Commonwealth to Open, Hire Staff for New Home Office
He added: “Our thinking going into it was they’re independent advisors. They didn’t want us necessarily [tied to] the income side of their earnings. They wanted to be more arm’s length. For the most part, that’s true, but we’ve also had some advisors” who said they wanted a “deeper partnership” with Commonwealth. “So we’d like [these transactions] to be purely earnings-based or EBOC [earnings-before-owners-compensation] based.”
What Commonwealth is “trying to do is really build deeper integrations into our bigger practices to help them run better and grow faster,” Bloom said. To date, there’s been “maybe a half a dozen practices we’ve invested in, and there’s several more in underwriting now. We’ll take up to a 40% stake” and will be “staying in a minority position.”
New Wealth Offerings
The Private Client group’s suite of enhancements aim to help advisors address the complexity of HNW investors, Commonwealth said. Resources will include lending solutions, legacy planning, tax management strategies and concierge services such as bookkeeping, performance aggregation, cybersecurity and health care.
In 2024, Strategic Retirement Solutions will provide additional support to advisors who want to do more business in defined contribution plans. A bundled 401(k) solution for small and midsize businesses will be run by the firm’s PlanAssist team, which handles fiduciary services, including selecting and monitoring the plan lineup and quarterly reporting.
High-net-worth clients, defined as those with at least $5 million in assets, now represent about 1% of households served by the firm’s 2,100 affiliated financial advisors. These clients, though, account for nearly 19% of total assets on Commonwealth’s platform.
PPS Select
Commonwealth is also seeing success with PPS Select, its in-house turnkey asset management program, Bloom said. Looking at data from 2018 to 2022, it found that advisors who used its TAMP “in a meaningful way grew 700 basis points faster per year than those who didn’t,” he explained.
“I think you can attribute that to just the time spent doing asset allocation, fund monitoring, fund selection [and] managing around systematic withdrawals,” Bloom explained.
“What was particularly interesting is we segmented the users of the service,” he added. “Not only did they grow 7% more per year … [but] the best advisors were the highest users of this service. And those who used it grew the fastest. So it was a pretty fascinating thing.”
Pictured: Wayne Bloom
