INDUSTRY TALK

LPL Financial to Buy Commonwealth Financial for $2.7B

The deal marks a turning point for the broker/dealer space as Commonwealth, a partner-owned firm that for years had championed its culture as a boutique, advisor-focused firm, a place where home office executives are reachable by direct phone calls and service team members are deeply familiar with the firms and advisors they support.

The agreement sets the stage for San Diego-based LPL to bring over Commonwealth’s 2,900 independent advisors and $285 billion in client assets, bolstering its advisor count to 29,000 across $1.7 trillion in assets. The transaction is set to close in the second half of 2025, with conversion to the LPL platform to be completed in 2026.

LPL’s challenge will be convincing many of Commonwealth’s advisors to bring their businesses and clients to the larger firm or risk having many decamp for other companies.

LPL estimates a 90% headcount retention rate and noted that Commonwealth has had a 98% retention rate over the past five years through 2024. LPL CEO Rich Steinmeier said on an investor call that the firm expects to keep advisors and their clients partly because it is “not changing the Commonwealth brand” and combining the two firm’s technology platforms.

“We want to bend LPL to look more like Commonwealth, not the other way around,” he said, speaking from Waltham, Mass., alongside Commonwealth CEO Wayne Bloom.

OUR TAKE:

Having your firm bought by another custodian might be one of the worst things for an advisor to have to deal with because it forces change. Commonwealth advisors will have to decide to move client assets to LPL or another firm. Either way it spells disruption for advisors and their clients. In an ideal world, the clients would be able to leave their money at Fidelity (where Commonwealth custodies), but LPL likely won’t let that happen because they want to make the spread on the client’s cash and get ticket charges, etc. What this means for the industry is there’s just one less firm to go as an option when leaving a captive broker/dealer. The bright side to this whole thing is that I think a lot of Commonwealth advisors will choose to go RIA instead of join LPL. It’s most advisor’s opinion that LPL is notorious for bad technology and worse service. In fact, we recently talked to an advisor that joined LPL from Edward Jones about one year ago and this advisor is already choosing to pay back the money LPL gave them and go RIA because the technology is so bad in his opinion.

We had Jason Wenk, founder of Altruist, give his opinion on the deal on the latest podcast linked below. Feel free to check it out!