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November 05, 2012 at 05:46 AM
Waltham, Mass.-based Commonwealth Financial executives said Saturday they plan to give its representatives more official options in how they do business with the independent broker-dealer, starting in the second quarter of 2013. This move could help the firm attract more breakaway brokers and other advisors, while giving its roughly 1,400 existing reps more opportunities to adjust their own business strategies.
“I’ve spoken with at least three or four advisors who have said they want to drop their FINRA registration and have greater flexibility,” said Commonwealth CEO Wayne Bloom, in an exclusive interview Saturday with AdvisorOne during the group’s national conference in San Antonio. “This is what I call a glide path issue, and we are hearing more and more about it.”
As of next spring, independent advisors will be able to drop their FINRA registration and use Commonwealth’s RIA, for instance, or operate solely as their own RIA. As is the case today, they also can be affiliated with Commonwealth and keep their FINRA registration, be dually registered with FINRA and as an IAR, or run a hybrid business with FINRA registration and their own RIA.
“We are going to take our inward-facing compliance systems and make them outward facing, so an RIA can protect his or her own business and ride on our technology,” said Bloom. “I see it as a way that advisors can go IA only without being alone.”
“The business has evolved to the point that how advisors are registered is essentially meaningless,” he explained. “Offering them tools that open options for them in how they do business, a glide path, is meaningful.”
Commonwealth advisors now produce about $700 million in yearly fees and commissions, 70% of which is fee based. The independent broker-dealer “is marching toward” becoming a $1-billion firm with a $500,000 production average over the next few years, while maintaining its reputation for boutique-level service, Bloom says.
Breakaway Brokers
he breakaway movement is a real thing, and we’ve done a fantastic job getting the word out that Commonwealth is a sophisticated, service-oriented firm, and that we are interested in capturing them and building a bridge to that market in ways that are a good two-way fit,” explained Andrew Daniels (left), managing partner of field development, in the same interview. The second-quarter 2013 rollout of this new approach, he and other executives added, will help Commonwealth’s “value proposition resonate more” with this group of advisors.