Competition Heats Up for Commonwealth Advisors After LPL Deal

The hunt is on.

LPL Financial may have struck a monumental deal to acquire Commonwealth Financial Network last month, but competitors are swooping in on Commonwealth’s roughly 2,900 independent advisors. Recruiters from the likes of Raymond James, Wells Fargo, Morgan Stanley, and more, are reportedly looking to poach those advisors away from the largest independent broker-dealer in the nation. That has made Commonwealth advisors hot ticket hires, with some being offered lucrative deals to leave LPL.

“Anytime there’s a major broker-dealer acquisition like this, the competitors smell blood in the water,” said Jason Diamond, executive vice president of recruitment firm Diamond Consultants.

Call Me, Maybe

The all-cash, $2.7 billion dollar deal is expected to close later this year, with the goal of LPL retaining about 90% of Commonwealth’s advisors. Even with competitors actively trying to recruit those advisors, Diamond said LPL is likely to hit its retention goal — at least in the short term. “It’s an easy-button option for most of these advisors” he told Advisor Upside, adding that LPL is offering meaningful money in retention deals. Advisors also won’t have to repaper accounts if they go straight to LPL. However, many advisors may be looking for the exit after just a few years, he said. 

“There is a cultural mismatch between LPL, which is as big as it gets, versus Commonwealth, which is all about culture and being boutique,” Diamond said. Already, industry efforts to court as many Commonwealth advisors as possible include:

• Cetera President Todd Mackay recently published an open letter, urging Commonwealth advisors to consider Cetera as their new home. 
• “We’re having conversations with advisors from across the industry, including those from Commonwealth, who are looking to grow and affiliate with a leading brand and firm,” an Ameriprise spokesperson said in a statement to Advisor Upside.

One anonymous Commonwealth advisor told InvestmentNews that Raymond James is offering “over 100% of your trailing 12 months of compensation.” Another industry source told the outlet LPL is offering Commonwealth retention bonuses that are between 10 to 50 basis points on an advisors’ assets under management.

Please, Don’t Go. While some Commonwealth advisors might not end up at LPL, expect attrition levels to be low, said Samantha Sferas, COO of recruitment firm Terrana Group. “Acquisitions like this are usually in the works for two years before they’re ever announced,” she told Advisor Upside. “LPL is putting down billions in cash — that’s confidence and that confidence doesn’t just come from nowhere.”