We feature Commonwealth as the next firm for our Vantage Impact Firms in Focus series.
As an independently owned, privately held firm, Commonwealth offers advisors an assortment of models, platforms, and resources to choose from when considering how to partner with them.
In this article, we discuss what differentiates Commonwealth from other firms in the financial services industry, who they are looking for in a “right-fit” advisor, and what they can offer financial advisors who transition to their firm.
Founded in 1979 by current chairman, Joe Deitch, Commonwealth is the nation’s largest privately held RIA-independent broker/dealer. It is now fully owned and controlled by 12 tenured managing principals who remain a part of day to day firm operations.
Today more than 2,000 advisors partner with Commonwealth’s 900 supporting staff members through multiple affiliation models, and they boast some impressive “advisor satisfaction” survey results and awards. For those advisors operating independently, but affiliated with a broker/dealer, Commonwealth has been ranked #1 for “Independent Advisor Satisfaction Among Financial Advisors” by J.D. Power eight times in the last decade.
Also noteworthy, Financial Advisor Magazine’s “Independent Broker Dealer Ranking 2021” ranked Commonwealth #6 in Total Gross Revenue with the #1 highest Gross Revenue per Representative ($814,075).
Fidelity Institutional provides clearing, custody, and other brokerage services to Commonwealth through National Financial Services LLC (NFS). While Commonwealth is one of NFS’s largest and longest-tenure correspondent firms, Commonwealth owns the operations and technology processes which allows for more advisor autonomy.
Commonwealth offers four different affiliation models for advisors to provide more flexibility in what they are looking for and what goals they are trying to achieve.
Here we provide a bullet point overview of some of the major components of each type of affiliation.
Click here for a Commonwealth “Compensation and Pricing” brochure with information about compensation and fees for each type of model and specific program.
A few noteworthy highlights of Commonwealth’s payout rates and various programs to help you make sense of the different options:
For advisor teams under the advisory fee pricing model, groups can aggregate production to increase their payout level for the entire team.
Commonwealth bases compensation for PPS programs on account size as one of the factors, but there are also two different methods for advisors to grow: enhanced PPS payout levels and the “Growing Advisor Program” (GAP).
For both of these methods, Commonwealth offers administrative fee discounts commensurate with their total PPS program AUM. The growth of your business directly results in a reduction of the program’s administrative fees.
Specific to GAP, or the Growing Advisor Program, the advisor’s administrative fee level actually has a “ceiling” or is “capped” at a particular level. The GAP cap reduces administrative fees on smaller account sizes and allows the larger accounts to be assessed whatever is less: the standard rate or the GAP cap.
In addition to the standard PPS compensation schedule, Commonwealth allows advisors to manage client accounts on a discretionary basis, and then you are compensated from an annual management fee based on a percentage of the account’s value.
If you would like to discuss these details and talk about which model would be best for you based on your current book of business and situation, let’s schedule a consultation.
Commonwealth’s variety of affiliation models with different “business requirement” entry points of AUM provides advisors a unique opportunity to shift their type of affiliation as they grow in production.
For advisors looking to leave the wirehouse and become more independent, starting an RIA might not be feasible or realistic. While this may be a career goal and a major interest of the advisor, the production levels may not quite be there or the life timing may not be right.
Commonwealth’s models of Dual Registration or IAR-Only allow advisors to immediately benefit from the firm’s large infrastructure of support and build their practice, with the eventual “glide path” towards a hybrid or fully independent RIA when it makes sense in the future.
Technology platforms are essential for an advisor nearing the first quartile of the 21st century, yet providers are still learning the best ways to support the financial services industry. Most firms need to use multiple platforms or systems to serve clients and run their practice sufficiently.
For example, advisors may use CRM (Customer Relationship Managers) like Redtail or Orion to store financial and customer data, but they still integrate this CRM with a customized version of Salesforce installed a decade ago to serve some need. Then the practice has invested in tools like eMoney to assist with Financial Planning. Now Salesforce sales reps keep calling to convince decision-makers they need to upgrade to Salesforce Financial Cloud, and team members are clamoring about needing a new tool to prospect and generate leads.
Sound familiar?
For those interested, Commonwealth built their own fully integrated technology stack called Advisor 360 to solve this problem. Rather than invest 100’s of thousands of dollars for their 2,000 advisors to utilize a variety of different platforms, Commonwealth created their own system for advisors and support staff to use with clients. Advisor 360 combines CRM tools, financial and customer data, prospecting, investment management, and financial planning tools into one suite for advisors to use.
Feel good about your current tech stack? It’s important to note as well - advisors can plug and play their own technology (Risk Analyze, Planning Tools, Redtail, etc).
Commonwealth also provides ongoing support and training for advisors and their staff members to make sure they are utilizing the different suite of tools to the best of their abilities.
For advisors who are not attached to their current technology platforms and are looking for a way to simplify things, Commonwealth’s Advisor 360 is an interesting and beneficial solution to consider.
Note: While not mentioned above, Vantage Impact is a HubSpot Certified Partner, and we help financial advisors utilize its suite of CRM, marketing, and sales tools to earn more clients and grow their practices.
In our work and review of Commonwealth, we were struck by the comprehensive infrastructure of support for advisors, in both their emphasis on its importance, and what systems have been established to back up their philosophy.
In addition to the technology platform and training mentioned above, Commonwealth provides advisors support in the areas of transition consulting, marketing, practice management consulting, and compliance.
Here is a quick rundown of the various services offered in each one of these areas:
Offering a variety of “supported independence” models, Commonwealth wants advisors who are seeking more independence, but who will also embrace the comprehensive support provided by the firm.
“Right-fit” advisors will primarily do fee-based business and want to spend their time interfacing and working directly with clients. They will see the value in the integrated technology stack and feel comfortable working with Commonwealth’s practice management team to build a plan for success.
Advisors who are kind and affable, with clean compliance records, will fit in best to Commonwealth's culture.
Commonwealth differentiates itself with its commitment to multiple affiliation models that are flexible and offer advisors a way to run their practices independently, but still have direct access to exhaustive support systems.
The integrated technology stack with different suites all held under one platform is a major differentiator and could offer a solution for advisors who have been struggling to navigate the complexities of this environment.
Commonwealth is not for everyone, and advisors who prefer to outline, dictate, and run every element of day-to-day practice operations by themselves will probably not thrive in this firm.
If you want to learn more about Commonwealth, including specific payout rates and options per affiliation model, or start exploring other options, reach out to us and schedule a consultation. We can dig into the details and take you through the process.