What changed in this filing

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Item 1. Business

2024-02-21 compared with 2023-02-23 · 71 added, 95 removed, 282 unchanged (37% of the section changed)

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We serve more than 22,000 financial advisors, including advisors at approximately 1,100 enterprises and at approximately 570 registered investment advisor (“RIA”) firms nationwide, providing the front-, middle- and back-office support our advisors need.

We offer integrated technology solutions, brokerage and advisory platforms, clearing services, compliance services, consultative practice management programs and training, business services and planning and advice services, and in-house research to help our advisors run successful businesses.

We are steadfast in our commitment to the advisor-mediated advice model and the belief that investors deserve access to personalized guidance from a financial advisor.

Through our comprehensive platform, we offer integrated technology solutions;

brokerage and advisory platforms;

clearing, compliance, business and planning and advice services;

consultative practice management programs and training;

and in-house research to help our advisors deliver advice to their clients and run successful businesses.

We are steadfast in our commitment to the advisor-mediated model and the belief that investors deserve access to personalized guidance from a financial advisor.

We believe advisors should have the freedom to choose the business model, services and technology they need and to manage their client relationships.

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• LPL Financial LLC (“LPL Financial”) is a clearing broker-dealer and an investment adviser that clears and settles customer transactions.

• Fortigent Holdings Company, Inc.

and its subsidiaries (“Fortigent”) provide solutions and consulting services to RIAs, banks and trust companies serving high-net-worth clients.

• LPL Insurance Associates, Inc.

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• LPL Employee Services, LLC and its subsidiary, Allen & Company of Florida, LLC (“Allen & Company”), along with their affiliate, Financial Resources Group Investment Services, LLC (“FRGIS”), provide primary support for the Company’s employee advisor affiliation model.

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At LPL, our mission is to take care of our advisors so they can take care of their clients.

Our vision is to become the leader across the advisor-mediated marketplace by empowering advisors to deliver great advice to their clients and be great operators of their businesses.

Our vision is to become the leader across the advisor-mediated marketplace by empowering advisors to deliver advice to their clients and operate thriving businesses.

In order to achieve this vision, our strategy is to meet advisors and enterprises where they are in the evolution of their businesses, provide capabilities to help advisors differentiate and win investors, create an industry-leading service experience that delights advisors and enterprises and their clients, and help advisors and enterprises run the most successful businesses in the industry.

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In addition, we make meaningful investments in technology and services to support the growth, productivity and efficiency of advisors across a broad spectrum of business models as their practices evolve.

Our advisors are a community of diverse, entrepreneurial financial services professionals who support approximately 7.9 million client accounts.

Our advisors are a community of diverse financial services professionals who support approximately 8.3 million client accounts.

They build long-term relationships with their clients in communities across the United States by guiding them through the complexities of investment decisions, retirement solutions, financial planning and wealth management.

Our services are designed to support the evolution of our advisors’ businesses over time and to adapt as our advisors’ needs change.

The majority of our advisors are independent practitioners who are viewed as local providers of independent advice.

Many of our advisors operate under their own business name, with LPL offering assistance with their branding, marketing and promotion and regulatory review.

We believe we offer a compelling economic value proposition to independent advisors, which is a key factor in our ability to attract and retain advisors and their practices.

The independent channels pay advisors a greater share of advisory fees and brokerage commissions than the captive channels — generally 80-100% compared to 30-50% for captive channels.

Our independent financial advisors are business owners who, unlike their captive counterparts, also have the opportunity to build equity in their own businesses.

Most of our independent financial advisors are business owners who, unlike their captive counterparts, also benefit from building equity value in their own businesses.

We also support advisors through our independent employee advisor affiliation model, where they benefit from a full-service employee relationship with us while generally retaining ownership of their client relationships in exchange for a slightly lower payout than our traditional independent model.

Furthermore, we believe that our technology and service platforms enable our advisors to operate their practices with a greater focus on serving investors at a lower cost than other independent advisors.

Our more than 22,000 advisors average over 20 years in the industry, which generally allows us to focus on supporting and enhancing our advisors’ businesses without needing to provide basic training or subsidizing advisors who are new to the industry.

Our flexible business platform allows our advisors to choose the most appropriate business model to support their clients whether they conduct brokerage business, offer brokerage and/or fee-based services on our corporate RIA platform, or provide fee-based services through their own RIA practices.

The majority of our advisors are independent practitioners who are primarily located in rural and suburban areas and, as such, are viewed as local providers of independent advice.

Many of our advisors operate under their own business name, and we may assist these advisors with their branding, marketing and promotion and regulatory review.

We also support advisors through our independent employee advisor affiliation model, where they benefit from a full-service employee relationship while generally retaining ownership of their clients.

Advisors licensed with LPL Financial as investment advisory representatives are able to conduct fee-based business on our corporate RIA platform, and advisors licensed with LPL Financial as registered representatives are able to conduct commission-based business on our brokerage platform.

Advisors licensed with LPL Financial as investment advisory representatives conduct fee-based business on our corporate RIA platform, and advisors licensed with LPL Financial as registered representatives conduct commission-based business on our brokerage platform.

In order to be licensed with LPL Financial, advisors must be approved through our assessment process, which includes a review of each advisor’s education, experience and compliance history, among other factors.

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These advisors also agree not to engage in any outside business activity without prior approval from us and not to act in competition with us.

LPL Financial also supports over 500 independent RIA firms that conduct their business through separate registered investment advisor firms (“Independent RIAs”) with approximately 5,800 advisors who conduct their advisory business through these separate entities, rather than through our corporate RIA.

Independent RIAs operate

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pursuant to the Investment Advisers Act of 1940, as amended (the “Advisers Act”), or their respective states’ investment advisory licensing rules.

These Independent RIAs engage us for technology, clearing and custody services, as well as access to our investment platforms.

LPL Financial also supports approximately 570 independent RIA firms that conduct their business through separate registered investment advisor firms (“Independent RIAs”) with approximately 6,300 advisors who conduct their advisory business through these separate entities.

Independent RIAs operate pursuant to the Investment Advisers Act of 1940, as amended (the “Advisers Act”), or their respective states’ investment advisory licensing rules.

These Independent RIAs engage us for technology, clearing and custody services, as well as access to our investment platforms and business services.

Advisors associated with Independent RIAs retain 100% of their advisory fees, and in return, we charge separate fees for custody, trading, administrative and support services.

In addition, some financial advisors associated with Independent RIAs carry their brokerage license with LPL Financial and access our fully-integrated brokerage platform under standard terms.

We believe we are the market leader in providing support to over 3,500 financial advisors at approximately 1,100 enterprises nationwide.

In addition, some financial advisors associated with Independent RIAs are registered representatives of LPL Financial and access our fully-integrated brokerage platform under standard terms.

We believe we are the market leader in the enterprise channel, providing support to over 3,600 financial advisors at approximately 1,100 enterprises nationwide.

The core capabilities of these enterprises may not include investment and financial planning services, or they may find the technology, infrastructure and regulatory requirements of supporting such services to be cost-prohibitive.

For these enterprises, we provide their financial advisors with the infrastructure and services they need to be successful, allowing the enterprises to focus more attention and capital on their core businesses.

We also provide support to approximately 3,600 additional financial advisors who are affiliated and licensed with insurance companies.

Finally, we provide support to approximately 3,800 additional financial advisors who are affiliated and licensed with insurance companies.

These arrangements allow us to provide outsourced customized clearing, advisory platforms and technology solutions that enable the financial advisors at these insurance companies to offer a breadth of services to their client base in an efficient manner.

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We support our advisors by providing front-, middle- and back-office solutions through our distinct value proposition:

integrated technology solutions, comprehensive clearing services, compliance services, consultative practice management programs and training, business services and planning and advice services, and in-house research.

The comprehensive and increasingly automated nature of our offering enables our advisors to focus on their clients while successfully and efficiently managing the complexities of running their own practice.

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• inspecting branch offices and advising on how to strengthen compliance procedures.

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Consultative Practice Management Programs and Training

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Our business services portfolio includes professional services and business optimizer offerings.

Professional services offerings, including CFO Solutions, Marketing Solutions, Admin Solutions, Bookkeeping and Partial Book Sales, are digital and employee-powered solutions that provide practice management expertise to support growth and operational efficiency.

Professional services offerings, including CFO Solutions, Marketing Solutions, Admin Solutions, Advisor Institute, Bookkeeping, Partial Book Sales, and CFO Essentials are digital and employee-powered solutions that provide expertise to increase business-level growth and operational efficiency.

Business optimizer offerings, including M&A Solutions, Digital Office, Resilience Plans and Assurance Plans, are digital solutions that provide risk mitigation and business continuity services to support practice operations and succession planning.

Planning and advice services were launched in January of 2022 and are digital and employee-powered solutions that help advisors expand the breadth and depth of their advice.

Our planning and advice services are digital and employee-powered solutions that help advisors and enterprises expand the breadth and depth of their advice in areas such as tax planning, paraplanning and private client support for high-net-worth relationships.

The focus of planning and advice services is helping advisors increase marketplace differentiation while limiting additional complexity and risk.

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Fee-Based Platforms and Support

We have various fee-based platforms that provide centrally managed or customized solutions from which advisors can choose to meet the investment needs of their clients, including wrap-fee programs, mutual fund asset allocation programs, an advisor-enhanced digital advice program, advisory programs offered by third-party investment advisor

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firms, financial planning services and retirement plan consulting services.

The fee structure of our platforms enables our advisors to provide their clients with higher levels of service while establishing a recurring revenue stream for the advisor and for us.

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• We have managed our capital allocation framework and expenditures such that we have been able to both invest in our business and return capital to stockholders.

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Our Competitive Strengths

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Flexibility of Our Business Model

Our business model allows our advisors the freedom to choose how they conduct their business, subject to certain regulatory parameters, which has helped us attract and retain advisors from multiple channels, including wirehouses, regional broker-dealers, RIAs and other independent broker-dealers.

Our platform can accommodate a variety of independent advisor business models, including independent financial advisors, RIAs and employee advisors.

Our platform can accommodate a variety of independent advisor business models, including financial advisors as independent contractors, employee advisors and Independent RIAs.

The flexibility of our business model enables our advisors to select their preferred affiliation model and product mix as their business evolves and preferences change within the market or their client base all within an environment that allows for evolution with minimal interruption to their business and their clients.

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We believe the productivity of our advisors has the potential to increase over time as we continue to develop solutions designed to enable them to add new clients, manage more of their clients’ investable assets and expand their existing practices with additional advisors.

We expect to facilitate these productivity improvements by helping our advisors better manage their practices in an increasingly complex external environment, which we believe has

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the potential to result in the assets per advisor growing over time.

We expect to facilitate these productivity improvements by helping our advisors better manage their practices in an increasingly complex external environment, which we believe has the potential to result in the assets per advisor growing over time.

Business services and planning and advice services are a source of organic growth as a larger share of advisors adopts these service solutions.

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We have also experienced momentum from a continued expansion of our advisor affiliation models, which has attracted prospects from new sources.

Finally, we have opened up a new market with our newest enterprise affiliation model.

This resulted in relationships with M&T Bank Corporation and BMO Harris Financial Advisors that we began during 2021 and the onboarding of CUNA Brokerage Services, Inc.

and People’s United Bank in 2022.

Finally, we have opened up a new market with our newest enterprise affiliation model resulting in strategic relationships with M&T Bank Corporation, BMO Harris Financial Advisors, CUNA Brokerage Services, Inc., People’s United Bank, Bancwest Investment Services and Commerce Financial Advisors.

Most recently, we announced an agreement with Prudential to transition the brokerage and investment advisory assets of Prudential Advisors, Prudential’s retail wealth management business, from its current third-party custodian to the Company’s Institution Services platform in the second half of 2024, subject to receipt of regulatory approval and other conditions.

Related investments in our enterprise platform have generated interest from new enterprise clients.

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As of December 31, 2023, we had approximately 8,400 full-time employees, all of whom are located in the U.S.

Of our employees, approximately 49% self-identify as women and 40% self-identify as Black, Indigenous, or People of Color.

Approximately 49% of our employees self-identify as women and 40% self-identify as Black, Indigenous or People of Color.

Talent Management and Culture

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Our Company’s senior leaders have an opportunity to receive a portion of their compensation in Company equity, and, subject to a cap, we match the contributions of all of our employees to our retirement savings plan to help support their long-term financial goals.

We also offer an employee stock

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purchase plan that enables eligible employees to acquire an ownership interest in our company at a discount to prevailing market prices.

We also offer an employee stock purchase plan that enables eligible employees to acquire an ownership interest in our Company at a discount to prevailing market prices.

We offer an array of benefits intended to meet the diverse needs of our employees and their eligible dependents.

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short-term and long-term disability insurance;

and the LPL Live Well employee wellbeing program, which includes a mental health support program with quick access to therapy and counseling.

and the LPL Live Well employee wellbeing program, which supports employees and their family members in their wellness journeys as well as offering targeted and focused programming for mental health, Type 2 Diabetes care and maternity management.

As a Fortune 500 company focused on innovation and growth, talent drives the success of our company.

Therefore, we are focused on attracting, developing and retaining our employees.

To reach a diverse pool of potential talent, we are continually in the market and take a multi-faceted approach to recruiting in pursuit of diverse, entrepreneurial and dedicated team members.

Therefore, we are focused on attracting and retaining our employees.

To reach a diverse pool of talent, we are continually in the market and take a multi-faceted approach to recruiting in pursuit of diverse, entrepreneurial and dedicated team members.

By expanding our reach and sourcing efforts and implementing diverse recruitment methods, we seek to create a workforce representative of the communities and partners we serve.

We continue to invest in talent recruitment channels to introduce younger generations to the opportunities within wealth management and financial services.

We continue to invest in talent recruitment channels to introduce emerging talent to the opportunities within wealth management and financial services.

As part of our university recruitment strategy, we have expanded partnerships with colleges and universities in the local communities we serve and beyond.

We continuously seek ways to collaborate with students, faculty and diverse campus organizations to increase exposure and opportunities for students.

LEAP, our Leadership Excellence and Achievement Program, encompasses the Company’s early talent initiatives and offers internship, part time and full time opportunities to develop the next generation of leaders.

LEAP, our Leadership Excellence and Achievement Program, encompasses the Company’s emerging talent initiatives and offers internship, part time and full time opportunities to develop the next generation of leaders.

Training and Development

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To ensure that new employees integrate into our culture and their daily work, we provide a robust new-hire experience, as well as extensive ongoing training for existing employees to acquaint them with our business.

We require all of our employees to complete courses in key regulatory areas, such as insider trading and anti-money laundering compliance, and we offer professional development opportunities through training sessions and cross-departmental workshops, resulting in over 140,000 completed courses and workshops and approximately 134,000 development hours for our employees .

In addition, we have mentorship programs that pair newer employees with more experienced professionals, giving mentees access to experience, expertise, and guidance.

Finally, to help employees determine the next steps in their careers, we have a Career Growth Portal that provides employees with tools, resources, training courses and assessments as they chart their career paths.

We require all of our employees to complete courses in key regulatory areas, such as insider trading and anti-money laundering compliance, and we offer professional development opportunities through training sessions, on-demand learning and cross-departmental workshops, resulting in over 170,000 completed courses and workshops and approximately 200,000 development hours for our employees .

In addition, we have mentorship programs that pair employees with more experienced professionals, giving mentees access to experience, expertise, and guidance.

To help employees determine the next steps in their careers, we continue to provide a Career Growth Portal that provides employees with tools, resources, training courses and assessments as they chart their career paths.

Lastly, we have created skills cards with curated content targeting key skills and desired capabilities to help employees develop.

Employee Safety

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We are committed to providing a workplace that is free from violence, harassment and other unsafe or disruptive conditions and require our personnel to attend regular training sessions and workshops on those topics.

To promote health and safety in our workplace, we implemented a work-from-home-or-office practice that enables employees in many positions to choose whether to work remotely and/or on-site.

For our employees working in our offices (including our on-site essential workers), we continue to maximize outdoor air intake and air filtration.

In addition, we have installed integrated ionic air purification systems into the HVAC systems of our large office locations.

We believe we continue to support all health and safety requirements in effect, and we continue to provide leaves of absence and workplace accommodations to support employees with mental health concerns, daycare challenges or distance learning for their children and dependents.

To promote health and safety in our workplace, we have an environment, health and safety function that partners with others across the organization to support compliance with applicable workplace health and safety requirements.

We also have a cross-functional team, with members who have been trained to conduct threat assessments to support workplace violence prevention.

We provide leaves of absence and workplace accommodations, and we provide employees with the flexibility to support their individual circumstances, where possible.

In addition, the LPL Financial Foundation continues to support the LPL Care Fund, an employee-to-employee relief fund created to help employees facing unexpected and unavoidable financial hardships as a result of a natural disaster or epidemic by providing tax-free grants .

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Our diversity, equity and inclusion (“DEI”) efforts are overseen by our chief executive officer, chief human capital officer and chief diversity officer.

In 2022, the management committee received quarterly updates on these metrics,

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and they approved a requested financial investment in our DEI program.

In addition, our Board of Directors (the “Board”) also received updates during regularly scheduled quarterly meetings.

We believe that well-being is more than just physical safety and that our employees should feel welcome and supported as who they are.

We seek to foster diversity and a culture of inclusivity.

Our employee-led resource groups focus on the needs, concerns and experiences of various diverse groups to help leaders drive business outcomes.

In addition, our professional development and recruitment efforts have focused on improving the diversity of our employee population, including through targeted outreach to and collaborations with organizations that serve diverse populations.

Continuous improvement is a pillar of our culture, and we regularly solicit employee feedback on the effectiveness and quality of our support programs and their level of engagement with our business.

In 2023, the management committee received quarterly updates on DEI-related issues.

Our Board of Directors, its compensation and human resources committee and its nominating and governance committee, which oversees our environmental, social and governance program, also received multiple updates on our progress in this area.

At LPL, we believe that well-being is more than just physical safety and that our employees should feel welcome and supported as who they are.

We seek to foster a culture of inclusivity.

Our employee-led resource groups give voice to the needs, concerns and experiences of various diverse groups so that our leaders can ensure that all employees, regardless of background, are valued, respected and fully supported.

Continuous improvement is a pillar of our culture, and we regularly solicit employee feedback on the effectiveness and quality of our programs, including our diversity and inclusion programs, and their level of engagement with our business.

We use this feedback to improve our programs and processes and inform decisions about our business.

In addition, we closely monitor employee turnover, both in the aggregate and in key subcategories such as diversity and levels in the Company, to evaluate our effectiveness in retaining critical personnel.

We are committed to an inclusive work environment to encourage and cultivate diversity of thought and ideas within the organization.

We sponsor Employee Resource Groups (with representation including but not limited to groups for individuals who identify as African-American, Asian-American and Pacific Islander, Hispanic, LGBTQ, Veterans, Women and People with Disabilities) to leverage the individual talents, perspectives and experiences of our employees to position us for continued growth and success.

The DEI talent attraction efforts are centered on strengthening relationships with community partners, particularly historically Black colleges and universities, where we have hosted several career fairs.

These efforts helped create a 2022 class of interns where over 70% identified as a woman and/or as Black, Indigenous, or a Person of Color.

We continue to improve our non-traditional recruitment channels as well, investing in new methodologies in 2022 to identify underrepresented pools of candidates and working with executive search firms that present diverse candidates.

We also focus our efforts on providing advancement opportunities for employees underrepresented in the financial industry.

Our flagship Emerging Leaders Program virtually hosted a diverse group of top talent leaders with keynotes, small groups, real-world practice and collaborative community discussions to further enhance their leadership capabilities.

In addition, we have partnered for the twelfth year with Linkage’s Women in Leadership Institute to send women leaders to the annual conference for learning and networking opportunities.

We continued our partnership and participation in the McKinsey Black Leadership Academy and expanded participation in the McKinsey Asian Leadership Academy and the McKinsey Hispanic/Latin Leadership Academy in 2022.

In furtherance of our commitment to cultivating diversity of thought and ideas within the organization, we sponsor and encourage all of our team members to participate in Employee Resource Groups to leverage the individual

talents and share the perspectives and experiences of our employees across all demographics.

These include, but are not limited to, groups open to all employees focusing on the experience of individuals who identify as African-American, Asian-American and Pacific Islander, Hispanic, LGBTQ, Veterans, Women, People with Disabilities and Working Parents.

Finally, our professional development and recruitment efforts include targeted outreach to and collaborations with organizations that serve historically underserved and underrepresented populations.

We closely monitor employee turnover across a variety of dimensions to evaluate our effectiveness in retaining personnel.

In addition, our DEI talent attraction efforts are centered on strengthening relationships with community partners, particularly historically Black colleges and universities.

Our goal has been to broaden the pool of talented applicants to include groups historically underrepresented so that we can truly reach the best candidates, and our efforts towards this goal helped create a 2023 class of interns with significant representation by people identifying as a woman and/or as Black, Indigenous or a Person of Color.

The financial services industry is subject to extensive regulation by U.S.

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Broker-Dealer Regulation

LPL Financial and FRGIS are registered broker-dealers.

LPL Financial is a clearing broker-dealer registered with the SEC, a member of the Financial Industry Regulatory Authority (“FINRA”) and a participant in various clearing organizations including the Depository Trust Company, the National Securities Clearing Corporation and the Options Clearing Corporation.

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Virgin Islands.

FRGIS is registered with the SEC, a member of FINRA, and registered as a broker-dealer in New Jersey, South Carolina, and New York.

The rules of the Municipal Securities Rulemaking Board, which are enforced by the SEC and FINRA, apply to the municipal securities activities of LPL Financial.

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LPL Financial is regulated by the SEC, FINRA, CFTC and NFA.

FRGIS is regulated by the SEC and FINRA.

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procedures intended to ensure compliance with securities laws and to prevent improper trading on material nonpublic information, limitations on extensions of credit in securities transactions, clearance and settlement procedures and rules designed to promote high standards of commercial honor and just and equitable principles of trade.

Broker-dealers are subject to rules and regulations covering all aspects of the securities business, including sales and trading practices, public offerings, publication of research reports, use and safekeeping of clients’ funds and securities, capital adequacy, recordkeeping and reporting, the conduct of directors, officers and employees, qualification and licensing of supervisory and sales personnel, marketing practices, supervisory and organizational procedures intended to ensure compliance with securities laws and to prevent improper trading on material nonpublic information, limitations on extensions of credit in securities transactions, clearance and settlement procedures, anti-money laundering, cybersecurity, credit risk management and rules designed to promote high standards of commercial honor and just and equitable principles of trade.

Broker-dealers are also subject to state securities laws and regulated by state securities administrators in those jurisdictions where they do business.

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In many cases, our margin policies are more stringent than these rules.

On June 30, 2020, the SEC’s new standard of conduct applicable to retail brokerage accounts (“Reg BI”) became applicable.

Reg BI requires that broker-dealers act in the best interest of retail customers without placing their own financial or other interests ahead of the customer’s and imposes new obligations related to disclosure, duty of care, conflicts of interest and compliance.

LPL Financial's recommendations to retail customers are subject to a standard of conduct specified by the SEC (“Reg BI”).

Reg BI requires that, when making recommendations, broker-dealers act in the best interest of retail

customers without placing their own financial or other interests ahead of the customer’s and imposes obligations related to disclosure, duty of care, conflicts of interest and compliance.

Certain state securities and insurance regulators have also adopted, proposed or are considering adopting similar laws and regulations.

In December 2020, the DOL finalized a new Prohibited Transaction Exemption 2020-02 (“PTE 2020-02”) that expanded instances where an investment advice fiduciary can receive additional compensation on transactions as a result of fiduciary recommendations to a plan covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), IRA or other account covered by Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”).

Compliance with these provisions has increased our compliance costs.

In addition, the DOL has proposed a “Retirement Security Rule” that would broaden the definition of fiduciary advice and modify the prohibited transaction exemptions in effect as of the date of this Annual Report that enable investment advice fiduciaries to receive compensation on transactions as a result of fiduciary recommendations to a plan covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), IRA or other account covered by Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”).

Compliance with proposed conduct standards could increase the complexity and costs of our compliance or affect our revenue streams, including, in the case of the DOL proposal, our ability to rely on the current prohibited transaction exemptions.

Moreover, to the extent new rules or regulations affect the operations, financial condition, liquidity and capital requirements of financial institutions with which we do business, those institutions may seek to pass on increased costs, reduce their capacity to transact, or otherwise present inefficiencies in their interactions with us.

As industry compliance practices and regulatory approaches to guidance, examinations and enforcement continue to develop, the ultimate impact that these new rules or regulations will have on us, the financial industry and the economy cannot be known at this time.

It is unclear how and whether other regulators, including banking regulators, and state securities and insurance regulators, may respond to or attempt to enforce similar issues addressed by Reg BI and PTE 2020-02.

Investment Adviser Regulation

As investment advisers registered with the SEC, our subsidiaries LPL Financial and Fortigent, LLC are subject to the requirements of the Advisers Act, and the regulations promulgated thereunder, including examination by the SEC’s staff.

As an investment adviser registered with the SEC, our subsidiary LPL Financial is subject to the requirements of the Advisers Act, and the regulations promulgated thereunder, including examination by the SEC’s staff.

Such requirements relate to, among other things, fiduciary duties to clients, maintaining an effective compliance program, conflicts of interest, advertising, limitations on agency cross and principal transactions between the advisor and advisory clients, recordkeeping and reporting requirements, disclosure requirements and general anti-fraud provisions.

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Retirement Plan Services Regulation

Certain subsidiaries, including LPL Financial, LPL Employee Services, LLC, PTC, Fiduciary Trust Company of New Hampshire and LPLIA, are subject to ERISA, and Section 4975 of the Code, and to regulations promulgated under ERISA or the Code, insofar as the subsidiaries provide services with respect to plan clients, or otherwise deal with

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plan clients, plan participants and retirement, health and educational accounts that are subject to ERISA or Section 4975 of the Code.

Certain subsidiaries, including LPL Financial, LPL Employee Services, LLC, PTC, Fiduciary Trust Company of New Hampshire and LPLIA, are subject to ERISA, Section 4975 of the Code, and to regulations promulgated under ERISA or the Code, insofar as the subsidiaries provide services with respect to plan clients, or otherwise deal with plan clients, plan participants and retirement, health and educational accounts that are subject to ERISA or Section 4975 of the Code.

ERISA imposes certain duties on persons who are “fiduciaries” (as defined in Section 3(21) of ERISA) and prohibits certain transactions involving plans subject to ERISA and fiduciaries or other service providers to such plans.

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Section 4975 imposes excise taxes for violations of these prohibitions.

On June 29, 2020, the DOL officially reinstated its “five-part test” defining fiduciary “investment advice” under ERISA and the Code (the “Five-Part Test”).

The DOL has a “five-part test” defining fiduciary “investment advice” under ERISA and the Code (the “Five-Part Test”).

Under this test, providing non-discretionary investment advice or recommendations with respect to a covered account can cause a person to be a fiduciary under ERISA and/or the Code if the advice is provided for a fee, on a regular basis, and subject to a mutual understanding that the advice will be personalized to the needs of the advice recipient and used as a primary basis for an investment decision.

This action formally implemented the Fifth Circuit’s decision in 2019 to vacate the DOL’s 2016 “fiduciary rule,” which had significantly expanded the scope of activities that could otherwise result in fiduciary status under ERISA and Section 4975 of the Code.

In December 2020, the DOL finalized PTE 2020-02, providing broad exemptive relief for receiving variable or transaction-based compensation, and certain other “prohibited transactions,” in connection with fiduciary investment advice to investors using covered accounts if certain conditions are met.

In addition, the DOL has proposed a “Retirement Security Rule” that would modify the Five-Part Test to broaden the definition of fiduciary advice and the prohibited transaction exemptions in effect as of the date of this Annual Report.

The DOL’s prohibited transaction exemption 2020-03 (“PTE 2020-02”) provides broad exemptive relief for receiving variable or transaction-based compensation, and certain other “prohibited transactions,” in connection with fiduciary investment advice to investors using covered accounts if certain conditions are met.

The preamble to this exemption also included the DOL’s new and expanded interpretation of when providing a rollover recommendation (or potentially other recommendations) could result in fiduciary status under the historic Five-Part Test.

This new interpretation, as well as other guidance issued by the DOL in connection with this interpretation, is the subject of multiple litigations in federal district courts challenging the DOL’s authority to issue it.

On February 13, 2023, a federal court issued a decision that invalidated the DOL’s interpretation of who qualifies as a fiduciary under ERISA in providing a rollover recommendation.

interpretation, as well as other guidance issued by the DOL in connection with this interpretation, has been the subject of multiple litigations in federal district courts challenging the DOL’s authority to issue it.

On February 13, 2023, a federal court issued a decision that invalidated, in part, the DOL’s interpretation of who qualifies as a fiduciary under ERISA in providing a rollover recommendation.

We operate our business in compliance with a number of DOL prohibited transaction exemptions, including PTE 2020-02, where applicable.

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In addition, it is unclear how and whether the DOL and other regulators, including the SEC, FINRA, banking regulators, and the state securities and insurance regulators may respond to or enforce elements of the Five-Part Test and PTE 2020-02 rules or interpretations.

The DOL also signaled its intent to further amend the definition of “fiduciary” under ERISA and the Code and certain of its existing prohibited transaction exemptions, which we expect, if completed, to result in increased legal, compliance, information technology and other costs and could lead to a greater risk of client lawsuits and enforcement activity by the DOL and other regulators.

The DOL also proposed amendments to the definition of “fiduciary” under ERISA and the Code and certain of its existing prohibited transaction exemptions, which we expect, if completed, to result in increased legal, compliance, information technology and other costs and could lead to a greater risk of client lawsuits and enforcement activity by the DOL and other regulators.

The effect of any future DOL regulations and changes on our retirement plan business cannot be anticipated or planned for but may have further impacts on our products and services and results of operations.

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These laws and regulations are designed to serve specific bank regulatory and supervisory purposes and are not meant for the protection of PTC, PTC Holdings, Inc., LPLFH or their stockholders.

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Regulatory Capital Requirements

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(& Design) are among our service marks.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business