(Phoenix) Commonwealth Financial Network wants to maintain its identity despite some serious expansion, say executives attending the broker-dealer’s recent national conference, held Oct. 26-30 at the JW Marriott Desert Resort & Spa. And, as far as the independent BDs reps are concerned, that plan is just fine.
“We are focused on controlled, managed growth,” says Joe Deitch, chairman and CEO. “It’s more about quality than quantity.” He also told advisors that the company isn’t in any talks about a possible sale of the business nor is it making any plans to go public.
“It feels that the Commonwealth staff members are genuinely concerned about you and your experience with them, not the bottom line,” says Matt Slewa of KSP Financial Consultants in Waltham, Mass.
Still, some of Commonwealth’s numbers are going up, making it likely that a possible suitor or two could came calling: for instance, the average production of a Commonwealth advisor is now $300,000, and the average AUM is $40 million.
“This is a big change from 1990, when we had one advisor with production of $300,000 or more,” notes Deitch. Today, 33 advisors are producing $1 million or more, he adds.
Furthermore, the Waltham, Mass., and San Diego-based BD has raised its minimum production level for new advisors to $200,000. “While we’re being more selective and therefore fishing in a smaller pond, our profile in the industry continues to increase and that puts us on more folks’ radar,” explains John Rooney, managing principal in San Diego.
But, like other firms, Commonwealth wants to make sure it gets the right fit. “About 55 percent of prospective advisors are turned down,” Deitch explains. “That’s up from 35 percent two years ago.” Of those getting a thumbs-up, some 75 percent visit and join.
In addition, Commonwealth’s revenue is on track to grow about 20 percent this year and reach about $400 million; fee-based sales could total $13 million vs. $9 million a year ago. And assets should tick up to some $40 billion from roughly $30 billion in 2005.
As for the total number of advisors affiliated with Commonwealth, that stands at about 1,080 — up about 100 from a year ago. With some 400 employees, that gives the broker-dealer a staff-to-advisor ratio of about one to three. “That compares quite favorably with that of rivals, where one to five or one to six and higher is the norm.”
Addressing a crowd of 600-plus advisors and 540 other guests, Deitch and Commonwealth President Peter Wheeler took turns answering questions about the firm’s direction. The questions had been sent in by advisors via e-mail in advance.