For LPL's CEO Rich Steinmeier, the acquisition of Commonwealth Financial Network sounds like it's getting a bit personal.
LPL Financial Holdings Inc. at the end of March announced its $2.7 billion, all cash acquisition of leading independent broker-dealer and longtime rival Commonwealth Financial Network.
The close to 3,000 financial advisors who are registered with the firm are, on average, among the highest revenue generating advisors in the independent brokerage industry and are prized not only by LPL Financial, an acquisition machine, but broker-dealers and registered investment advisors that compete with LPL.
As part of its attempt to win over Commonwealth’s advisors, who are not employees and therefore free to take their business elsewhere, LPL, led by its CEO, is engaging in what sounds like a charm offensive with some Commonwealth advisors.
Indeed, Steinmeier over the past five weeks has visited Commonwealth advisors, taken bike rides in stormy weather with them and sipped wine, all as part of an effort to send the message that LPL respects the close-knit Commonwealth culture and does not want to upset that culture, although the firm is being acquired.
“Just even in just this week alone, I’d [point to] a couple of great conversations I personally had with Dan and Carrie Pennise during a rain soaked bike ride in Scottsdale with 21 other advisors and family,” Steinmeier said Thursday afternoon during a conference call with analysts to discuss first quarter earnings.
“I was out on a wine tasting tour, actually a blind wine tasting, with Raegan Saylor, Wes Botto, and other advisors, again, having casual interactions,” he said. “I had lunch on Sunday in Sacramento with Leslie Roper Day. And just having those interactions to hear, you know, where they stand.”
LPL’s target is to move to their brokerage and RIA platform 90% of Commonwealth’s current clients, with close to $285 billion in assets.
LPL is fending off significant competitors who are chasing after those Commonwealth advisors, including Raymond James Financial Inc., Ameriprise Financial Inc. and Fidelity.
Steinmeier said on Thursday that he like LPL’s chances.
“I’m not sure that there are a lot of credible players that Commonwealth advisors would consider as an alternative to LPL,” he said. “I think there are a couple out there, and they’re being very active. I think you see a lot of the smaller players trying to take and assert themselves into this market opportunity.”
“It’s just going to be a struggle for them to be competitive relative to our robust set of capabilities, especially when you think about how we have been very clear on that we are keeping the Commonwealth experience,” he said, adding that included the firm’s brand, its service associates, trips, study groups, and practice consultants that help advisors grow their businesses.
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