John Rooney warmly greeted more than 860 advisors and about 810 other guests at Commonwealth Financial Network’s nationwide gathering, which recently took place 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 on Thursday.
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, D-Mass. “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] regulations. 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,” he says, 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 an unprecedented asset flow 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 Fnancial Industry Regulatory Authority 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 types of arrangements.