LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at institutions in the United States. The company's brokerage offerings include variable and fixed annuities, mutual funds, equities, fixed income, alternative investments, retirement and 529 education savings plans, and insurance; and client cash programs consist …
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Competitive advantage assessment
Key strengths
High Return on EquityReturn on equity ranks highly vs peers (score 0.77).
Sticky AUM BaseRevenue stickiness is high (stability score 0.97).
Key risks
Elevated LeverageLeverage is elevated vs peers (score 0.32).
The dashed ring is the peer median. Defense scores are percentile ranks
against peers, so 50 is roughly the typical company in this group.
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LPL Financial Holdings Inc. ranks #20 of 67
scored companies in Capital Markets by moat score — the top 30%.
The widest moat in the group is Interactive Brokers Group, Inc. (IBKR)
at 83/100.
Moat scores for companies ranked near LPLA in Capital Markets
How LPLA scores on the Asset Management Specialized defenses
Fee Revenue Quality
Score 66
· 20% of the moat score
Fee revenue quality is the ability to charge above the industry's falling average and keep charging it.
Client Retention & Revenue Stickiness
Score 77
· 18% of the moat score
Assets under management leave far more easily than they arrive, and the fee leaves with them.
Compensation Discipline
Score 50
· 18% of the moat score
Compensation is the largest expense in asset management and the one that decides whether a good year ever reaches shareholders.
Capital Efficiency
Score 71
· 20% of the moat score
Asset managers are asset-light: with little capital employed, a healthy business should earn a very high return on equity, and a merely average one is a real warning.
Earnings Quality & Cash Conversion
Score 57
· 14% of the moat score
Reported profits here can be flattered by performance fees, seed-capital gains and consolidated fund accounting, none of which recur reliably.
Balance Sheet Strength
Score 47
· 10% of the moat score
Because the business needs so little capital, an asset manager carrying meaningful debt has usually borrowed to buy another manager or to fund distributions.
LPL Financial Holdings Inc. (LPLA) scores 63 out of 100 on the StatsAlpha Moat Map, which rates its competitive advantage as moderate. It ranks #20 of 67 scored companies in Capital Markets, the top 30%. The score is a weighted composite of 6 competitive defenses, each measured against industry peers of 74 companies in Capital Markets. Its strongest defense is Client Retention & Revenue Stickiness (77/100) and its weakest is Balance Sheet Strength (47/100).
How does LPL Financial Holdings Inc. compare with other Capital Markets companies?
LPL Financial Holdings Inc. ranks #20 of 67 scored companies in Capital Markets by moat score. The widest moat in Capital Markets is Interactive Brokers Group, Inc. (IBKR) at 83/100. The companies ranked closest are Cohen & Company Inc. (COHN) at 63 just above it and XP Inc. (XP) at 63 just below it.
How is the moat score calculated?
Each company is scored with an industry-specific template — Asset Management Specialized in this case, chosen because the defenses that matter to a bank are not the ones that matter to a software company. Every defense combines several financial signals, and each signal is measured as a percentile against a peer group of 74 companies in Capital Markets. The defenses are then weighted to produce the overall score out of 100.
Why is LPL Financial Holdings Inc. scored with the Asset Management Specialized template?
An asset manager owns almost nothing. It charges a fee on someone else's money, pays much of that fee out in compensation, and keeps the remainder — so its economics turn on the fee rate it can defend, whether client money stays, and how much revenue survives the bonus pool. The Asset Management template scores those questions rather than the balance sheet, which in this industry is largely beside the point.
Which competitive defenses are measured for LPL Financial Holdings Inc.?
The Asset Management Specialized template measures 6 defenses, and LPLA scores: Fee Revenue Quality (66), Client Retention & Revenue Stickiness (77), Compensation Discipline (50), Capital Efficiency (71), Earnings Quality & Cash Conversion (57), Balance Sheet Strength (47). Each is scored independently as a percentile against peers, so a company can be strong on one and weak on another — the overall score reflects how those defenses are weighted for this industry.
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