Commonwealth to Target Wirehouse Advisors in New Recruiting Push

Commonwealth Financial executive Andrew Daniels

Commonwealth Financial aims to step up its recruiting of breakaway financial advisors in 2021, especially those leaving the wirehouse firms, according to Andrew Daniels, managing principal at Commonwealth Financial, who said he's looking forward to an expected "second wave" of breakaway advisors.

"It's been a bit of a rollercoaster year" for recruitment at Commonwealth, he told ThinkAdvisor in a recent phone interview.

"We had a pretty strong first quarter," according to Daniels, who oversees the firm's recruiting efforts. But "we had a pretty lousy, COVID-induced second quarter. Everything sort of ground to a halt, and I don't think that's unique to Commonwealth."

The firm bounced back, though, with an "extremely strong third quarter," he said. Still, "the end of the year is going to be somewhat quiet for us, based on history."

Nonetheless, "the pipeline is extremely strong," Daniels said, noting "we're talking to an awful lot of folks right now from all channels" about joining Commonwealth.

This year, however, the firm is not going to see the "record recruiting" levels of 2017, 2018 and 2019: "2020 is not going to be that," the executive explained. He declined to blame the situation entirely on the pandemic, noting that it wasn't completely clear what other factors were at play.

"But I am excited about the pipeline leading into 2021," especially Commonwealth's "considerable focus internally on … infrastructure development built around attracting the breakaway wirehouse advisors to us for the long-term," he said. "Breakaways are an absolute focal point for us in 2021 and beyond."

The independent broker-dealer/RIA had over 2,000 advisors working with over $200 billion in client assets as of Dec. 31, 2019.

Wirehouse Watch

"My focus is on the true wirehouse channel to broaden Commonwealth's spectrum" at this point, he explained.

Advisors from Merrill Lynch, Morgan Stanley and UBS have "been a relatively small piece of our historic pie," with maybe just 12% of Commonwealth advisors historically coming from these three wirehouses, according to Daniels.

"My goal is to create greater familiarity within this community that Commonwealth is indeed the shop that's in position to support them," he added.

Advisors with Wells Fargo are not being targeted as part of Commonwealth's new initiative. This is because the independent advisor firm already has seen historically amazing success" recruiting advisors from this wirehouse, he said.

Daniels adds that Commonwealth is "putting the final coat of varnish on the set of tools and economics" involved with the formal launch of its new breakaway recruitment effort on Jan. 1.

But "there are wirehouse prospects that we are working with today who … are talking to us, knowing and comfortable in that in the next two months that this is going to be finalized," he said.

Also on tap are initiatives designed to "ensure that we are being competitive" when it comes to forgivable loans to advisors and transition assistance for them, Daniels explained, calling these efforts a "big part of the plan for the coming year."

More Services

The firm also is "focused on helping advisors with real estate with setting up their business entity with preliminary marketing work, designing and formatting and putting together their new independent selves" after they break away and join Commonwealth, he said.

While Commonwealth has offered such services before, in the past, "the responsibility was really on the advisor to do that — and what I want to do is create the best of both worlds" now, Daniels explained.

"I want to give the advisor information and frameworks so that they can structure their independent selves the way they want, and I want to give them, if you will, human resources to do that preliminary lift for them and allow them to focus more on moving the books here and less on the establishment of the business," he said.

"We have been and continue to be extremely well-positioned for them. We always were a shop that was built for the outsourcer, namely built for the advisor — [especially those] not interested in being in the infrastructure management business," according to the executive.

"Commonwealth has the resources to significantly help these advisors on multiple levels, including tools to help with asset management, Daniels said.

— Check out Commonwealth Sees Surge in Advisors Ditching FINRA on ThinkAdvisor.