After recently revamping their efforts to target wirehouse financial advisers, LPL Financial and Commonwealth Financial Network appear to be gaining traction with the group, which is made up of the most sought after and profitable advisers in the financial advice industry.
Financial advisers at the four wirehouses — Merrill Lynch, Morgan Stanley, UBS and Wells Fargo Advisors — on average produce $1 million or more in total annual revenues, which is two to three or even four times the average revenue at many so-called independent broker-dealers. But LPL and Commonwealth have launched new programs to recruit and hire wirehouse advisers and so far this year have being seeing results.
Last Thursday, LPL said it had hired financial advisers Tracy Applewhite and Sean Tyll, who will work under the Linsco by LPL Financial brand, the firm’s new employee advisor model. Previously with Wells Fargo Advisors, the two had clients with $185 million in advisory, brokerage and retirement plan assets. They will be the anchor tenants for a new Linsco office in Richmond, Virginia.
Last month, Commonwealth said that it had recruited former UBS adviser Klaudia Conradt, with $132 million in client assets, to an already affiliated Commonwealth firm in Gig Harbor, Washington.
For decades, the prevailing wisdom among recruiters and industry executives has been that wirehouse advisers were far less likely to move to independent firms than other kinds of advisers. The prestige at an IBD was less, the clients weren't as wealthy, the technology was poor, and the recruiting bonus, called "transition assistance" in industry parlance, meager.
Some firms, like Raymond James Financial Inc. and Ameriprise Financial Inc., already had well-established dual channels for advisers: one for employees, like those wirehouse advisers, and another for advisers who are paid as independent contractors, or those advisers working under the umbrella of an independent broker-dealer.
Now LPL and Commonwealth's efforts to penetrate the wirehouse market for financial advisers look to be paying off. In the second quarter, LPL recruited advisers with $2.5 billion in its new business models, including the employee Linsco brand, and in June, Commonwealth recruited its first adviser, Keith Ryan, using its new Access Advisor Program effort. Formerly with UBS, Ryan had close to $140 million in client assets.
Last year, Commonwealth said it was lowering its pricing on separately managed accounts, bringing them in line with the competition to lure advisers. And it boosted its transition bonus for recruits with an eye on wirehouse advisers, putting more money in their pockets.
In 2018, LPL Financial tapped a wirehouse veteran, Rich Steinmeier, who helped launch the wildly successful Merrill Edge, to take over as head of recruiting. And last year it launched its Linsco-branded platform for wirehouse advisers, promising to increase those advisers' payouts, putting more money in their pockets.
"Commonwealth and LPL have both been standouts winning over the wirehouse advisers," said Casey Knight, executive vice president and managing director at ESP Financial Search, a recruiting firm that works with LPL. "You can’t compete with the economics, payout and transition money and fees. The cost of doing business on average is less than anywhere else."
Rich Steinmeier, managing director and head of business development at LPL, noted that the firm currently serves almost 19,000 advisers. "If you have that large a base, we don’t have a lot of fixed costs to invest in" to get the new employee program targeted at wirehouse advisers off the ground, Steinmeier said in an interview. "We already have the product set and are not planning to hire very expensive field leadership."
Andrew Daniels, managing principal for business development at Commonwealth, said that more than a dozen advisers are talking to the firm about the new program that targets wirehouse reps.
"The more advisers that join means more recognition on the Street," Daniels said. "And the hope is it will continue to snowball."
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