | — | — | 19,356 | ||||||||||||
| Receivables from clients, net | 633,834 | — | 633,834 | — | 633,834 | ||||||||||||
| Receivables from brokers, dealers and clearing organizations | 76,545 | — | 76,545 | — | 76,545 | ||||||||||||
Advisor repayable loans, net(1) | 360,760 | — | — | 281,146 | 281,146 | ||||||||||||
| Other receivables, net | 902,777 | — | 902,777 | — | 902,777 | ||||||||||||
| Investment securities - held-to-maturity securities | 15,214 | — | 15,190 | — | 15,190 | ||||||||||||
| Other assets: | |||||||||||||||||
Deferred compensation plan(2) | 8,742 | 8,742 | — | — | 8,742 | ||||||||||||
| Securities borrowed | 4,811 | — | 4,811 | — | 4,811 | ||||||||||||
Other investments(3) | 7,706 | — | 7,706 | — | 7,706 | ||||||||||||
| Total other assets | 21,259 | 8,742 | 12,517 | — | 21,259 | ||||||||||||
| Liabilities | |||||||||||||||||
| Client payables | $ | 1,898,665 | $ | — | $ | 1,898,665 | $ | — | $ | 1,898,665 | |||||||
| Payables to brokers, dealers and clearing organizations | 129,228 | — | 129,228 | — | 129,228 | ||||||||||||
| Corporate debt and other borrowings, net | 5,494,724 | — | 5,480,389 | — | 5,480,389 | ||||||||||||
(1)Includes repayable loans and forgivable loans which have converted to repayable upon advisor termination or change in agreed upon terms.
(2)Includes cash balances awaiting investment or distribution to plan participants.
(3)Other investments include Depository Trust Company common shares and Federal Reserve stock.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 25, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.