Commonwealth to Open, Hire Staff for New Home Office

Commonwealth Financial Network plans to hire staff for and open a new corporate headquarters in Cincinnati by June 30, according to Wayne Bloom, CEO of the hybrid registered investment advisor and independent broker-dealer.

The new home office will include the firm’s two largest call centers, a technology help desk and service center, Bloom told ThinkAdvisor in an interview last week. The firm — now headquartered in Waltham, Massachusetts, and San Diego — currently has more than 1,000 employees.   

The move to open the Cincinnati base is part of a multi-prong strategy to “keep growing and making sure we provide great service to our advisors,” said Bloom, who helped the firm stage its national conference in mid-October near Denver.

It also stands in marked contrast to the office closures and layoffs announced by other industry players over the past few months. Charles Schwab, for instance, closed five offices in October and shrank the size of six facilities; affected employees were reassigned or given remote work. Envestnet and Orion Advisor Solutions recently cut jobs, as did Hightower.

Commonwealth also says it will roll out several product and service upgrades next year that focus on key areas for advisor growth: high-net-worth clients, mergers and acquisitions, and equity funding. The enhancements will “build out already comprehensive product portfolios” in its Wealth Management and Business Solutions groups, the firm said in a statement.

Business Solutions

The Business Solutions group plans to launch Marketplace next year to help advisors with recruiting. The platform aggregates advisor profiles and hiring needs and then finds matches for them. 

The Commonwealth team will also make introductions, as well as provide support and financing for dealmaking. This entails connecting Commonwealth financial advisors and advisors not yet affiliated with the firm as part of a new recruiting model, it said.

Business Solutions is also adding options to its Entrepreneurial Capital program, which was launched last year. The effort includes more types of funding via a minority investment in advisor businesses. Commonwealth will provide capital in exchange for a percentage of the firm’s earnings on an active or passive basis, it said.

“As far as Entrepreneurial Capital goes,” transactions are done “on more of a passive basis where we’re taking equity positions in advisors’ practices,” Bloom explained. “Generally, they’ve been revenue conversions. They’re based on earnings, and then we just convert it to revenue.”

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