Commonwealth Financial Network has set a strategic goal of reaching $1 trillion in assets under management, the firm announced Thursday, noting that was one of three new major business growth initiatives disclosed to advisors at its annual National Conference earlier this month.
The target is an aggressive one given that the RIA/broker-dealer said its more than 2,000 independent financial advisors oversaw over $272.9 billion in assets across the U.S. as of Dec. 31, 2021.
"The way we've mapped it out, we think it'll take about a decade" to achieve that goal, said Commonwealth CEO Wayne Bloom. "The compounded growth rate that it'll take to get there is about 14% and, if you look at our performance over the past few years, it's been about 13 and a half percent," he told ThinkAdvisor.
"So it's pushing a little bit harder from a growth rate perspective that we've already achieved," he said, adding, "in all fairness, as the math gets bigger, the growth rate becomes a little more challenging, particularly if you want to maintain the same values and care and everything that we typically do."
'Some Light M&A'
The firm will be "increasing our recruiting, helping our existing advisors grow [and] we do see some light M&A in the future that'll be needed to achieve our goal," Bloom said. But he added M&A transactions are "certainly not the driver."
Any M&A transactions the firm does will need to be "consistent with the sort of values and processes that we've used to grow the firm. We're not going to compromise that at all … . Mindless aggressive growth to get assets is not" how Commonwealth operates, he explained.
Although the firm has no debt and has the funds to make acquisitions "within reason," he told ThinkAdvisor, "There's going to be more M&A on the part of the advisors [through] our new entrepreneurial capital program where we are extending debt or taking equity positions in the practices, and that's for them to do M&A" deals.
After all, he added, "Whether the M&A comes directly to us in the form of a firm or other advisors, or through our existing advisors, it's still helping us achieve our goal."
At the National Conference, Bloom outlined what the firm conceded was an "ambitious goal" to reach $1 trillion in AUM in front of almost 2,000 conference attendees.
"This objective will allow us to increase our reinvestment in the firm and continue to provide the right products and services that enable Advisors to succeed and grow, today and tomorrow," Bloom said Thursday in the press release.
"Our path to a trillion is all about elevating our ability to help Advisors be the best they can be — for both their clients and their staff," added Bloom. "Guided by our community and Advisor-centric values, we'll continue to pursue a well-managed growth strategy — this is essential for the long-term innovation and financial strength that makes Commonwealth the best partner for client-focused Advisors."
