Kestra Financial and Raymond James have won several of what recruiters are characterizing as relatively early battles in the recruiting drive for Commonwealth advisors.
Kestra, a subsidiary of Kestra Holdings, and Raymond James drew teams ranging from as many as 17 staffers to pairs of advisors in late July and early August, according to advisor moves data from ISS Market Intelligence. LaSalle St. Securities, Osaic and Purshe Kaplan Sterling Investments also saw movers in that time frame.
LPL Financial said it had finalized offers to Commonwealth advisors during an August earnings call. On that call, CEO Rich Steinmeier said the results have the firm well on track for its goal of keeping 90% of the roughly 3,000 advisors slated to come over via an acquisition of the Waltham, Mass-based broker/dealer announced in March.
Steinmeier also said reports in trade outlets of advisors moving were overblown, and that attrition of Commonwealth advisors was as expected.
Even so, several more teams decided to move ahead of next year’s planned integration of Commonwealth advisors onto LPL platforms, according to the data and regulatory filings. None of the broker/dealers or individual advisors responded to requests for comment.
Shelby Nicholl, founder of recruitment and consulting firm Muriel Consulting, who did not work on these specific moves, said the advisors were likely sure they wanted to exit shortly after the deal was announced, while more are either preparing to move or still on the fence.
“I look at the Commonwealth exits as a marathon, not a sprint,” Nicholl wrote via email. “It’s a safe bet that we will see another big wave of departures this fall as advisors race to finish transitions before the holidays and year-end.”
Nicholl said these first wave of departures likely “had zero interest in the LPL deal.” Meanwhile, others signed the retention package while still planning to move later this year or early next. And still some will see how things play out.
“LPL will need to play the long game and keep the servicing high for the existing Commonwealth advisors in order to retain them,” she wrote.
Kestra’s largest get in recent months was Dynasty Advisors, a team based in Freehold, N.J., with 17 employees and 11 advisors, according to its website. According to BrokerCheck, managing directors Ronald Lomangino and William Grundig moved the firm to Commonwealth in 2016.
The Benjamin Group, an advisory firm based in Vestavia Hills, Ala., also moved to Kestra. Father-and-son advisors Stuart and Zack Benjamin, along with four staff members, had been with Commonwealth for over 18 years.
The Monarch Retirement Group, a six-person team based in Fallbrook, Calif., and two advisors who run Udall Financial in Mesa, Ariz., also made the move.
Raymond James also added to the list of Commonwealth advisors who have chosen to join it in recent months.
On Monday, it announced the latest of three recent moves by Commonwealth advisor teams who had worked with a combined $687 million in client assets. Jeremy Lobo, Chris Pascale and Michael “Mike” Mendillo brought their Lobo & Pascale Wealth Management firm to Raymond James to be based in Wallingford, Conn. Lobo and Pascale, who had been managing $300 million in client assets, had been with Commonwealth for 24 years.
According to ISS Market Intelligence data, FlahertyColvin, a Westerville, Ohio-based team of five, left Commonwealth for Raymond James in early March after 12 years with the broker/dealer.
Hinkson Wealth Management, another six-person midwestern team, also shifted its Troy, Mich.-based practice to Raymond James. That firm’s CEO and President, Greg Hinkson, had been with Commonwealth for over 20 years, according to BrokerCheck.
Data also showed that three-person firm Planning Strategies, based in Dallas, Texas, and run by father-and-son Mike and Spencer Williams, left Commonwealth after founder Mike had been with the broker/dealer for 11 years.
Frank LaRosa, CEO of Elite Consulting Partners, agreed that many Commonwealth advisors are still assessing their options of whether to stay or go to the larger LPL. He noted that even if advisors accept the retention package, which LPL said would range from 10 to 50 basis points, it is not binding and can be paid back within seven to 10 years.
“I think that advisors that weren’t sure, or even had a knee-jerk reaction that they weren’t going to LPL, are still doing their due diligence and are making sure that whatever decision they make is the right one,” LaRosa said.
He said teams that have already moved likely had things in motion shortly after the announcement. That makes it hard to gauge yet whether LPL is on track to hit its 90% attrition goal.
“If you just look at the timing of everything since the announcement, I think there are a lot of teams, or even just groups of advisors, who are still looking to find the right place,” he said. “Getting a group of advisors together can be a bit like herding cats .… it takes time to find the right solution.”
LPL CEO Steinmeier had said during earnings earlier this month that the firm had been doing “fever-pitched engagement” with Commonwealth advisors, and that “as we’ve stated continually, we are committed to preserving that unique culture, the advisor experience, the brand, and in fact, we’ll only enhance what they already receive with the combination of the LPL capabilities with that Commonwealth experience.”
After the deal was announced, LaRosa had expected broker/dealers such as Kestra, Raymond James, and potentially Cetera to win out in the recruiting push for Commonwealth advisors as they looked for cultural or service fit. Larger RIAs may also be winners, while some advisors may start their own shops.
LaRosa also said some may prioritize the ability to stick with Fidelity as a custodian, which Kestra provides access to, and which Cetera has said will be available to advisors in October. For his part, LaRosa tries to coach advisors that clients are not likely to leave due to the custodian, and to focus more on the service aspect for the advisor and their clients.
Recruiter Shelby also noted that Cambridge Investments is “picking up teams” from Commonwealth. She said the deals “aren’t as rich, but the ethos of the firm is similar to Commonwealth.”
Meanwhile, Kestra and Raymond James benefitted from going out quickly with “aggressive deals” and “a capabilities suite that matches Commonwealth advisors’ needs.”
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