LPL Financial appears to be facing an uphill battle in its quest to retain a majority of advisors from Commonwealth Financial Network following their $2.7 billion acquisition of the close-knit firm.
“With Raymond James offering a very reasonable amount of money—I don't have my written offer yet, but I know what we're all hearing, it just seems much better for us—service wise, payout,” an advisor who has been with Commonwealth for over 15 years, told InvestmentNews. “It just seems like it would be almost a no-brainer at this point.”
Raymond James is offering “over 100% of your trailing 12 months of compensation,” according to the Commonwealth advisor who spoke to InvestmentNews on the condition of anonymity. When asked to confirm these details, Raymond James declined to comment on this story.
LPL is offering Commonwealth advisors retention bonuses that are between 10 to 50 basis points on an advisors' assets under management, according to an industry source with knowledge of the situation. LPL also stresses that if advisors from Commonwealth stay at the firm, they will maintain their brand and community while taking part in a seamless transition of their books and data to LPL's systems.
“Our retention program is tailored for Commonwealth Advisors, grounded in maintaining their community and industry-leading experience, as well as their all-in ongoing economics," LPL said in a statement to InvestmentNews. "In addition to our commitment to a seamless conversion, we've added financial incentives, based on several factors including assets under management, revenue, asset mix, growth rate and tenure at Commonwealth."
However, the Commonwealth advisor said of LPL, "their one selling point is that there'll be no new paperwork involved. But most of us, we think long term. We think in terms of 10 or more years, what's in our best interest over the next decade. So having to read paper accounts, as we call it even though everything's done on DocuSign these days, it isn't that big of a deal," he said.
The pending defection of Commonwealth advisors under LPL was recently described as a "melting ice cube tray" by Dynasty Financial Partners’ co-head of investment banking Harris Baltch, referring to the firm's diminshing value if advisors don't join LPL.
“They seem insulting,” the Commonwealth advisor said of LPL’s offer. “If you look at what some of the other firms are willing to pay, it's nearly twice as much as that. From what I understand of the $2.7 billion, a billion was set aside for the Commonwealth retention bonuses, and the rest went to the others—managing partners at Commonwealth who are getting paid off on this.”
An LPL spokesperson said that LPL “is deeply committed to preserving Commonwealth’s community, brand, and premium service.”
“Commonwealth with LPL will not only leverage all the benefits of the Commonwealth experience, it will also deliver meaningful value to advisors through innovative technology, business and capital solutions, and M&A opportunities," LPL said in a statement. "Unlike other firms, LPL will provide to Commonwealth advisors an advanced experience that starts with a frictionless, paperless conversion, avoiding disruption to their clients and ensuring the continuity of their businesses. We are focused on the opportunities that matter most to advisors while honoring the community and culture that make Commonwealth such a respected company in our industry.”
The advisor added that he feels a widespread sense of “betrayal” amongst the 2,900 Commonwealth advisors set to move to LPL, the largest independent broker-dealer. While LPL has said it seeks to retain 90% of Commonwealth advisors, this advisor source from Commonwealth instead pegs 50% to 60% as a more likely outcome.
“It's a whole different culture at Commonwealth—this family culture,” said the advisor, who oversees over $100 million AUM. “Depending on where you fit on the production level, they have these conferences each year where you get to be with your peer group and everybody's friends. And people have come to visit me, and I've gone to visit them. Everybody just feels that won't be there in a few years,” he says of the shift to LPL.
Kestra and Cetera have joined Raymond James in their pursuit of Commonwealth advisors, while Fidelity is also pushing RIAs to steer Commonwealth advisors away from LPL.
"Large groups of us are looking at different firms. Some of us are thinking of coming altogether, if that gets us a better deal. I know that Raymond James is very active right now," said the Commonwealth advisor.
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