When Adam Spiegelman learned in March that Commonwealth Financial Network would be acquired by LPL Financial later this year, he was so disappointed he almost felt betrayed.
He was far from the only Commonwealth employee to experience those emotions. Spiegelman, who announced earlier this month he was leaving Commonwealth to start an RIA, remembers a call with half a dozen of his colleagues, all part of a study group, shortly after news of the LPL purchase broke.
One participant was close to irate. Spiegelman understood where he was coming from: Over the years, everyone on the call had heard Commonwealth executives say many times that there were no plans to sell.
But before Spiegelman could be dragged into a full-on grievance-airing session, another colleague’s simple message grabbed him. Commonwealth executives had made a business decision. Now, his colleague suggested, it was time for everyone else to do the same.
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That admonition proved to be just what Spiegelman needed to turn his attention to his long-held desire to start his own registered investment advisory. He launched Spiegelman Wealth Management, an Alamo, California-based RIA specializing in working with high net worth clients, in mid-July.
“I just got my head out of my rear, and I started being very objective and tried to just not get emotional and upset,” Spiegelman said in a recent interview. “But, yes, at the very beginning, I felt like: Wait a minute, this is just kind of the opposite of what they’ve been telling us.”
Nearly 110 brokers have gone somewhere other than LPL
Spiegelman is among a growing fold of Commonwealth advisors who have decided to go somewhere other than LPL. Some, like Spiegelman, left to start RIAs. Others moved to industry rivals such as Raymond James, Purshe Kaplan Sterling Investments, Cambridge Investment Research, Equitable Advisors, Arkadios Capital and Kestra.
So far, the relatively small number of departures is unlikely to stir anxieties at LPL, which has set an ambitious goal of retaining 90% of Commonwealth’s $285 billion in client assets. According to numbers compiled by financial advisor data firm AdvizorPro, nearly 110 now-former Commonwealth advisors have switched their brokerage affiliation to firms other than LPL since the start of April. As a share of the roughly 2,900 advisors Commonwealth had at the time the purchase agreement was announced, that’s still less than 4%.
Raymond James, Purshe Kaplan among the big gainers
The biggest magnet for departees thus far has been Raymond James, which has gained 21 former Commonwealth advisors since April, according to AdvizorPro. Among the St. Petersburg, Florida-based firm’s wins are a six-advisor team in Dundee, Michigan, going by the name Village Wealth Management; a four-advisor team in Depew, New York, named Buffalo Financial; an advisor in Fitchburgh, Massachusetts, going by the name Croteau Financial; a trio of advisors made up of the husband-wife team of Erik and Paula Heben, along with their longtime associate Leo Boisvert; an independent practice named Barstow & Co. in Omaha, Nebraska; and Jose Campos, the founder of Rydge Wealth Management in Burlingame, California.
Raymond James had no comment on the recruited advisors. Speaking on an earnings call last week, CEO Paul Shoukry said the firm is recruiting at a pace it hasn’t seen since the financial meltdown of 2008. The industry publication InvestmentNews has reported that the firm is offering Commonwealth advisors recruiting deals worth as much as 100% of their previous year’s revenue production.
Purshe Kaplan Sterling Investments has also taken a large number of affiliations with former Commonwealth advisors, according to AdvizorPro. The gains all come from a single practice: Summit Wealth Group, which has 23 advisors and 47 support staff members and announced in May it was leaving Commonwealth to start an RIA while maintaining a brokerage relationship with PKS. (Fourteen of those advisors now have brokerage registrations with Purshe Kaplan, according to AdvizorPro.)
Randy Morris, the CEO and founder of Colorado Springs, Colorado-based Summit Wealth, said at the time that his team’s move had been in the works for months before LPL announced its plans to purchase Commonwealth. Still, he said the departure came with “fortuitous timing,” given that he and his colleagues were already finding Commonwealth a tad big for their liking, never mind the much-larger LPL.
Other firms that have pulled from Commonwealth include Cambridge Investment Research, which picked up 13 advisors. Its recruits include members of Soar Wealth Strategies in Omaha, Nebraska.
Tammy Robbins, Cambridge Investment executive vice president and chief business development officer, said in an email statement that her firm has for 45 years followed a plan designed to keep it “internally controlled and truly independent.”
“Our long-standing commitment to this approach is well known across the industry, and it’s why so many financial professionals view Cambridge as a destination of choice, especially in today’s evolving environment,” she said.
Meanwhile, the Atlanta-based independent broker-dealer Arkadios Capital, has pulled over a trio of advisors in Roselle, Illinois, named Cannata & Co. Arkadios director of strategic partnerships Paul Pilcher said he and his colleagues were “thrilled” to welcome the Cannata team.
“They did their homework, and their decision to join us speaks volumes. We share a culture of excellence and an unwavering commitment to helping advisors succeed,” he said in a statement.
Osaic, Mariner, Cetera, Ameriprise pull one-off recruiting deals, so far
Some of LPL’s direct industry rivals, meanwhile, have so far pulled over just one advisor each, according to AdvizorPro’s data.
Those firms include Osaic, which announced early this month that it had recruited Brett Bidenback, a former Commonwealth advisor with 21 years of industry experience and $90 million in client assets. RIA Mariner Wealth Advisors meanwhile has recruited Elizabeth Osterndorf Campbell, Cetera Financial Group pulled over James Paul Cunningham, Truist Investment Services recruited Perry Mathew Sutton and Ameriprise pulled over Michael Arthur Thomas.
A spokesperson for Mariner said, “While we can’t discuss individual employee situations, we’re always looking for top-tier advisors who share our commitment to putting clients first while benefitting from the full spectrum of Mariner’s resources.”
Cetera has reached out directly to Commonwealth advisors, with Cetera Wealth Management President Todd Mackay publishing an online appeal in the form of two “open letters.” The second offered transition assistance equal to as much as 150 basis points — or 1.5% — of their assets under management for accepting a recruitment deal.
Mackay said in an email comment that Cetera is the “best fit for advisors who believe this is still a relationship business, supported by a strong sense of community and white-glove service to our advisors.”
“We support multiple models, multiple custodians and multiple definitions of success,” he added. “The Cetera Advantage is found in how we deliver community without conformity, flexibility without compromise, scale without bureaucracy and independence without isolation.”
LPL ‘honored’ by Commonwealth advisors who remain
Amid the departures, AdvizorPro’s data shows 10 Commonwealth advisors have already shifted their registration to LPL. A spokesperson for LPL declined to comment on teams that had left or the firms they were going to.
“As stewards of independence, we respect the choice of all advisors,” the spokesperson said. “We remain positive about retention and are humbled and honored to be partnering with the many Commonwealth advisors who are recommitting to the Commonwealth community, retaining their well-respected service experience while benefitting from the additive value LPL brings to their continued success.”
Perhaps the biggest question regarding LPL’s purchase plan is whether advisors who joined Commonwealth specifically to be part of a smaller firm could ever feel at home in LPL’s much larger operation. Commonwealth’s reputation for going out of its way to accommodate its brokers and employees has earned it high marks in industry surveys. The research and consulting firm J.D. Power reported earlier this month that Commonwealth ranked No. 1 in advisor satisfaction at independent firms for the 12th year in a row. LPL came in near the bottom at No. 7.
LPL, for its part, has promised to keep intact everything that makes Commonwealth special, including its brand and its general ways of doing business. It has also based the economics of the $2.7 billion purchase price on its assumption that the majority of assets now managed by Commonwealth advisors will eventually move over.
Meanwhile, not all the movement has been out of Commonwealth; teams have also been joining, including Patrick Funke & Associates, a Phoenix, Arizona-based firm that previously had $430 million under management at Osaic.
Wiggle room in LPL’s 90% retention goal
Industry recruiters and others have expressed confidence that LPL will come close to hitting its goal of moving over 90% of Commonwealth’s assets. Phil Waxelbaum, the founder of the recruiting firm Masada Consulting, said that target wasn’t conjured out of thin air but instead devised through close consultation with investment bankers and similar experts.
That said, there probably is some wiggle room.
“I’ve said all along that 80% is a win,” Waxelbaum said. “I mean, they could lose 300 advisors and they are at around 90%. I think they are going to fall between those two goal posts.”
Waxelbaum also noted that even though many in the industry are paying close attention to Commonwealth’s advisor headcount, that’s not necessarily the best way to measure how things are going for LPL. Advisors with small AUM tallies, for instance, can do relatively little damage by leaving.
“By year end, there is a goal at LPL to have ‘X’ number of advisors who have signed on, and that number is a high goal,” Waxelbaum said. “But they are also focusing on assets, not just bodies.”
Like many recruiters, Waxelbaum predicted most Commonwealth advisors will move to LPL to see if they like it. It could easily take a year, he said, before it’s clear how close LPL has come to meeting its retention goal.
The LPL purchase ‘sped up my timeline by years’
Spiegelman said his decision to leave Commonwealth to launch his own RIA wasn’t driven by dread at the prospect of joining LPL. Well before the purchase deal was announced, he had been moving toward starting an advisory-only practice. He dropped his brokerage registration with the Financial Industry Regulatory Authority a few years ago and now only charges clients asset management fees.
“That was the direction that my business was headed in,” he said. “And I think the announcement back in March just probably sped up my timeline by a number of years.”
At the same time, Spiegelman said he had already experienced life at a large public firm — he moved to the privately held Commonwealth from the publicly traded Northwestern Mutual in 2018 — and wasn’t necessarily eager to become affiliated with another one. He said internal recruiters at LPL offered him a generous retention deal. He also received recruiting offers from many rival firms, all of which he declined to provide the numbers for.
Courtsey of Adam Spiegelman
“I would love to share those details because I’d like my clients to know that I was giving up this big amount,” Spiegelman said. “Which I think is in their best interest, because at the end of the day, if they’re going to offer that kind of check, they have to make it up somehow.”
Spiegelman said that when he joined Commonwealth, one of its most appealing aspects was its assurance that he would be free to take his book of business with him, should he later choose to leave. Now, as he continues to move over the roughly $400 million he managed for about 150 families to his new RIA, he’s finding that Commonwealth is living up to its promise.
“One of the first questions when I was being recruited was — since I didn’t have the best transition coming to Commonwealth for my former broker-dealer — ‘Hey, if this doesn’t work out, how does that work?’ They said: ‘You’re free to go. You own the data.’ And they’ve stayed true to that word. I was blown away.”
