By Andrew Welsch

Across the wealth management industry, 2025 is shaping up to be a very busy recruiting year. The reason? Nearly 3,000 financial advisors managing $285 billion in assets for one of the most respected firms in the industry are now seen as in play.

Rival brokerage firms are swarming advisors at Commonwealth Financial Network, an independent broker-dealer that LPL Financial announced March 31 that it plans to buy. Commonwealth, based in Waltham, Mass., is known for its tightknit community, high quality service, and low attrition, according to recruiters.

That may be changing with LPL's acquisition. Thousands of Commonwealth advisors are faced with a choice: Stay on with San Diego-based LPL after the acquisition closes later this year or move to a completely different firm. It's as if the entire New York Yankees' team suddenly became free agents.

"I'm getting emails directly from recruiters. Phone calls, LinkedIn messages -- it's constant," says one Commonwealth advisor, who asked for anonymity.

LPL's rivals are willing to pay up for these free agents, offering recruiting bonuses that are generally either a multiple of advisors' annual revenue based on production or a percentage of their assets under management, according to recruiters and advisors. For example, bonuses being offered to Commonwealth advisors based on revenue can range from 70% to 125% while bonuses based on assets can range up to 1.5%. Both types of bonuses are typically structured as multiyear promissory notes with a portion of the note forgiven each year. If an advisor leaves before their contract is up, they have to repay the balance. For an advisor who generates $1 million in revenue and has $200 million in assets under management, the payout can generally range from $700,000 to $3 million.

The deals are "the most aggressive I have ever seen," says Frank LaRosa, chief executive officer of Elite Consulting Partners in Moorestown, N.J. "All the other firms are looking at this at a once in a lifetime opportunity."

To compete with such offers, LPL is offering advisors retention bonuses that go as high as 50 basis points on an advisors' assets under management, depending on individual circumstances. A basis point is one one-hundreth a percentage point. That could add up to $1 million for an advisor who has $200 million in assets under management.

Money is only one factor, as advisors are assessing firms' technology, investment platforms, and other capabilities to ascertain where the best place is to serve clients.

For LPL's rivals, capitalizing on the opportunity to recruit Commonwealth's coveted advisors to their firm won't be easy. Some Commonwealth advisors tell Barron's they are willing to stay on with LPL after the acquisition closes. But of those open to going to a new firm, several advisors that Barron's talked to say they are taking a wait-and-see approach. They reason they have time to assess their options because LPL has said it doesn't plan on transitioning advisors to its platform until next year.

That leaves plenty of time left for LPL and its competitors to make their case to Commonwealth advisors.

Free agents. Advisors affiliated with an independent broker-dealer -- such as LPL, Commonwealth, and their competitors -- own their practices and rely on the firm for technology and an investment platform. Independent advisors can move with relative ease to another firm.

But they have fewer options than they used to. The broker-dealer industry has been undergoing rapid consolidation as large companies like LPL, which has roughly 30,000 advisors, absorb smaller competitors. Wealth management acquisitions are recruiting opportunities for the industry.

"It's standard in our industry that in the face of M&A, your competitors descend," says Mike Durbin, CEO of Cetera Financial Group, which has approximately 12,000 advisors and more than $545 billion in assets under administration. "In this case we're on offense, in other cases we've been the defense because we too are active in M&A."

LPL's Commonwealth deal is its largest ever, but LPL is an experienced acquirer and has been able to convince advisors to stay in the past. Last year, LPL bought Atria, which had 2,400 advisors and $100 billion of assets -- about one third that of Commonwealth. The Atria acquisition closed in October, and LPL said it expected to meet or exceed its retention target of 80%.

With Commonwealth, LPL is shooting for a 90% retention rate. Scott Posner, managing director of business development at LPL, told Barron's Advisor in May that the company was on track to meet its goals. "We're very happy with how it is pacing," Posner said. "It's exceeding our internal metrics."

Wining and dining. For advisors to move to another firm, there has to be both push and pull factors, according to recruiters. While the retention bonuses are a pull factor, LPL is working hard to ensure there is nothing pushing advisors away. The company has said it would maintain Commonwealth's brand, community, and the same level of home office support and service that its advisors have come to expect. It also says that it will not require advisors to "repaper" client accounts, a labor-intensive process for moving assets to a new platform that advisors will likely have to do if they choose to join a competitor.

"We are steadfast in our commitment to preserving the very best of Commonwealth while complementing their strengths with the industry-leading advantages of LPL," an LPL representative said in a statement. "This goes well beyond maintaining Commonwealth's respected brand and continuing to deliver extraordinary experiences; it's about leveraging the solutions, talent and culture of responsiveness that are core to Commonwealth's award-winning service."

The company has been hosting advisors at its San Diego headquarters and in Fort Mills, S.C., where it has a large corporate office. LPL staff are meeting advisors in their offices too, and hosting dinners and other get-togethers in various cities. CEO Rich Steinmeier has also been pitching advisors on the benefits of LPL in intimate settings such as bike rides and wine tastings.

LPL's competitors, too, are putting their best foot forward and trying to court every Commonwealth advisor they can. "They're besieging all the Commonwealth advisors and teams," says Larry Walker, a Commonwealth advisor in Monterey, Calif.

Cetera has recruiters working the phones and has penned two open letters to Commonwealth advisors. The company is offering recruiting deals of up to 150 basis points on assets under management. It's also positioning Cetera as a place where Commonwealth advisors will feel at home.

Although Cetera is one of LPL's largest rivals, its 12,000 advisors are divided into five smaller units (or "communities" as Cetera calls them) which are roughly the same size as Commonwealth. "We've built an ecosystem -- not a platform," Todd Mackay, president of Cetera Wealth Management, writes in one of the letters. "We support multiple models, multiple custodians, and multiple definitions of success."

'You couldn't drag me.' Some advisors have decided they'll give LPL a try. Ralph Angelo, whose 30-person team oversees $1.5 billion, says he'll do just that. Angelo's group joined Commonwealth the day LPL announced the acquisition. "We spent three months preparing for it, just making sure we had all the information we needed, then you reach out to the clients once you begin the transition," he says. Given the work involved, switching firms isn't something he wants to repeat, Angelo says.

Other advisors may take more convincing to stay on with LPL. Over the years, Commonwealth recruited a fair number of advisors who previously worked at large companies but wanted a smaller, tightknit community.

One advisor in the Western U.S., who asked not to be named, says he has loved the service at Commonwealth compared with his prior firm, which was much larger. When he needed help, it was always easy to get a Commonwealth representative on the phone, and that has made it much easier to grow his practice. He says his team has no desire to go to LPL. "You couldn't drag me to LPL with a John Deere tractor," he says.

Recruiters and advisors interviewed for this article were divided as to whether they thought LPL will hit its 90% retention target. Some point to rivals' recruiting bonuses as an enticing lure while others expect many advisors to take the path of least resistance. LPL's true retention rate might not be known until a year or two from now when advisors have gotten a feel for LPL's platform and service and then make their ultimate decision as to whether to stay or go.

Walker, the advisor in Monterey, knows firsthand how switching firms can be a positive career decision. He says his team's decision to join Commonwealth from UBS in 2020 has been great for their practice.

Despite the calls, emails, and texts they now are receiving from recruiters, Walker's team intends to give LPL a try. "I'm not responding. I'm not interested," he says. "Besides, if there is something that is very serious that we don't like, we can choose to leave later."

Write to Andrew Welsch at andrew.welsch@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 01, 2025 15:48 ET (19:48 GMT)

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