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Commonwealth Wants Good Growth Without Hiring Jerks

By Thomas Coyle February 29, 2016

Two things count most at Commonwealth Financial Network: size and manners.

Size because leadership at the Waltham, Mass.-based independent broker-dealer reckons haphazard growth threatens its value proposition and long-term viability.

Manners because it sees jerks as equally bad for business.

“If you’re not a nice person you can’t work here,” says Commonwealth’s CEO, Wayne Bloom.

This goes for its 700-plus staff and the 1,700 or so financial advisors who use its brokerage and RIA platforms.

“We really mean it.”

So the dinner Bloom has with an advisor looking to join Commonwealth can be make or break.

“It’s happened once or twice we’ve decided not to proceed based on how an advisor treated the wait staff,” says Bloom. “Where I come from — and forget about Commonwealth — that’s not a person you want to hang around with.”

More to the point, Commonwealth doesn’t want to deal with people who’ll harass its support staff, drive away members of his or her own team and generally make the company look bad.

In this sense, Commonwealth views niceness as an aspect of business acumen.

Wayne Bloom

“It’s not just about how they treat waiters, it’s how they run their businesses,” Bloom says of would-be Commonwealth affiliates. “Do they have a lot of turnover? That’s not a good sign.”

Commonwealth is so keen on its version of a good fit, it’ll set aside its annual production minimum — $250,000 — for an advisor with the right attitude and trajectory.

“We look more favorably at a kid with $210K and the ability to grow what he’s got than a wirehouse advisor with $300K who is obviously winding down,” says Bloom.

For New York-based headhunter Mark Elzweig, there’s only one reason Commonwealth’s preferences for such things as restaurant manners and likeability matter to FAs.

“It’s a destination for high-end advisors,” says Elzweig. “It’s a place advisors aspire to.”

Some critical numbers seem to bear this out.

Last year, average per-advisor production at Commonwealth was $506,058 versus $212,000 for industry.

Its payout — 92.13% on average — is the highest in the channel, according to Financial Planning magazine.

And where WealthManagement.com’s average grade for IBD compensation and benefits was 9.1 in 2015, Commonwealth and Independent Financial Group shared the top spot with scores of 9.7.

Wealth-industry expert Dennis Gallant says Commonwealth’s success comes down to its ability to seem both large and small.

“It’s small enough that everyone knows everyone,” says the head of GDC Research in Sherborn, Mass.

But, he adds, it’s big enough to turn heads with efficient homegrown technology the company doesn’t mind spending money on to keep sharp.

“Commonwealth straddles these worlds better than anyone else,” says Gallant.

Size mattered to Bobby Comeaux and his partners at CBD Wealth Management before they left LPL Financial for Commonwealth last June.

"LPL got too big,” Comeaux says of the firm that supported his Metairie, La.-based practice for more than a decade.

Over time, he says he went from knowing LPL’s support personnel by name to feeling like a number.

“They adopted a call-center format” for fielding inquiries from affiliates, Comeaux explains. “And when they couldn’t answer a question — which seems like it was all the time — they’d take a message and you’d wait to hear back.”

This approach hurt customer service. “You need to have complete trust the information you’re getting for your clients is right, and that trust comes with a relationship that’s built up over 15 or 20 conversations with the same person,” says Comeaux.

Commonwealth won the confidence of Comeaux and his colleagues by inviting them to test drive its services before they jumped ship.

When they had a question for LPL they were urged to mirror the query with their smaller suitor.

“And we did that for two or three months, two or three times a day,” says Comeaux.

Instead of a clearing-house approach for all questions, CBD Wealth Management staffers got direct lines to subject-matter experts at Commonwealth.

“It was a completely different experience,” adds Comeaux, whose practice manages about $350 million. “They listen to you.”

Before signing on with Commonwealth, however, CBD Wealth Management wanted assurance that the IBD didn’t have rapid expansion plans.

“We asked them, ‘Why not get bigger?’ and they told us growing too fast would hurt their culture.”

Bloom says the issue isn’t how big a company gets, it’s “how well it manages growth.”

The executive says Commonwealth doesn’t recruit FAs just to add headcount or assets but to meet a sustainable target of adding about 100 FAs a year.

“We always say it’s more important to get it right than get it done,” says Bloom, describing how Commonwealth’s brass make decisions.

So in considering any course, Bloom says the overriding question at Commonwealth is, “Will this help the advisor? No? Then why do it?”