From the November 2017 issue of Investment Advisor • Subscribe!

Independent Firms Highlight Key Issues, Growth Trends at Conferences

Events hosted by Commonwealth Financial Network, Raymond James & LPL brought leaders and advisors together for focused discussions and networking

John Rooney warmly greeted over 860 advisors and about 780 other guests to Commonwealth Financial Network's nationwide gathering, which took place in mid-October in San Diego.

“It's been 17 years since we moved to San Diego [to open Commonwealth's West Coast headquarters], and we’re finally hosting the national conference in America's finest city,” explained the managing principal.

In February 2000, the facility had nine staff members. Today, it has 145. “When we opened, we had 70 advisors west of the Mississippi, and that number's grown to over 600…,” Rooney said.

“It's been a journey. Every day, every year we try and get better,” he explained. “Forging relationships has been key to building the business.”

Commonwealth CEO Wayne Bloom reviewed some of the year's “highlights,” including a letter he received about fiduciary issues in January from Sen. Elizabeth Warren. “Your feedback has been incredible. Our advisors genuinely care about the firm,” he said.

“This interactive manner is how we run the firm, and it is key to helping us get through [Department of Labor regulatory changes]. Where are we? The new fiduciary rule is unofficially delayed through July 2019, while the industry is adhering to its impartial conduct standards, as we have for decades.”

Bloom says Commonwealth “expects the DOL and SEC to vastly improve what has been proposed,” noting that the DOL's main regulations were “well-intentioned but not well-executed.”

The executive also says he is “optimistic” that the provision for class-action litigation will be eliminated and that the best-interest contract exemption (or BICE) will be used for commission-based retirement business.

“There are other things going on at Commonwealth,” he told the crowd. Revenue for 2017 is estimated to be $1.2 billion, a 16% increase from 2016. “We are the envy of the independent channel at nearly $659,000 [in average yearly fees and commissions] and 93% payouts.”

Total client assets for the firm's 1,700 financial advisors stand at $147 billion. The Preferred Portfolio Services fee-based platform has about $75 billion; the brokerage/third-party asset management platform has $55 billion; and the retirement-consulting platform has $17 billion.

“The PPS infrastructure has been receiving unprecedented asset flows since 1996,” Bloom said. Recently, it has been adding about $1 billion per month. “That is not unusual at all,” he added. The PPS Select program, designed for small investors, has about $6 billion in assets and includes roughly 14,000 accounts.

“The RIA-ization of Commonwealth continues,” the executive said. There are currently 50 advisors with the firm who have decided to drop their FINRA designation and do fee-based business exclusively.

“As I told Elizabeth Warren [in a response to her letter], the decision to have a fee-based or commission-based relationship is best determined by the advisor and investor,” Bloom explained. “We have no fee-based agenda here … and will support” both arrangements.

Other Milestones

“This is the first time that women [had] their own dedicated pre-conference session,” said Maria King, vice president of practice management. Attendance included 114 of the 370 women advisors with Commonwealth.

This year's gathering of female reps grew out of a discussion at last year's conference in Austin. “We had lunch and were asking advisors about the idea of a new women's event,” King explained.

Nine advisors said they wanted to work on support, networking and women's issues at Commonwealth in general. “They decided what the pre-conference would look like … and what agenda would be needed to be meaningful,” she said.

The group tapped behavioral scientist and productivity coach Barbara Kay for the keynote presentation. This was complimented by a panel of six-women advisors at Commonwealth who have been part of the same professional study group for several years.

“Kay talked about how [participants] can be powerful women in the face of all the expectations for them as entrepreneurs, advisors and in the other roles they play. There are so many things they can and need to do, including setting healthy boundaries — around their professional lives. A lot of it is about having the right village for support,” King said.

The panel discussion also impressed those in attendance. “So many women advisors identified with [those on the panel] and want to replicate what they are doing” in their practices and beyond,” she added.

The Commonwealth advisors who spearheaded the pre-conference event are: Barbara Allison, Barbara Appleby, Alexandra Armstrong, Jane Braun, Kristin Guibord, Katherine Liola, Christy Raines, Rajanee Shendure and Andrea Winterer.

Meanwhile, one advisor present in San Diego — Joseph Chornyak, Sr., of Columbus, Ohio — celebrated a significant milestone during the event: The team he leads hit $1 billion of client assets.

“We always set goals and targets, and I have great staff working with me,” Chornyak explained, highlighting the work of his 11-member team. “I remember making the target of $100 million, $250 million and $500 million,” he said. “Now that we’ve crossed $1 billion, our next target is $1.5 billion.”

Chornyak has been in the business for about 40 years and has spent the last eight with Commonwealth. “They have great technology, great support … and the conferences are wonderful. I always get nuggets [of wisdom] at the events, and I never stop learning and growing,” he explained.

The national event's keynote speakers on Oct. 12 were former Secretary of State Madeleine Albright, author and leadership guru Ken Blanchard and photographer Platon Antoniou.

At the event, Chairman Joe Deitch received the 2017 Commonwealth Special Service Award for his work founding the firm in 1979, supporting its advisors and giving back to the broader community.

Raymond James’ Gathering

Twenty-three years ago, when the Network for Women Advisors first started, 35 women attended the first Raymond James Women's Symposium. This year's gathering is “the largest Women's Symposium ever,” Michelle Lynch, vice president of the Network for Women Advisors, said during her opening session at the mid-October event.

There were about 630 attendees in total, including 400 advisors and top branch staff members, at this year's symposium in Tampa, Florida. “This is a great testament to not only the value of this conference but also the growing number of women in the profession and and those who are finding a home here at Raymond James,” she told the crowd.

Yet, the percentage of women at Raymond James and in the industry overall is still hovering around 15%. “As a firm, we are right around 15% women; as an industry, we are right around 15% women,” Lynch said. “And I have to tell you that it's proven much harder than I thought it was going to be to move that needle ever so slightly.”

In a media briefing held as part of the event, Raymond James CEO Paul Reilly expressed his disappointment that the percentage of women at Raymond James hasn't increased. But he also explained why that needle hasn't moved. According to Reilly, Raymond James’ recent acquisitions of Alex. Brown and Morgan Keegan “have been less diverse.”

However, Reilly says, in the last 12 months, 69% of the new hires have been diverse. He also highlighted five women who were recently recruited to senior roles — including Emma Bredin, the new chief compliance officer for Raymond James; Kim Jenson, the new COO for employee-advisor channel Raymond James & Associates Private Client Group; and Grace Jackson, the new chief operating officer of Raymond James Bank.

“I really believe we have a unique atmosphere here for women, I really do, so it's disappointing to me that [15%] statistic isn't higher,” he said. “I understand why it didn't grow the last two years because of these acquisitions. It really would have, but I don't want to use that as an excuse.”

During her speech, Lynch discussed the several initiatives the Network for Women Advisors has taken to get more women into Raymond James and into the industry. Part of that includes recruiting women from other firms, but Lynch admitted that effort alone is not going to raise the overall percentage of women.

“We’re not going to stop trying to attract women from other firms. But if we really are going to make a difference moving that needle, we’re not going to do it by shifting women from one firm to the next,” Lynch said. “So, we have to identify ways to get more women into this profession.”

Raymond James started a second-career initiative website about a year and a half ago to target women who are teachers, attorneys, real-estate agents and psychologists, for instance, and interest them in the work done by financial advisors.

“We’ve seen a lot of traffic on the website. A lot of interest from women wanting to learn more about what it is that you do,” Lynch said. “We’ve actually hired several of them into our advisor mastery training program, and we have a lot more still in the pipeline and we’re continuing to have those conversations.” These aren't big numbers, she adds, but it is creating a pipeline that the firm didn't have before.

Lynch also discussed the Registered Associate Mentoring Program (RAMP), a yearlong curriculum for registered sales associates with an interest in becoming financial advisors. “On average, we’re finding that 36% of the women who complete RAMP are moving into our [Advisor Mastery Program],” Lynch said. “Again, not big numbers, but a pipeline that didn't exist before.”

Raymond James also is working with colleges and universities that have Certified Financial Planner programs. The University of South Florida just launched its first CFP designation program, and Raymond James helped fund its first year.

“This is going to be a very organic and slow process, but one we must start and one we must advocate for if we’re going to make a difference,” Lynch told the crowd. “It's important that our workforce reflect the very diverse client base that we have and our clients of the future.”

LPL's Retirement Event

LPL Financial executives and staff are pushing to attract advisors from the former National Planning Holdings’ broker-dealers to its platforms. One selling point for these 3,500 registered reps is LPL's retirement plan program, Retirement Partners.

“The capabilities that they are going to have at LPL are really unmatched for indie reps,” said Bill Beardsley, head of Retirement Partners, in a recent interview. The firm's retirement plan consultants and the technology it offers advisors serving such plans work “efficiently and effectively with scale to truly drive outcomes … in ways that were unavailable to them at their prior BD.”

Beardsley and other executives met with about 200 of the IBD's most successful retirement plan advisors at the business unit's annual conference in Rancho Palos Verdes, California, in early October — two months after the firm bought NPH's broker-dealer network. The firm's leaders spoke with retirement plan reps about “taking the implications of [industry] changes and moving your businesses forward” and about LPL's “commitment to the retirement business,” according to Beardsley.

Andy Kalbaugh, head of national sales and consulting, underlined these themes in his address to the group. “It was one of the first times we’ve included a senior executive to deliver our business update as part of the opening session [for the Retirement Partners conference]. It was great to have him here and [is] a great sign of where we are and what we value,” Beardsley explained.

Overall, about 1,400 members of LPL-affiliated advisors are part of the firm's Retirement Partners group; they work on plans covered by the Employee Retirement Income Security Act of 1974 on LPL's hybrid platform. About 800 do retirement work via LPL's corporate platform. LPL advisors now serve about 46,000 retirement plans.

Out of a total of 14,000 LPL-affiliated registered reps, about 6,000 advisors — who mainly work in banks or are wealth-focused FAs — are doing “tactical retirement [plan] work” with LPL's Small Market Solution, the executive says.

Nationwide, of the roughly 300,000 advisors across the industry, about 25,000 specialize in 401(k) plans, according to Fred Barstein of the Retirement Advisor University, and have $25 million in assets or more. Roughly 2,500 have $250 million or more.

“We had over 200 of these elite retirement plan advisors in attendance,” Beardsley said. “We have 80 home-office staff dedicated it to the retirement-plan space, which is one of the largest allotments in the industry, because of the size of our business.”

The firm wants to help more of its advisors grow their retirement-plan business by tapping into these resources. “This [program] outsources the risk and functions of moving money away from the plan sponsor to LPL,” he explained. “We’re having terrific success with it, as it's being broadly embraced.”

The IBD also is upbeat about its Wellness Assessment Capability — a questionnaire for retirement clients that directs them to a website with workshops and support. “There's a strong synergy between qualified-plan advisors and wealth advisors … [tied to] an outcomes-based approach and driving retirees’ security — meaning the accumulation and then drawdown of nest eggs in the most efficient ways to draw the most income,” Beardsley said. “This is where wealth management can complement and drive the commitment to successful retirement.”

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