Public, Private or PE? Commonwealth Advisors (and Others) Have Decisions to Make

Other key topics included Cetera’s multi-custodian strategy that offers both self-clearing and third-party custody capabilities.

“We have built a model that makes it as easy as possible for advisors to come into our ecosystem without major hurdles,” Durbin said. “There’s always going to be some friction in an advisor’s transition process, but it doesn’t have to be a huge headache.”

Here are highlights from our conversation, edited for length and clarity:

THINKADVISOR: Before we talk about recruiting and the LPL-Commonwealth topic, could you give us a high-level view on how the first half of 2025 has gone for the financial advisor industry and its clients?

MIKE DURBIN: It’s funny, because yes, this has been a dramatic time in terms of U.S. and global news events, but the fact of the matter is that markets have been pretty resilient. If you look at the big indices, they have really bounced back in a dramatic way after the Liberation Day tariff news resulted in some dramatic downward swings.

For our industry, demand for advice has only increased in this environment, and we’re not changing our tactics based on short-term market moves. In fact, I would submit that we are poised for even more acceleration of the advisor industry consolidation wave that has been happening for years. This type of environment puts a further premium on scale and having the resources available to help advisors and clients navigate these times.

At Cetera, we’ve very consciously built a hybrid business that has diverse revenue sources across commission-based business and fee-based business. So that gives us a ballast as market conditions change.

Generally, if we see asset values go down and the fees paid on assets fall as a result, we also see trading volumes go up, and revenue on that side of the business spikes. It puts us and our advisors in a more stable position overall as a business.

THINKADVISOR: I understand that Cetera has rolled out an AI-based note-taking and meeting summary tool for advisors in collaboration with Jump AI. How’s that going?

DURBIN: Thanks for the question, because it’s been a real success. We expected advisor take-up would be substantial, but the rate has really surpassed our expectations.

You’ll recall that we have about 12,000 advisors, plus or minus, and we’ve already seen 1,500 of them fully adopt this technology since we introduced it in May. Frankly, we wish all our offerings would see this pace of adoption, but I think it just shows how important it is for advisors to be as efficient as they can while they serve clients.

What they appreciate is that this is about more than just note-taking. The platform automates meeting documentation, yes, but it also generates CRM updates, compliance logging and follow-up workflows. Advisors who are using it really love it.

THINKADVISOR: We have done a lot of reporting on the LPL-Commonwealth acquisition, including coverage of two open letters written by Cetera’s Todd Mackay directly inviting Commonwealth advisors to join up. How are you thinking about the current recruiting environment, especially with respect to Commonwealth teams that might not want to land at LPL?

DURBIN: There’s no doubt that the LPL-Commonwealth news has sparked a big push from outside firms — including ourselves — to try and win over some of these teams. The reasons why are obvious. Commonwealth has carefully built a business of advisor teams that have higher growth rates and more assets under management than the industry average.

I personally know the Commonwealth business really well, because they were a top client of mine during my 14 years at Fidelity. You see a lot written about the Commonwealth culture, and I agree that it’s been a differentiator for them. For a long time, they had successfully resisted the urge of just maximum headcount of advisors under any condition, and they were serious about the no-jerk clause.

That is what makes this opportunity so unique for a firm like us as we try to liberate some of those Commonwealth advisors. I’ve often said that Cetera strives to make the big feel small, and that’s why we have embraced a multi-affiliation model that now has five distinct channels. These channels, in turn, are composed of many smaller advisor communities who can share best practices and build their own subcultures within our firm.

Commonwealth advisors who express the most interest in making a move to Cetera or another firm are those who worry about joining a much larger organization, where that boutique feel and the deep connection to the top leadership team might not be there. That’s why we’ve seen LPL making promises to the incoming advisors about maintaining their boutique feel and even the Commonwealth brand itself.

It remains to be seen how effective that will prove to be in the long term. What I can say with confidence today is that many teams that are currently a part of Commonwealth would have previously considered and rejected the idea of joining LPL. Some may feel differently today, but many will be looking for other options.

Interestingly, this push to make Commonwealth advisors more comfortable has actually sparked some interest in firms like Cetera from LPL’s current advisors. They see all this focus and attention on pleasing the Commonwealth folks that they can start to wonder, what about the rest of us?

THINKADVISOR: When you’re talking with potential recruits, how much does the topic of ownership structure come up? There’s been a lot of talk about Commonwealth going from private to public, while Cetera has been on its own journey as a private-equity owned company.

DURBIN: Yes, this is a pretty frequent topic of discussion, and that’s been one reason why the LPL-Commonwealth deal has been playing out a little differently from other big acquisitions we’ve seen over the years.

We’re seeing a formerly privately held business be acquired by a publicly traded company. As a result, we’ve gotten more public visibility into the structure of things like LPL’s retention compensation packages than we typically see in a private deal.

As you noted and as we’ve discussed previously, we are a PE-owned company. That fact does come up in some online discussions and you sometimes see people making negative statements and assumptions about what that means. But I can say unequivocally that we feel that being PE-owned gives us a distinct advantage in this environment.

First, we’re owned by Genstar. Those who understand the financial services space and spend the extra moment to know who our sponsor is don't ask those leading questions. They know what it means for us to have Genstar’s backing, and how our long-term strategic vision fits in perfectly with Genstar's current and former portfolio companies.

Second, people who aren’t in our situation often assume that private-equity ownership means the same thing as private-equity leadership, and that’s just not the case. Of course, we work very closely with the Genstar board, and they hold us accountable for meeting our goals and ambitions. But they aren’t interfering with our strategy or pushing us to change how we do things.

It’s the exact opposite. They are fully supportive of the things I’ve been describing — our multi-affiliation model, our multi-custodial model, or organic and inorganic growth strategies. Ultimately, we have a great strategic partner in Genstar. It's more than just a capital partner.

THINKADVISOR: Can you say more about the firm’s approach to working with multiple clearing and custody providers? Seems safe to say you’re not heading toward only self-clearing, even as the organization continues to grow?

DURBIN: Yes, that’s right, we have no interest in moving towards a fully self-clearing model. We have great relationships with both Pershing and Fidelity/NFS, and that’s not going to change.

Having this structure means we can often eliminate one of the big pain points that is associated with advisor transitions, and that is repapering. Some teams that join us decide they want to work with us for clearing and custody, and that’s great, but it’s not going to be a requirement.

Pictured: Mike Durbin