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Commonwealth CEO Upbeat on DOL Fiduciary, ‘RIA-zation’

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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.

Other Milestones

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“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 female advisors with Commonwealth.

This year’s gathering 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.”

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.”

The group tapped behavioral scientist and productivity coach Barbara Kay for the keynote presentation. This was complemented by a panel of six female advisors at Commonwealth who have been part of the same 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.”

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.

The Commonwealth advisors who spearheaded the pre-conference 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 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.”

The national event’s keynote speakers on Thursday 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, supporting its advisors and giving back to the community. 

— Check out BDs Address Fiduciary Rule, Growth Challenges on ThinkAdvisor.