‘This is about as fiercely competitive an environment for a group of advisors as I’ve ever seen,’ says one senior industry executive.
The fight for Commonwealth Financial Network’s financial advisors is turning into a street brawl, with one analyst, Steven Chubak of Wolfe Research, saying yesterday that roughly 5% of the firm’s total have exited for competitors since LPL Financial Holdings Inc. at the end of March said it was buying its rival for $2.7 billion in cash.
LPL has said since it bought Commonwealth from its founder Joe Deitch its target is to retain 90% of the firm’s financial advisors. Senior industry executives are privately questioning whether LPL will hit that mark, particularly as a plethora of firms are chasing the high producing, high quality Commonwealth reps.
“This is about as fiercely competitive an environment for a group of advisors as I’ve ever seen,” said one senior industry executive who spoke privately to InvestmentNews about the matter. “And it’s because the Commonwealth advisors are the cream of the crop.”
LPL’s acquisition of Commonwealth, which it completed over the summer, gave a jolt to the 3,000 or so advisors there, many of whom had no desire to leave before LPL’s purchase. Five percent would represent close to 150 financial advisors.
“These financial advisors are what ever firm is looking for,” the executive said. “They have a high production of annual revenue, clean compliance histories and a very high percentage of advisory business, which means predictable revenue.”
Meanwhile, Chubak, managing director of Wolfe Research and a leading brokerage analyst, wrote in a note yesterday that LPL’s retention target of 90% of Commonwealth advisors was still in the cards. That’s after InvestmentNews and other trade publication have reported LPL’s rivals successfully recruiting Commonwealth advisors with billions of dollars of client assets.
“Our team has been monitoring [Commonwealth] trends quite closely, and while [Commonwealth] attrition has picked up these last three months, that’s consistent with prior deal seasonality where attrition accelerates 3 to 6 months post announcement,” Chubak wrote. “Thus far we’ve seen ~ 5% cumulative attrition, and while we anticipate additional departures, we also believe retention will likely settle at or around 90%.”
Regardless of whether LPL reaches its goal, high-quality Commonwealth advisors are leaving. InvestmentNews reported last week that Raymond James since August recruited totals 18 Commonwealth teams with close to $4.5 billion in assets, according to a tally of its press releases. And last week alone, Raymond James said it has recruited four Commonwealth teams with $1.08 billion in assets.
And there appears to be no slowdown. Cetera Financial Group on Tuesday said it recruited the Manalapan, N.J.-based King Financial Network, a team with $1.1 billion in client assets and formerly registered with Commonwealth, to its Cetera Wealth Services broker-dealer.
