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Commonwealth Financial Highlights RIA Focus, Tech and 'Grit' at Event

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Commonwealth Financial Network is on track for $1.4 billion in revenue this year, executives said at the group’s annual conference, which took place in early November in Austin, Texas. That’s up from about $1.15 billion in 2017.

But the independent broker-dealer insists numeric growth is not its focus, and there’s no plan in sight to double its roughly 1,800-advisor headcount. “We continue to step up our game … which puts us in the best position to help you and your investors,” said CEO Wayne Bloom during a general session.

Part of this effort, Bloom says, includes a focus on the growing number of RIAs. There are about 75 advisors who have fully embraced this model, “and more are doing so,” the executive said.

According to CFO Trap Kloman, the firm’s RIA team has 22 employees for a ratio of about three advisors to one support staff. “It’s a separate group … that replicates the services offered by our broker-dealer team,” he explained in an interview during the conference, which drew about 1,175 advisors and 745 other guests.

As a growing number of advisors decide to drop their FINRA license and embrace the fee-only business model, “We are working on new service pods for the [fee] ‘onlies’ to serve them optimally,” said Bloom. “We are looking at where the puck is going.”

The younger generations of advisors and financial planners “are more inclined to be fee only,” John Rooney, managing principal, San Diego, explained during an interview. “They don’t want the commissions, unlike some of the old timers.”

FINRA President & CEO Robert Cook “gets it,” Rooney adds. “The clock is ticking,” in terms of regulators having the time they need both to overcome barriers that inhibit the long-term growth of traditional Series 7 advisors and to work with the SEC in the short term to harmonize rules that are in the best interest of clients and advisors.

Other Matters

Regardless of what happens in Washington, Commonwealth wants to “keep the critical feedback coming” from its advisors, Kloman says, so it can further improve its service score of 95.8.

The firm “finally” won its fifth J.D. Power award for advisor satisfaction in the independent channel this year, Bloom told those attending the Nov. 8 keynote. A slide soon popped up showing New England Patriots quarterback Tom Brady with his Super Bowl rings next to a photo of Bloom holding five J.D. Power trophies. “Who wore them better?” Bloom asked.

“We’re boringly consistent,” said Andrew Daniels, managing principal of business development, during an interview. Recruiting has been “fantastic” this year, he added, and “explosive” in the past two quarters.

As for early 2019, Daniels expects further momentum, much of that based on referrals, he said. “We’re not changing our recruiting [strategies or] … incentives,” said Kloman. “It’s our value proposition that is winning us advisors.”

Tech News

Commonwealth Financial Network has partnered with RightCapital to share more financial-planning tools with its advisors, which it introduced at its recent conference. The integration will let the broker-dealers and RIA’s roughly 1,800 independent advisors build financial plans for clients more efficiently, the two firms say.

“For the past decade, Commonwealth has integrated goal tracking right into Client360 [software], straddling the line between basic calculators and comprehensive financial-planning software,” according to Darren Tedesco, managing principal of Innovation and Strategy at Commonwealth.

With the partnership, Common-wealth’s Client360 software now will show clients’ goals “in sync with RightCapital’s own software, allowing advisors to run the full gamut of planning from simple to advanced,” he explained. RightCapital’s technology has interactive planning features, such as tax-efficient retirement income withdrawal strategies, with Roth IRA conversions and a Medicare module.

The BD/RIA has a $250-per-month technology fee for performance reporting, CRM, goal tracking, document storage, proposal, rebalancing software and analytics. For its part, the firm spends about $70 million a year on IT. To date, it has invested some $500 million into its technology platform and services.

(Commonwealth is based in Waltham, Massachusetts, while RightCapital has its main office in Shelton, Connecticut.)

Other speakers at Commonwealth’s national event advisors included Mick Ebeling, founder and CEO of Not Impossible, a social innovation lab, highlighted how “doing good is good business.” He urged members of the audience to do some hard thinking and plenty of teamwork to turn “the impossible” into “the possible,” as he and his team have done to help amputees in Sudan, for instance. “The grit is what’s important,” he told the audience.

At the start of the conference, Commonwealth’s team of 125 advisors, guests, and home office staff helped improve Sammy’s House, a facility for medically fragile and/or developmentally delayed youth. For the final session, President George W. Bush discussed the importance democracy along with the need for respect and for helping those in need.

Janet Levaux is editor-in-chief of Investment Advisor. She can be reached at [email protected].


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