LPL Faces $1B Loss in Commonwealth Assets
Commonwealth Financial Network, a significant player in the financial advisory space, is facing a substantial loss of nearly $1 billion in assets as many of its advisors relocate to other broker-dealers. These developments come shortly before LPL Financial, the owner of Commonwealth, is set to release an earnings report. This report is expected to address recent advisor departures since LPL’s acquisition of Commonwealth for $2.7 billion on August 1.
LPL Anticipates Advisor Retention
LPL Financial has stated its goal to retain at least 90% of the approximately 3,000 advisors from Commonwealth through their transition to LPL’s platforms, scheduled for late 2026. Despite this optimistic outlook, movements within the industry have spurred advisors to consider other options. Competitors are leveraging attractive pay packages and advanced technology to entice Commonwealth advisors.
Recent Departures and Competitor Strategies
- October has seen 116 advisors leave Commonwealth, marking the highest attrition month since the acquisition.
- A total of 243 advisors have transitioned to firms such as Arkadios Capital and Cambridge since the deal’s closing.
- Competitors like Cetera and Raymond James have announced acquisitions of Commonwealth advisors, emphasizing their advanced technologies and support systems.
John Evans from Four Pillars Investment Management, who previously managed $143 million in assets at Commonwealth, recently moved to Osaic. He highlighted that Osaic’s extensive product range and supportive environment will enhance client service.
Industry Insights into Advisor Migration
According to AdvizorPro, advisor retention is crucial for LPL’s success post-acquisition. Hesom Parhizkar, a co-founder, suggests that the final outcomes will depend on LPL’s collaboration with its remaining advisors. While some advisors view the move as a simile of “training wheels,” a solid support mechanism may sway their decisions.
The Challenges Ahead for LPL
- CEO Rich Steinmeier acknowledged a potential for attrition and reassured maintaining Commonwealth’s unique culture and supporting advisor experiences.
- Experts believe early transitions may prompt more substantial movement before deadlines approach.
Amid these changes, new opportunities have emerged for advisors. Mark Gallagher has moved to Osaic following ten years managing $194 million at Commonwealth. Similarly, Richard “Rick” Salmeron joined Raymond James after overseeing $140 million in assets. These moves reflect a broader trend as firms adjust their approaches to meet shifting advisor preferences.
Future Outlook for Advisors
Advisors are reframing their retention decisions, emphasizing long-term business visions over immediate gains. The continuing evolution of brokerage and advisory platforms will shape advisor movements in the coming months as firms strive to establish stability and support amidst significant transitions.
As LPL Financial prepares for its earnings call, the financial industry will closely monitor the ramifications of these transitions and the future landscape for Commonwealth and its advisors.
