As Facebook’s recent IPO shows, public is not always better (as of this post, FB hovered at just under $26 a share). That seems to be the reason why four advisors recently jumped ship from Lincoln Financial Advisors, a public company, to Commonwealth Financial Network, one of the last remaining privately-held, independent firms. The three brought more than $375 million in combined assets with them.
The new Commonwealth recruits include Ray Evans of Pegasus Capital Management, a $1.2 million producer with $200 million in AUM; Timothy DiSette and David Pacer of Trinity Planning Group, which generated $1 million in revenue in 2011 on $150 million in assets; and James Stanziola of Stanziola Financial Group, with $400,000 in production and $25 million in assets. All four advisors came over from Lincoln Financial Advisors in May.
According to a statement, one of their major motivations for going to Commonwealth was the fact that it’s a privately-held, independent company. From Evans: “Aligning my firm and clients with a privately held broker/dealer was a top priority.” From Pacer: “Being aligned with a privately owned and independent broker/dealer allows us to provide flexibility and value-added services to our clients—all with enhanced technology and low fees.” And Stanziola: “As a privately held independent broker/dealer, Commonwealth provides the flexibility I desire to run my practice effectively and efficiently.”
Philip Palaveev, president of Fusion Advisor Network, says Commonwealth and Cambridge Investment Research are really the only firms left of significant size that are still under independent ownership. It’s true; if you look at a list of the top independent broker/dealers, most are either public companies or owned by another entity.
Insurance-owned broker/dealers, in particular, are in a sell cycle at the moment, with many of them shedding their b/d units to focus on their core business—selling insurance. I’m saying Lincoln is in that boat. In fact, I spoke to a 30-year Lincoln veteran a couple weeks ago who said he’s been very satisfied with the firm, and had no pressure to sell the insurance company’s proprietary products.
That said, such firms can bring instability and uncertainty. “And what we find is insurance companies, generally speaking, change their plans, change their intentions, change their strategy,” says Palaveev.