LPL Financial on target to retain 90% of Commonwealth financial advisors, Wolfe Research analyst says

LPL Financial Holdings closed it $2.7 billion acquisition of Commonwealth Financial Network last month and appears – at least for now - on target to hang onto 90% of Commonwealth’s roughly 3,000 advisors managing $305 billion, according to one analyst.

The 90% target has been the stated goal for LPL Financial since it announced the acquisition at the end of March. According to Steven Chubak, managing director of Wolfe Research and a leading brokerage analyst, LPL Financial is currently meeting that goal, although competitors such as Raymond James Finncial are nipping at LPL’s heels.

Commonwealth had a net loss of 42 brokers in July and 69 so far in August, according to Chubak. That’s compared to a net gain of 10 financial advisors in July 2024.

Raymond James Financial in July and August had a net gain of 76 former Commonwealth advisors, while Ameriprise Financial recruited 16 this month, according to Chubak’s analysis.

Indeed, the rate of Commonwealth advisors leaving, known as attrition in the retail securities industry, has recently increased, Chubak noted. Such broker movement is to be expected four to five months after such an acquisition is announced, he said.

LPL Financial Holdings (ticker: LPLA) “remains atop the recruitment leaderboard, and while Commonwealth attrition has accelerated in recent weeks, we still see a credible path to (greater than) 90% retention based on our analysis of prior deals, [including National Planning Holdings in 2016 and Waddell & Reed in 2020], with peak attrition typically occurring three to six months post announcement.”

LPL Financial Holdings’ acquisition of Commonwealth Financial Network was announced at the end of March.

Industry recruiters and executives noted that LPL’s goal to keep 90% of Commonwealth’s advisors might be sustainable in the short term. However, over time that figure could drop, as Commonwealth’s advisors look to work at other firms or even launch their own registered investment advisors. This latter process has become simpler over the past decade because of improvements in technology and more investors looking to back such independent firms.

Another hurdle that could cause Commonwealth financial advisors to seek work elsewhere is the eventual integration of Commonwealth brokerage and custodian platform, which is Fidelity’s National Financial, onto LPL’s own in-house system. That move of thousands advisors and their clients is expected to be completed by the end of next year.

“When the Commonwealth conversion to LPL happens, that’s the real deadline in the mind of a lot of advisors,” said Danny Sarch, an industry recruiter. “No advisor wants to put his or her clients through that paperwork change twice.”