Commonwealth Now Aiming for $1T in Assets

What You Need to Know

The target "reinforces" the firm’s commitment to advisor growth, CEO Wayne Bloom says, and includes some "light M&A in the future."
The AUM target is aggressive, because the firm said its more than 2,000 independent advisors oversaw over $272.9 billion in assets last year.
The RIA/BD also plans to reduce platform fee pricing and to expand its outsourced business solutions offering.

Commonwealth Financial Network has set a strategic goal of reaching $1 trillion in assets under management, the firm announced Thursday, noting that was one of three new major business growth initiatives disclosed to advisors at its annual National Conference earlier this month.

The target is an aggressive one given that the RIA/broker-dealer said its more than 2,000 independent financial advisors oversaw over $272.9 billion in assets across the U.S. as of Dec. 31, 2021.

“The way we’ve mapped it out, we think it’ll take about a decade” to achieve that goal, said Commonwealth CEO Wayne Bloom. “The compounded growth rate that it’ll take to get there is about 14% and, if you look at our performance over the past few years, it’s been about 13 and a half percent,” he told ThinkAdvisor.

“So it’s pushing a little bit harder from a growth rate perspective that we’ve already achieved,” he said, adding, “in all fairness, as the math gets bigger, the growth rate becomes a little more challenging, particularly if you want to maintain the same values and care and everything that we typically do.”

‘Some Light M&A’

The firm will be “increasing our recruiting, helping our existing advisors grow [and] we do see some light M&A in the future that’ll be needed to achieve our goal,” Bloom said. But he added M&A transactions are “certainly not the driver.”

Any M&A transactions the firm does will need to be “consistent with the sort of values and processes that we’ve used to grow the firm. We’re not going to compromise that at all … . Mindless aggressive growth to get assets is not” how Commonwealth operates, he explained.

Although the firm has no debt and has the funds to make acquisitions “within reason,” he told ThinkAdvisor, “There’s going to be more M&A on the part of the advisors [through] our new entrepreneurial capital program where we are extending debt or taking equity positions in the practices, and that’s for them to do M&A” deals.

After all, he added, “Whether the M&A comes directly to us in the form of a firm or other advisors, or through our existing advisors, it’s still helping us achieve our goal.”

At the National Conference, Bloom outlined what the firm conceded was an “ambitious goal” to reach $1 trillion in AUM in front of almost 2,000 conference attendees.

“This objective will allow us to increase our reinvestment in the firm and continue to provide the right products and services that enable Advisors to succeed and grow, today and tomorrow,” Bloom said Thursday in the press release.

“Our path to a trillion is all about elevating our ability to help Advisors be the best they can be — for both their clients and their staff,” added Bloom. “Guided by our community and Advisor-centric values, we’ll continue to pursue a well-managed growth strategy — this is essential for the long-term innovation and financial strength that makes Commonwealth the best partner for client-focused Advisors.”

The Two Other Growth Strategies

The other two key business growth initiatives the firm disclosed to advisors at the National Conference were reducing platform fee pricing and expanding its outsourced business solutions offering.

Combined, the three initiatives “will ensure the firm’s independence and continued support of its affiliated advisors and their clients,” the company said in a news release. They will also “help advisors scale their businesses while remaining true to a legacy of high-quality, world-class service.”

The firm’s planned “significant fee reduction” for its custom and advisor-managed portfolio programs will give advisors “competitive advantages and the enhanced ability to operate within the industry’s shift to fee-based investment services,” according to Commonwealth.

“The bottom line is that our new platform fee pricing will be lower, simpler, and, above all, more competitive. It will cover all products,” including stocks, exchange-traded funds, bonds and mutual funds,” Bloom explained.

Commonwealth’s plan to expand its outsourced business solutions to all affiliated advisors “will save them money and give them more time — an advisor’s most valuable asset — while gaining access to expertise and support,” the company said.

The company’s “comprehensive offering will include an array of à la carte outsourced services, including human resources, compliance, investment management, operations, technology, marketing, and financial planning,” it said. The solutions will help guide advisors to develop a plan that meets their needs now and in the future, Commonwealth noted.

Bloom added: “We are evolving Commonwealth to maximize value for Advisors and contribute to their lasting success. These efforts reinforce our mission to deliver an indispensable advantage to our Advisors, so they can help their clients live their best lives.”