Nearly $1 billion in assets are leaving Commonwealth Financial Network, impacting LPL Financial significantly. Recent announcements reveal substantial outflows as numerous advisors transition to other brokerages ahead of LPL’s earnings report this Thursday.
LPL Financial and Commonwealth Partnership
LPL Financial’s acquisition of Commonwealth closed on August 1, involving a cash deal worth $2.7 billion. Despite LPL’s confidence in retaining 90% of Commonwealth’s roughly 3,000 advisors, recent data indicates growing attrition.
Advisor Departures and Asset Movement
- October witnessed the highest advisor attrition for Commonwealth, with 116 advisors leaving.
- Since the acquisition’s completion, 243 advisors have departed to other firms.
- Firms like Arkadios Capital, Cambridge, and Cetera are among those attracting Commonwealth advisors.
John Evans, a Commonwealth advisor who has now joined Osaic, manages $143 million in client assets. He noted the comprehensive solutions and technological support offered at Osaic as key factors in his decision, highlighting the competitive landscape for talent.
Reasons Behind the Exodus
According to Hesom Parhizkar, co-founder of AdvizorPro, advisors perceive transitioning to LPL as a shift towards lesser independence. Tactics like competitive salaries and advanced technology are employed by competitors to attract advisors. Parhizkar emphasized whether LPL could maintain advisor satisfaction and retain their unique culture amid these transitions.
Strategies for Retaining Advisors
CEO Rich Steinmeier of LPL has assured that they will work to maintain Commonwealth’s established culture while enhancing it with LPL’s services. He acknowledged that some attrition is to be expected, but believes media attention may overstate the issue.
Shelby Nicholl, a consultant, emphasized the urgency for LPL to process advisor transitions quickly to build momentum and increase retention. Advisors have until late 2026 to finalize their decisions regarding LPL.
Recent Key Departures
- Mark Gallagher, formerly of Commonwealth, moved to Osaic, managing approximately $194 million.
- Richard Salmeron joined Raymond James, having previously managed $140 million.
- Kirk Huismann left with Friedline Financial, overseeing $144 million.
- Christian Benard transitioned to Cetera’s Avantax advisor channel after 19 years with Commonwealth, managing nearly 2,000 tax returns last year.
The ongoing recruitment efforts from various firms illustrate the competitive environment within the financial advisory sector. Nicholl noted that for many advisors, the decision revolves around long-term business vision and optimal conditions for client continuity.
Conclusion
This significant movement of nearly $1 billion in Commonwealth assets presents both challenges and opportunities for LPL Financial. How they manage the retention of their advisors and the cultural integration from Commonwealth will be pivotal in the coming months.
