It's been a little more than two weeks since LPL Financial announced its acquisition of Commonwealth Financial Network for $2.7 billion in cash, a move that shocked many in the wealth management community given Commonwealth’s long-standing reputation as a fiercely independent and privately held organization.
Industry experts immediately speculated that the news would set off a recruiting frenzy for Commonwealth’s elite practices, and one advisor within the “Commonwealth family” who agreed to speak anonymously with ThinkAdvisor said that expectation is indeed playing out.
So far, the advisor said, he has been contacted by the likes of Raymond James, Cetera, Wells Fargo, Morgan Stanley, Ameriprise and more. So, too, have many of his colleagues across the Commonwealth organization.
“They want to pull as many Commonwealth advisors as possible during this process,” the advisor said. “My sense is that Raymond James and Wells Fargo are really all over this. The same for Cetera.”
Morgan Stanley, Raymond James and Wells Fargo all declined to comment, while Ameriprise provided a short statement about its efforts.
“We’re having conversations with advisors from across the industry, including those from Commonwealth, who are looking to grow and affiliate with a leading brand and firm,” a spokesperson said. “In the current environment, advisors are attracted to the strength of the Ameriprise value proposition, our stability and track record of navigating uncertainty.”
Cetera Financial likewise confirmed their interest in winning Commonwealth advisors who feel LPL isn’t the right fit for their practice and shared the text of an open letter from Todd Mackay, president of Cetera Wealth Management.
LPL offered the following in a lengthy written statement about the matter: “Unlike other firms, LPL will provide to Commonwealth advisors an advanced experience that starts with a frictionless, paperless conversion, avoiding disruption to their clients and ensuring the continuity of their businesses. We are focused on the opportunities that matter most to advisors while honoring the community and culture that make Commonwealth such a respected company in our industry.”
Echoing the Commonwealth advisor, several industry recruiters and acquisition consultants have told ThinkAdvisor that some degree of “poaching” will be inevitable during the transition process. Which firms will have the most success is an open question, but what’s clear, they agreed, is that Commonwealth advisors are in a real position of strength during the decision-making process.
“Commonwealth’s top producers find themselves in the midst of garnering both solicited and unsolicited offers from various broker-dealers,” said Simon Hoyle, recruiter and founder at RIA Choice. “Some are comparing what their ‘total package’ may look like somewhere else, but many are also negotiating with firms they’re most interested in, and they now have a guaranteed offer as a bargaining chip.”
One Advisor’s Experience
The acquisition took Commonwealth’s advisors by complete surprise, the advisor said, but he is striving to keep an open mind about the future at LPL.
“We were always under the impression that Commonwealth would stay a privately owned company forever,” the advisor said. “There were some rumors on the street in the last three to six months that the leadership team was looking for some liquidity, but it wasn’t anything concrete. We all went to a conference recently in Hawaii and there wasn’t any talk about this.”
The advisor said many colleagues are “not necessarily thrilled about the selection of LPL,” but that fact is not a slight against the purchasing firm.
“It’s more of a culture shock thing,” the advisor said. “They are a large, publicly traded company with 29,000 advisors with a history of buying broker-dealers and molding them into the way they do business. That’s just a lot different from what Commonwealth was built to do.”
The advisor also offered high-level details about how LPL and Commonwealth’s executives are communicating with advisors about the deal, including the retention incentives they are putting on the table.
Put simply, he said, LPL is offering a retention package that nominally offers advisors less compensation than practices might be able to get from outside firms looking to acquire them. But, he emphasized, LPL is bringing a lot of value to the table for advisors in terms of new technology, liquidity to grow or exit the business, and a seamless transition process — so it’s important for Commonwealth advisors to see the bigger picture when making any decisions about where to base their practices moving forward.
“In terms of assets under management, we’re looking at retention compensation in the range of 40 to 50 basis points for smaller practices, and it's more like 60 to 75 for big practices — maybe a little more for the top practices who push harder to negotiate this,” the advisor said. “That’s lower than the transition number that Wells Fargo or Raymond James might be offering, but again, you need to understand the added costs and inconvenience that’s going to come along with transitioning. Retention and transition are two very different things.”
Regarding its retention compensation approach, LPL’s statement included the following: “Our retention program is tailored for Commonwealth advisors, grounded in maintaining their community and industry-leading experience, as well as their all-in ongoing economics. In addition to our commitment to a seamless conversion, we've added financial incentives, based on several factors including assets under management, revenue, asset mix, growth rate and tenure at Commonwealth.”
Can the Culture Hold?
The advisor said LPL’s leadership has been aggressive in its messaging to the Commonwealth advisor network, pledging to ensure that the “boutique, white-glove” approach will be kept intact. He said he believes LPL’s leadership is sincere in this, but he worries about what could happen over the longer term.
“The message we are getting from LPL’s leadership is that they want to learn from Commonwealth,” the advisor said. “They say they are going to make us more of a subsidiary instead of molding us into their way of doing things. What concerns me is that, yes, that might be the leadership’s intention today, but what if we see a change at the top down the road and a different perspective?”
LPL’s statement also addressed the culture question. “LPL is deeply committed to preserving Commonwealth’s community, brand and premium service,” it said. “Commonwealth with LPL will not only leverage all the benefits of the Commonwealth experience, it will also deliver meaningful value to advisors through innovative technology, business and capital solutions, and M&A opportunities.”
The advisor said he is not sure what to expect in terms of the number of Commonwealth advisors who will ultimately end up at LPL and how many may move to the various firms that are trying to win them over, but that should start to become clear in the coming months as important deadlines approach.
Decision Time
June 1 is an important date for Commonwealth teams to keep in mind, the advisor said.
“They want to know by June 1 what you intend to do,” the advisor said. “They’re incentivizing a pretty fast decision because, if you sign by then, apparently you will get the retention deposit in your account by the first day of August.”
However, the clearing platform transition is scheduled for mid-June 2026 — buying advisors more time. Those who ultimately depart could still agree to take the retention offer, the advisor explained, and then they could use a buyout from another firm to pay back the incentive if they later decide to leave.
“So, that gives you more time to make what is really a big decision about your future,” the advisor said. “If you wait until after June 2026, then you’ve got your hands full as you’ll have to completely repaper.”
Also notable, the advisor said, is that regulators are requiring LPL to send a letter to all of Commonwealth’s clients on June 1 detailing the acquisition.
“A lot of advisors are worried that letter will confuse clients, and I think they’re right to think that way,” he said. “I see two approaches here, but in either case, advisors need to get out ahead of that communication.”
First, if the advisor is happy to land at LPL, then they should send out a supplemental letter to clients right ahead of the time LPL will send its communication.
“You can position this as, ‘Oh, this is great news and we’ve got a great new partner and all these new resources and capabilities,” the advisor said. “On the other hand, if you have reservations about LPL or you’re negotiating a better retention package, you can send a client letter that says, ‘Hey, this transaction has happened and we’re hard at work doing our due diligence. Please stay tuned.’”
More Perspective From a Recruiter
Hoyle noted that high-producing Commonwealth advisors and teams are ideal acquisition targets for the likes of LPL and its rivals.
“Their percentage of revenue from advisory fees is industry-leading, and they benefit from total revenue per advisor,” Hoyle explained. “And their scale spills over in many ways, including the logistics of servicing the advisors. For example, it’s typically much more efficient to service one $5 million revenue practice compared to 10 $500,000 revenue practices.”
Another benefit to the broker-dealers who win these advisors is the boost in average production.
“Now with 30,000 LPL advisors, it would take a high percentage of Commonwealth reps to join to make a significant change in that number across the entire BD,” Hoyle said. “But if LPL follows the playbook where they keep the Commonwealth community and culture intact, it showcases and confirms LPL can successfully provide the higher level attention associated with high revenue and ultra-high revenue producers.”
At the end of the day, Hoyle said, broker-dealers with top producing advisors have a way of attracting more top advisors.
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