Good afternoon, and thank you for joining the Second Quarter 2025 Earnings Conference Call for LPL Financial Holdings Inc. Joining the call today are our Chief Executive Officer, Rich Steinmeier; and President and Chief Financial Officer, Matt Audette. Rich and Matt will offer introductory remarks, and then the call will be open for questions. The company has posted its earnings press release and supplementary information on the Investor Relations section of the company's website, investor.lpl.com. Today's call will include forward-looking statements, including statements about LPL Financial's future financial and operating results, outlook, business strategies and plans as well as other opportunities and potential risks that management foresees. Such forward-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 disclosures set forth under the caption Forward-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 investor.lpl.com. With that, I will now turn the call over to Mr. Steinmeier.

Thanks, operator, and thank you to everyone for joining our call. It's a pleasure to speak with you again. After an outstanding start to the year, we delivered another quarter of strong business performance and excellent financial results while continuing to advance key initiatives. We entered the second quarter against a backdrop of elevated macroeconomic uncertainty and market weakness. While markets rebounded sharply as the quarter progressed, questions remain regarding the resiliency of the equity markets. In this rapidly evolving operating environment, our advisers continue to serve as a steady hand, helping to guide their clients and reinforcing our commitment to support them. Okay. Now let's turn to our Q2 results. In the quarter, total assets increased to a record $1.9 trillion, and solid organic growth was complemented by higher equity markets. We attracted organic net new assets of $21 billion, representing a 5% annualized growth rate. Our second quarter business results led to strong financial performance with an adjusted EPS of $4.51, an increase of 16% 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, pursuing novel and differentiated strategies that enable the firm's sustained success; two, creating an extraordinary employee experience, so employees, in turn, deliver an unparalleled client experience; and three, leading the firm with operational excellence through increased intentionality and rigor. Effectively executing on these focus areas will help us sustain our industry-leading growth while delivering improved operating leverage. With that as context, let's review a few highlights of our business growth. In the second quarter, recruited assets were $18 billion, bringing our total for the trailing 12 months to $161 billion. In our traditional independent market, we added approximately $15 billion in assets during Q2, where despite a broader slowdown of industry-wide adviser movement, we maintained our industry-leading capture rates of advisers in motion, while also expanding the breadth and depth of our pipeline. With respect to our expanded affiliation models, strategic wealth, independent employee, and our enhanced RIA offering, we delivered another solid quarter, recruiting roughly $3 billion in assets. And as we look ahead, we expect that the increasing awareness of these models in the marketplace and the ongoing enhancements to our capabilities will drive sustainable growth. Next, we added approximately $1 billion of assets in the traditional bank and credit union market. We also continue to make progress with large institutions, where we announced that First Horizon would transition its wealth management business to our institutional services platform. As a reminder, First Horizon supports approximately 120 financial advisers, managing roughly $17 billion in client assets, which we expect to onboard later in Q3. Turning to overall asset retention. It remains industry-leading at 98% for the second quarter and over the last 12 months. This is a testament to our continued efforts to enhance the adviser experience through the delivery of new capabilities in technology and the evolution of our service and operations functions. As a complement to our organic growth, in July, we completed the conversion of Atria Wealth Solutions. This is no small feat when you consider that Atria had seven distinct broker-dealers that use multiple custodians. This is a testament to our experienced team and the diligent investments we've made in recent years, and it highlights our differentiated transition capabilities relative to the rest of the industry. As for retention, we're still finalizing results, but anticipate asset retention landing at approximately 82%, ahead of our initial target of 80%. Now as for our pending acquisition of Commonwealth Financial Network, our leadership team has had the pleasure of spending focused time with Commonwealth advisers and leadership over the last four months. This has been time well spent, helping to foster increasingly constructive conversations. Today, we have a better understanding of what's important to them, preserving and fostering the Commonwealth community and culture, plus we've had the opportunity to showcase the resources and capabilities at LPL. The combination creates a firm with the scale, the experience, and the permanent capital needed to serve and support their growth for decades to come. As a result, we have made steady progress with adviser commitments and remain on track to achieve our retention target. We expect to close the transaction tomorrow morning and are excited to hit the ground running as we prepare to onboard this community of advisers. To summarize, we are pleased with the second quarter results, and we feel great about our position as a critical partner to our advisers and institutions while we continue to create long-term value for our shareholders. With that, I'll turn the call over to Matt.

Thanks, Rich. I'm glad to speak with everyone on today's call. To Rich's point, it's been an active quarter with the team delivering tremendous results at a rapid pace. To reiterate some of those highlights, we delivered another quarter of industry-leading organic growth, launched our first-ever national marketing campaign, continued to make progress in the institutional channel as we prepare to onboard First Horizon, successfully onboarded Atria, and completed all pre-close work for our acquisition of Commonwealth. Our disciplined execution continues to translate into strong business and financial results with our cost efficiency work pulling through to sustainable improvements in our margins. Now turning to a few highlights from our Q2 business results. Total advisory and brokerage assets were $1.9 trillion, up 7% from Q1 as continued organic growth was complemented by higher equity. Total organic net new assets were $21 billion, approximately 5% annualized growth, a strong result both on an absolute and relative basis. On the recruiting front, Q2 recruited assets were $18 billion, contributing to $161 billion over the trailing 12 months. With respect to large onboardings, during the quarter, we successfully completed the conversion of Atria's seven broker-dealers, continue to prepare for First Horizon, which we expect to onboard in Q3, and we're progressing towards closing Commonwealth as planned. As Rich mentioned, we expect to close the transaction tomorrow and convert Commonwealth assets to our platform in the fourth quarter of 2026, which has moved out slightly from our original time frame as we've begun to scope the tech and operational work required to ensure advisers have an exceptional experience. At close, we continue to expect run rate EBITDA to be roughly $120 million and approximately $415 million once fully integrated, which is underpinned by our 90% retention target. With that as context and given the timing of the close, we'll include Commonwealth in our guidance items today. I would just note, given we have not yet closed the deal, there could be some variability in the line item geography. Looking at Q2 financial results, the combination of organic growth and expense discipline led to an adjusted pretax margin of approximately 38% and adjusted EPS of $4.51. Gross profit was $1.304 billion, up $32 million sequentially. As for the key drivers, commission and advisory fees net of payout were $349 million, down $14 million from Q1. Our payout rate was 87.3%, up approximately 60 basis points from Q1, largely due to typical seasonality. Looking ahead to Q3, we anticipate our payout rate will increase to approximately 87.6%, driven by the typical seasonal build in the production business as well as our acquisition of Commonwealth. With respect to client cash revenue, it was $414 million, up $5 million from Q1. Overall client cash balances ended the quarter at $51 billion, down $2 billion sequentially, primarily driven by continued elevated levels of net buying activity. Within our ICA portfolio, the mix of fixed rate balances ended the quarter at roughly 65%, slightly above the midpoint of our target range of 50% to 75%. Looking more closely to ICA yield, it was 342 basis points in Q2, up 5 basis points from Q1, as higher renewal rates on our fixed-rate contracts offset lower average cash balance. As we look ahead to Q3, based on where client cash balances and interest rates are today as well as the Commonwealth-related cash, we expect our ICA yield to be roughly flat sequentially. As for service and fee revenue, it was $152 million in Q2, up $7 million from Q1, primarily driven by strong organic growth. Looking ahead to Q3, we expect service and fee revenue to increase by approximately $20 million sequentially, driven by revenues from our annual Focus Conference, as well as our pending acquisition of Commonwealth. Moving on to Q2 transaction, it was $61 million, down $7 million sequentially due to lower trading volumes. As we look ahead to Q3, we expect transaction revenue to increase by approximately $5 million sequentially, primarily driven by Commonwealth. Now let's turn to expenses, starting with core G&A. It was $426 million in Q2, below our outlook range for the quarter as we continue to make progress on our renewed focus on driving operating leverage in the business. For the full year 2025, given our cost initiatives are tracking ahead of schedule, we are lowering our 2025 outlook to a range of $1.720 billion to $1.750 billion, which includes $170 million to $180 million of expense related to Prudential and Atria. Additionally, given the expected close of Commonwealth tomorrow, we factor these expenses into our overall core G&A outlook and expect an incremental $160 million to $170 million. As a result, our new core G&A outlook range is $1.880 billion to 1.920 billion. To give you a sense of the near-term timing of the spend, in Q3, we expect core G&A to be in a range of $495 million to $510 million, including Commonwealth. Moving on to Q2 promotional expense, it was $164 million, up $12 million from Q1, primarily driven by conference spend and transition assistance resulting from our strong recruiting. Looking ahead to Q3, we expect promotional expense to increase by approximately $35 million, driven by conference spend as we will host our annual Focus Conference next month, as well as transition assistance related to Commonwealth. Turning to depreciation and amortization, it was $96 million in Q2, up $4 million sequentially. Looking ahead to Q3, we expect depreciation and amortization to increase by roughly $5 million. As for interest expense, it was $102 million in Q2, up $22 million sequentially, driven by our April debt issuance. Looking ahead to Q3, given revolver balances following the close of the Commonwealth transaction, we expect interest expense to increase by approximately $5 million from Q2. Moving on to our tax rate, it was approximately 26% in Q2. Looking ahead, we expect Q3 to be around 27% as we anticipate recording a reserve on a couple of tax matters. Turning to capital management. As a reminder, we funded Commonwealth through a combination of corporate cash, debt, and equity. We ended Q2 with corporate cash of $3.6 billion, up $3 billion from Q1, which included proceeds from our capital raises. Following the close, we expect corporate cash to come back down closer to our management target range of roughly $200 million. And as such, we expect Q3 interest income to be approximately $40 million. As for our leverage ratio, it was 1.23x at the end of Q2. In line with the plans we shared previously, we expect our leverage ratio to be approximately 2.25x following the close, with a path to deleverage to approximately 2x by the end of 2026. Moving on to capital deployment. Our framework remains focused on allocating 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 Q2, the majority of our capital deployment was focused on supporting organic growth and M&A, where we continue to allocate capital to our Liquidity & Succession solution. To uphold our commitment to maintaining a strong and flexible capital position, we paused share repurchases, which we will revisit once we onboard Commonwealth. 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.

Our first question comes from Alex Blostein from Goldman Sachs.

I was hoping we could start with a question around Commonwealth. Obviously, it's a big focus for investors. Congrats on the deal, I guess, closing here tomorrow. But maybe just start with how the conversations with the team are evolving. You guys are clearly sticking with a 90% retention expectation. So a little bit of color on what gives you confidence in being able to achieve that. And then financially, Matt, I was hoping you maybe could hit on the reasons behind keeping EBITDA run rate at $120 million to start off despite the fact that the asset levels are a decent amount higher from the time you announced the deal.

Thanks, Alex. It's Rich. I'll begin and then pass the second part to Matt. Regarding Commonwealth, we have spent four months engaging constructively with them, which has allowed us to better understand the advisers, leadership team, and employees. Our initial impressions have been confirmed; the Commonwealth team has built something remarkable. They set a high standard for serving independent advisers. Recently, Commonwealth received their 12th consecutive #1 ranking from J.D. Power for independent adviser satisfaction. We are committed to maintaining their unique culture, adviser experience, and brand, and will enhance their existing strengths by combining LPL's capabilities with Commonwealth's experience. Additionally, we will share the insights gained from their exceptional client experience and adviser feedback with the broader LPL network. We are pleased with this transition as we approach the deal's completion, which we expect to happen tomorrow. We have started to blend our cultures by engaging with advisers, employees, and leadership to learn the key factors behind their success. Recently, 27 Commonwealth employees attended the LPL Summer Bash at our Fort Mill campus, and we sent representatives to Commonwealth's Annual Cornhole Tournament. In a little over a week, 70 Commonwealth advisers and home office staff are set to join our annual Focus Conference. I'm thrilled to announce that starting tomorrow, Commonwealth CEO, Wayne Bloom, will join the LPL Management Committee following the deal's closure. In terms of the transaction, we are making progress as planned. Operationally, our teams have closely collaborated to complete pre-closing tasks, and we are on track to finalize the deal tomorrow. While we are early in the integration planning process, we have outlined the work needed to ensure we maintain the experience for Commonwealth advisers during the conversion, which we expect to occur in the fourth quarter of next year. Regarding adviser retention, I feel positive at this point. We have engaged with numerous advisers. For those Commonwealth advisers focused on their experience, community, technology, service, and ongoing economics, staying with Commonwealth is their best choice. However, like any transaction or competitive recruiting scenario, some advisers will have different priorities. We anticipate this dynamic in our retention target. We are confident in capturing 90%, understanding that 10% may choose a different path. Overall, there have been no surprises in terms of competitive reactions or adviser decisions. There has been more discussion in the industry than we anticipated, but it carries little weight. In summary, we are extremely excited about the partnership, and the deal is on track as expected.

Yes, Alex. So on the run rate EBITDA, AUM is definitely up, but cash balances are down a little bit. So they kind of roughly offset. So the mix of that run rate EBITDA, you can say, has improved a little bit, but that's the reason it hasn't changed.

Our next question comes from the line of Steven Chubak from Wolfe Research.

Matt, it's a question on the expense optimization and specifically, the updated guidance for core G&A growth of 5% ex deals certainly suggests that your efforts to bend the cost curve are clearly bearing fruit. Given you continue to surprise positively versus the original guidance, I was hoping you could speak to whether you see room to drive further efficiency gains from here as we think about the longer-term expense journey. And do you see 5% or better G&A growth as a sustainable long-term target given some of those efficiency efforts?

Yes, Steven, I believe the main point I want to emphasize from my prepared remarks is that we are experiencing strong momentum in our efficiency initiatives. What excites me, and what motivates our team to collaborate effectively, is that these efficiencies not only enhance our operating margin but also improve client experience. It's quite motivating for everyone involved. Therefore, our progress is faster than anticipated. We're automating manual processes within our operations, which reduces friction for advisers, leading to a better experience and fewer calls we need to address. Regarding your specific question, this is not a one-year endeavor. We have significant opportunities to continue improving efficiencies before we fully implement newer technologies that are on the horizon. Each year we'll have to evaluate from a guidance perspective what that looks like, but strategically, we have many years ahead to drive improvements, not only in operational leverage but also in the experience we provide. This aligns with our goal of being the best environment for advisers, which can ultimately drive organic growth.

Our next question comes from the line of Craig Siegenthaler from Bank of America.

I had a question on net new assets in the independent RIA channel. What drove the modest outflows this quarter? And can you provide us an update on the long-term growth trajectory in this channel?

Craig, could you repeat the part about the modest outflows? I didn't catch that.

The independent RIA channel experienced modest negative net new assets in the last quarter. I would like to know what caused that and if you could provide an update on the long-term growth prospects in this channel.

Yes, Craig, there's nothing specific I would emphasize there. When you examine the growth, it's evident that the corporate channel has been strong, showing consistent improvement each quarter. There are some issues with misaligned OSJs that we've mentioned in previous quarters which could have an impact. However, there isn't anything particular I want to point out for this quarter. The charts indicate that the corporate RIA NNA is the main factor driving that area. Rich, do you have anything to add regarding the strategy in that area?

I think the thing I would say is that we continue to strengthen our offering, Craig, in supporting RIAs. One of the questions, I think, that you'll see arise is you've seen less flows to the RIA segment. We see more flowing into our corporate RIA. Mostly, that has to do with ambiguity around the current regulatory environment. I think the SEC is currently evaluating whether or not they're going to raise a threshold for SEC registration of an RIA versus state registration. So when you see that potentially moving from $100 million up to $1 billion threshold, I think you're going to see more folks that are pausing and actually flowing into our corporate shared ADV model. So I think you got to look at those things in tandem to take a look at where do you see overall flows moving into the firm. And there will be times when you'll see flows move into our corporate RIA versus independent RIAs. And I would say this is maybe that moment in time where you're seeing a little slowdown of the movement into independent RIAs because of the ambiguity in the regulatory environment. That probably contributes to some of those outcomes.

Our next question comes from the line of Devin Ryan from Citizens.

Great. Another one here on Commonwealth. So first off, great to confirm the retention target there, and congrats on closing that here tomorrow. Several industry newswires in recent weeks have talked about how some of these Commonwealth advisers are setting up their own RIAs or looking into doing the same thing. And maybe that's actually connected to the last answer you made. But Rich, I would love to get some thoughts on what this means for LPL in the context of the deal. Do you lose those advisers? Are they in that 10%? Or is there an opportunity to continue to work with them? And so just trying to think about kind of the implications of this more broadly.

Yes. Thank you, Devin. We've noticed more discussions among advisers regarding their options. This period has prompted heightened due diligence among Commonwealth advisers. It's important to remember that many of these advisers likely weren't conducting thorough evaluations before the announcement of Commonwealth’s sale. As they've undertaken their assessment, which we've actively supported, they've considered various options, including forming their own Registered Investment Advisory (RIA) firms. This interest isn't surprising given the profiles of Commonwealth advisers, many of whom are leaning towards advisory roles and are already in the process of relinquishing their licenses. When considering their paths, they can either surrender their licenses to transition into Independent Financial Advisers (IFAs) under a shared ADV model or establish their own RIA. The conversations you've referenced, Devin, pertain to this consideration of creating their own RIAs. Often, this decision is based on the belief that they would achieve better financial outcomes and increased independence by setting up an RIA. However, as we’ve engaged in one-on-one discussions and webinars, we’ve helped many realize that they may have underestimated the operational and regulatory complexities associated with running their own RIA. As RIAs, they would be responsible for their own regulatory compliance and risk management, along with the typical operations of a small business, such as technology and human resources. Additionally, I previously mentioned that the uncertainty surrounding the regulatory landscape contributes to the decision-making process about whether to establish their own RIA or operate under a shared ADV model. Working with a single regulatory body, like the SEC, is significantly more straightforward than navigating multiple state regulations. Even a minimal client presence in a state requires registration there. This complexity is central to the evaluation advisers are making about their futures. Addressing your question directly, we are supportive of independent RIAs and advisers who choose to relinquish their FINRA licenses to operate under our shared ADV corporate RIA. As our conversations have progressed, advisers have come to understand that they can maintain the Commonwealth experience, community culture, service environment, and brand they value inside an RIA framework with LPL or as IFAs under the shared ADV model with LPL. Therefore, when advisers evaluate the possibility of establishing their own RIA, it doesn't necessarily mean they will transition away from us. Another factor they have considered is that if they do decide to set up their own RIA with a different custodian, they will need to manage a repapering process. This involves re-engaging their clients and repapering all accounts, which can lead to inefficiencies and time-consuming transitions. In contrast, working with us allows them to avoid that challenge. Overall, advisers are recognizing that they can continue to receive our support while keeping their community and leadership teams intact, whether they choose to establish an RIA or remain with our shared ADV at LPL. Despite the reports and the narratives being amplified in the media, we believe that a significant majority of advisers will stay with us, with projections indicating around 10% may leave.

Our next question comes from the line of Dan Fannon from Jefferies.

I wanted to just talk about the recruiting backdrop and your outlook for NNA here as you think about the second half of the year. And maybe also just throw in adviser movement more broadly for the industry and how that compares to maybe what you thought earlier in the year to where we sit today.

Thank you, Dan. I believe you've touched on a key observation regarding the macroeconomic uncertainty we experienced in the second quarter, which resulted in a slowdown in adviser movement. Historically, adviser churn is around 5.5% to 6%, but it has been reduced to about 5% in the first half of this year. When advisers confront increased market volatility, they tend to postpone transitions as they want to stay invested for their clients. This doesn't suggest a permanent decline in movement; rather, it indicates a delay until conditions are more stable. We continue to face some ambiguity about the macroeconomic landscape, particularly with ongoing uncertainties related to tariffs. In the early part of this quarter, we still see a limited movement environment. However, I want to emphasize that we maintain industry-leading win rates for advisers who are transitioning. I am proud of our performance this quarter, which included recruiting $18 billion in adviser assets. Additionally, we've focused part of our recruiting team on retaining our 3,000 Commonwealth advisers, and that effort is progressing well. Overall, when we combine these elements, we feel very positive about our outcomes, reflecting the strong performance of our business development team. We've been mindful of competitor commentary regarding changes in transition assistance and competitive environments. As the firm recruiting the most advisers in the industry, we are engaged in numerous discussions and are aware of shifts in transition assistance. However, we believe that transition assistance is not the primary factor influencing advisers' decisions; instead, they prioritize capabilities, technology, service, and the value they receive from a firm, followed by the ongoing economics. We feel we excel in these areas. Transition assistance rates have become more competitive in the first half of the year, but we remain confident that our model's ongoing appeal positions us well to continue attracting advisers in motion.

Our next question comes from the line of Benjamin Budish from Barclays.

I was wondering if you could kind of comment at a high level about your overall gross profit ROA. It's been declining for a few years now, and I'm sure some of that is mix. Some of that is as you onboard larger enterprises, kind of move upmarket with larger financial institutions. Just curious, how do you think about how the next couple of years should look, especially ex cash? How much of this is sort of due to that kind of rapid growth, M&A? How much of this trend can be bucked? How should we think about that sort of medium-term outlook for that KPI?

Yes, you bet. I mean, I think broadly that as we've grown and as our revenue has diversified, that's not necessarily the best metric to look at, especially in a market where AUM is rising at a rapid pace and not all of our gross profit is AUM driven. So I think that's a little bit to your point on seeing gross profit ROA decline. You see that being driven by cash balances. You see that happening in line items like service and fees, where those are fees that are primarily driven by adviser levels and account levels, not AUM levels. When you start to look at the line items that are AUM driven like advisory fees, commissions is a little bit more transactional, I think you see a lot more stability there. So a long way of saying, I think the decline there, I think, is more driven by not every metric or item in that metric is driven by basis points in AUM. When we take a step back and look at where and how we're driving revenue, I think we feel very good about our gross profit growth overall, especially when you couple that with the efficiency measures and you start to look at EBITDA, ROA, and how that's grew for the first time this quarter in quite some time when you couple those two things together. So overall, I think we feel really good. I think you just get a little bit of noise in that metric because not everything is really AUM driven.

Our next question comes from the line of Michael Cyprys from Morgan Stanley.

I just wanted to ask about capital allocation with the deal closing tomorrow, just how are you thinking about that in the quarters ahead? And then related to that, on Liquidity & Succession, I was hoping you could update us on the progress there, how that's contributing to results and how you anticipate the pace of deals and capital allocation to that going forward from here?

Yes, Michael. When considering capital allocation, I'd like to reiterate our intentions regarding our leverage ratio. We anticipate maintaining a leverage ratio of 2.25x after the Commonwealth deal closes. Our plan is to deleverage down to 2x by the end of 2026 as we integrate. This plan will guide our capital allocation, including share repurchases, which we will reassess once we reach that leverage ratio. In the meantime, we will continue to focus on organic growth, particularly in capability development and technology, as well as support for recruitment efforts. Regarding M&A, we've successfully completed about 10 deals in the past few quarters. These deals are relatively small, typically in the $10 million to $20 million range, but they generate strong earnings for us and support advisers in transitioning their practices. Overall, the momentum has increased, and we are effectively utilizing our capital while still working to achieve our leverage ratio or deleverage down to 2x.

Our next question comes from the line of Jeff Schmitt from William Blair.

So for Commonwealth, you're adding $160 million or $170 million of core G&A for the deal, and that's around 5 or 6 basis points of AUM versus, I think, LPL is running at 9 basis points. I guess, one, is that the right way to look at it? And two is what would be driving that efficiency difference if so?

Yes, Jeff. I wouldn't focus too much on the initial EBITDA and expense guidance because that reflects the existing Commonwealth business. We still need to integrate that, which we will be doing until the end of 2026. As we proceed with that integration and reach a run rate EBITDA of $415 million, I believe the overall business, in terms of gross profit, will resemble ours and the margins will be in a similar range. So, I wouldn't get too caught up in the initial run rate figures.

Our next question comes from the line of Kyle Voigt from KBW.

So it's been a volatile quarter for sweep cash. Obviously, there was a focus on the level of decline in the May cash number. So it's good to see the rebound in June. Just wondering if you could hit on some of the bigger factors that drove the volatility in cash in the quarter, particularly over the past two months. And it would be great to hear if there's been any change in yield-seeking behavior or whether it's been driven by different factors. And then, Matt, maybe you could also update us on July sweep cash as well.

Yes, you bet. I mean, I think when you look at the quarter, it really is just driven by two factors. One, in April, which is the primary driver of the decline, these are typical seasonal items, the advisory fees coming out and tax payments. And as you noted, as you got deeper into the quarter, we saw some growth in June growing by $1.4 billion. So I think overall, it's kind of an expected trend that you would see in the balances. But the primary driver, about two-thirds of that, if you look at the cash as a percent of AUM coming down, is just the denominator growing right? We've got a strong equity market. If you look at our AUM overall, it's growing almost $100 billion on average for the last several quarters in a row. So you just have the denominator growing. Cash balances themselves have been pretty stable around $5,000 per account for quite some time, several quarters in a row. So I think it's - maybe to hit home the point, that percent decline is really just driven by tax payments as well as the denominator growing. Now bridging into what we've seen so far in July, sitting here almost at the end of the month, again, first month of a quarter, it's as expected with that seasonality and specifically advisory fees hitting in that first month of the quarter. For July, that's around $1.8 billion of a decline. Outside of that, cash balances were flat other than that. And then just to add on to that from an organic growth standpoint, very similar driver there, advisory fees reducing that in the first month of the quarter. And then to Rich's point earlier, that slowdown in industry-wide adviser movement on the recruiting side, you'll see that carry over into NNA into the third quarter. We're seeing that in July. If you put that together, we'd expect organic growth in July to be in the 4% zone, which for month one of a quarter, I think, is what you would expect. And I'd just highlight that is prior to any additional attrition that we'll have from the misaligned OSJs that are leaving. And just a reminder there, that was an overall $20 billion that we expected to depart, $13 billion has already departed through Q2. So there's $7 billion more to go. And that's primarily direct business at this point, which is a little harder to see and predict when that's going to leave, which is why it didn't included in the estimate. But again, no changes in the expected total there of $20 billion.

Our next question comes from the line of Bill Katz from TD Cowen.

Just maybe a couple of embedded questions. Inside of the AUM for Commonwealth, I was wondering if you could update us on the split between cash and the rest of the business. And then secondly, the broader question, just on Liquidity & Succession, what we continue to hear is that private equity firms continue to be quite aggressive in terms of scaling wealth management platforms. I'm wondering, is that having any impact on the deal multiple in terms as you deploy that capital, whether it be internally or externally.

Yes, Bill, I can take both of those. The cash as a percent of AUM at Commonwealth is a little bit below ours, call it, 1.5%, 2% zone. So a little bit smaller balances there than we have. On the Liquidity & Succession side, I mean the short answer is no. I mean, I think when you look at the multiples that we're paying, they have been consistent. I think the value prop that we have for a host of reasons, including staying in LPL, staying on our systems, the overall support that the team brings when they go into that model, I mean, I could go on and on and on. I think the price has not changed. The value prop is really what's driving that. And anything that from a private equity standpoint or the things that you had referenced has really not changed the multiples that we're paying at all.

Thank you. At this time, I would now like to turn the conference back over to Rich Steinmeier for closing remarks.

Thank you all for joining us. We look forward to speaking with you all again in October. Have a good night and go chase down the rest of those MLB trade deadline rumors so long.

This concludes today's conference call. Thank you for participating. You may now disconnect.