The annual Chairman’s Retreat at Commonwealth Financial Network gathers together the biggest producers who are independent financial advisors at the Waltham, Mass. and San Diego-based independent broker-dealer for several days of intense educational and networking events in Boston.
The attendees, who this year included advisors new to Commonwealth like Alex Armstrong and David Young and Commonwealth veterans like Tom Bartholomew, Debra Brede and Carrie Coghill, are veterans who bring a healthy dose of skepticism when it comes to the financial services business. But those same big producers broke out into spontaneous applause Jan. 31 when Commonwealth Financial’s CEO, Wayne Bloom (left), announced pricing and payout changes effective April 1, 2011 to Commonwealth’s fee-based asset management platform, known as Preferred Portfolio Services, or PPS.
Prefacing the announcement by reporting that over 70% of Commonwealth’s revenue is recurring revenue—“not all fees, but that’s where we’re headed”—Bloom said that in the second quarter the firm would reduce ticket charges and increase payouts. Noting that the change will mark the eighth time since 1996 that Commonwealth would make such a move, Bloom said that for advisors with more than $25 million in fee-based assets, equity and ETF ticket charges would drop from $16 to $7.95. The applause came when Bloom stated that “going forward, neither you nor I will be disadvantaged over ticket price charges.”
As for payouts, the increases for Commonwealth reps will increase to 94% from 92% on assets of more than $50 million to $100 million; to 96% from 94% on assets from $200 to $250 million, and to 98% from 95% for those advisors with more than $500 million. Bloom added that "these payouts are linear, right back to dollar one."