Kestra bets on landing ‘fair share’ of Commonwealth advisors

Kestra Financial president John Amore is confident that his independent broker-dealer will recruit a portion of advisors from Commonwealth Financial Network amid its sale to LPL.

“We've had a number of good conversations with good Commonwealth firms,” Amore said in an interview with InvestmentNews. “I suspect we'll win our fair share, particularly those that don't want to be part of a 30,000 advisor firm,” he said in reference to LPL Financial. 

LPL, the industry’s largest independent broker-dealer, announced its $2.7 billion acquisition of rival firm Commonwealth in late March with a stated goal of retaining 90% of advisors from Commonwealth, which now oversees $344 billion in client assets. Amore’s comments to InvestmentNews come as a new study from Kestra Financial finds that 94% of financial advisors who plan to retire in the next decade lack a written succession plan for their firm.

Firms bidding for Commonwealth advisors alongside Kestra include Raymond James, Cetera, and Ameriprise Financial, as well as RIAs including Savvy Wealth and Concurrent Investment Advisors. InvestmentNews previously reported that LPL is offering retention bonuses between 10 to 50 bonus points of AUM to Commonwealth advisors. Raymond James is offering over 100% of an advisor’s trailing 12 months’ compensation, while Ameriprise is offering up to 125% of trailing 12 months revenue to top-producing Commonwealth advisors. 

“Commonwealth has had some great advisors that are very akin to the type of advice we like to serve at Kestra—very planning oriented, fee based, people who value service in sort of a smaller community,” said Amore. “We've been having a number of conversations with Commonwealth advisors who want to continue in that kind of ecosystem.”

Kestra’s new advisor succession survey was conducted alongside Bluespring Wealth Partners, an RIA acquirer owned by Kestra Holdings. Fewer than half (41%) of advisors planning to retire in the next 10 years have transferred any equity to successors, according to the survey of 269 advisors from RIAs and independent broker-dealers.

“The other trend I think this points to is increasing scale and consolidation. And I'm not saying scale at any cost or growth at any cost, but the larger you are, the more resources you can devote to [succession planning],” said Pradeep Jayaraman, president of Bluespring. “Whether you get it through organic growth or through M&A, that is potentially going to solve some of these resource based issues within succession planning.”

Massachusetts-based Commonwealth Financial Network inked a partnership last year with fintech platform Succession Link to match advisors with potential succession partners via M&A opportunities. Kestra's findings of just 6% of advisors planning to retire in the next decade have a "fully documented succession plan" is significantly lower than December's Devoe & Company report that found 42% of RIAs maintain written succession plans.