I know very little about Commonwealth except what I've heard third-hand and it's generally positive.  I believe their minimum production requirements are a bit higher and the payouts a bit lower.  It could very well be that they are more geared toward fee-based and that may push their average payout lower...I don't know.  What I think I can say with some confidence is that you've selected two very capable B/D's and I'd be surprised if you didn't find an excellent match with at least one of them.

From an educational standpoint, do us a favor (as I did on Raymond James vs. LPL) and let us know what you ultimately decide and why you decided it.  My guess is that while you'll find information on here to be very helpful, the due diligence trips will be the deciding factor.  I was most impressed with both RJ & LPL, but it was obvious at the end of both trips that LPL fit my practice just a bit better than did RJ.

Good luck with your due diligence and keep us posted...

One big thing I liked about LPL that I did NOT like about Commonwealth is that LPL is self clearing.  From what I recall Commonwealth is not.  I felt there was less confusion for clients and less likelihood for operational problems when my custodian and my b/d were one in the same.

I am not familiar with eMoney.  Sounds like I’ll have to take some time to look into it!

Every other yr. or so, I tend to reach out to a few indy b/ds for my own due dilligence and Commonwealth is one I tend to inquire with often.  Some things you point out, I have felt as well; they are certainly on top of the service side as much as they can, very responsive and advisor focused when/where they can be.  Their technology in some areas is as good and better than LPL but in others it's worse - I found it dependent on the type of business where it may or may not matter comparitively speaking.  One thing I don't agree on however is that they have a better wealth management platform...I just don't think they are even close for a variety of reasons.  Their 3rd party mgr platform is horrible from a choice perspective and cost standpoint, last time I checked with them, they had maybe one all cap manager to choose.  They seem to offer much more in 3rd party FBAM platforms but after seeing that, I came to find that LPL pretty much offers the same options.

I would also ask, given you are a wealth manager, my assumption therefore is you are dealing at times with HNW clients; what is their flexibility and choice on alternative investments?  I just never gained a sense that they were very robust there but if they are please let us know.  And what I am talking about there is what is available hedge fund, LP, REIT, Oil and Gas, 1031, managed futures etc... that can help service the HNW clients?  Having Advent as their performance reporting package is good and bad - great tech, but a pain to work with in terms of interfacing capability which can add to the workload and additional technology you may have to add to your business.

My $.02!

All good points and questions I myself have. I do believe LPL has a much better alternative investment platform. 80% of my business is advisory business and I outsource all of it to 3rd party managers. Beyond that I use Russell Lifepoints as my fund of choice for smaller accounts and I don't do any transactional business so not sue the self-clearing issue is a concern to me. One other area LPL seems to have a leg up on CW is mortgages. Not sure how important this is but it's nice to have. The payouts at CW are lower but for higher producers and especially for advisors w/ a lot of assets in advisory services (like me) the payouts fall in the 90%. I also don't mind taking a lower payout as long as I feel I'm getting value. Two areas that really impress me with CW is a) their platform is centered around wealth management and their marketing materials and brochures are very impressive. They really do a great job in explaining to clients/prospects the whole wealth management process (not just investments). Since I focus on wealth management I find this a very attractive benefit. I've been granted access to LPL's branchnet website and I have yet to find any client-approved materials that show anything like Commonwealth's. I know I could create my own but having a lot of this marketing materials ready to go from day 1 is attractive. The 2nd area that's very interesting is their Practice Development Group. This seems to be an internal consulting group that is available to reps who want help in building and growing their business and want advice on issues such as hiring, compensation, moving to fee based, structuring your practice, etc... Again CW positions itself as the Harvard of IBD's and the story of being selective of who they bring in makes sense to me since that's the approach I take w/ clients (the fewer the better). In terms of technology I see that CRM (customer relationship management) is built in to CW system whereas LPL does not have their own. I know they are working on this and expect to roll something out next year.

And bottom line, the informational packet (box more like it) I received from Commonwealth was VERY impressive and VERY well organized which gave me the impression that they know exactly who they are, who they cater to, and focus their attention on that and that only. Again it looked "high end" when compared to LPL's info. On that matter RJFS also looked a lot better than LPL. I'm not going to choose a BD based on how "cool" their marketing material stuff looks but you now what they say about first impressions!

Gotcha - word of caution on the business development group at CW - it's staffed with I believe one person and the key question to ask is; how many of "them" have been in production?  Frankly, LPL is trying to add this too, not been to impressed and not many if any were producers either.  Marketing wise, I don't know what to tell you...I design my own investment policy statements, do financial plans, I do use LPL's wealth management proposal and often their PRT to present things to clients.  I focus exclusively on my process and how I work with clients and their money so brochures and that tend not to come into play for me.

What do you consider wealth management - since you call yourself as such?

csmelnix

Point well taken. I'm in a big firm now that has a biz dev. group and all of them are nothing but washouts who could never make it in the industry so add 0 value to me. One thing I've heard is that LPL let's the reps brand themselves a lot more vs. RJFS and maybe even CW so maybe that's why they keep so little marketing material since any rep who wants to create something may be better off customizing it to exactly their type of work and process so I also think your point is a very good one.

In terms of what I consider wealth management... Of course this means different things to different people but for me it boils down to acting as the quarterback for an internal and external team of professionals who in a sense act as a personal CFO to individual clients and service the clients in the following areas: investment management, risk management, tax planning, retirement, estate planning, and business planning. As an example because of my background, one of my areas of expertise is helping business owners design and execute business succession/exit plans to either third parties, employees or family. Like I said, to me WM is being able to act as the client's CFO and although the investments ARE CRITICAL to this role they are merely one aspect of the whole picture. At LPL for example, I've seen their wealth management proposals and to me they don't get it because it's nothing more than an investment proposal with the title Wealth Management on the cover.

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that's where I tend to use on the investment proposal side v others.  That's why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

You also said you outsource all advisory to 3rd party managers…is that managers themselves or is it 3rd party platforms like assetmark or SEI?

[quote=csmelnix]

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that’s where I tend to use on the investment proposal side v others.  That’s why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

Let me see if I can answer some of these... 1) [quote=csmelnix]

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients?  I do some tax planning (not tax preparation) as part of my financial planning process BUT I know my knowledge limits so I have no problem bringing in a CPA with complicated issues. I am not a CPA and don't pretend to be but I do have my CFP along with an MBA in Finance along w/ 15 years of management consulting and running my own business (prior to being an employee now) so I am up to speed in a lot tax related issues. My role here is to identify a problem or area of improvement, educate the client on the issue and bring in the expert to drill down into the details. 2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself? Very similar to the tax planning answer. Know enough about the problems and solutions and tax and legal concerns but bring in the estate planning attorneys to validate or improve our recommendations and certainly to draft documents. The attorney then runs their thoughts and recommendations by me first prior to delivering final results to clients. I have established 2 strong relationships w/ local attorneys in this area. 3. How do you do your insurance business or plan to do it as an independent? Currently I address life, disability and LTC insurance needs as part of my process and if the need is large enough we'll provide the insurance for the client through the insurance co. approved by my BD. In the area of P&C, Commercial, Umbrella, & Health I do not sell it myself but again if I discover a concern I tell the client to speak w/ their insurance person about the concerns or in some instances (A clients) we'll discuss it directly w/ the insurance person and try to releive the client of that work. As an independent I would expect to continue to run it this way unless I developed a STRONG relationship with an insurance broker whom I would trust and who would help us grow our business as we help them grow theirs.

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent? I have a process that I've created that let's me address all these areas w/ clients over the course of the first year of the relationship. I have a system to track the issues and recommendations so when we meet w/ the client we can refer back to it and make sure all the To-Do's are getting done as time goes by. I do not have anything like eMoney Advisors but this tool is something that WOULD GREATLY elevate the type of service I can provide and at the same time reduce the time it takes on my team's side to keep our client's financial picture updated and integrated. One key reason for going on my own is that at my current firm we do all this (granted for a handful of affluent and HNW clients) but we are prohibited from charging for our time and/or plans so it all has to be included in the asset management fees we charge. To me that' s ridiculous and leaves A LOT on the table. So I would continue to do things the way we do them now but better via better technology and access to tools that are not allowed at my current BD.

[/quote]

Yes that is managers themselves. All I do is decide on the overall asset allocation and manager(s) and turn over the portfolio to them. My job is then to make sure the investments returns are generating the PRR (personal rate of return) that I've calculated based on the financial analysis and that the risk/reward/MPT figures of the managers are fair. If not then my job is to make a decision about the manager and communicate that to the client. I don't even rebalance. I also outsource the overlay portfolio management because in my opinion that's also very time consuming.

[quote=csmelnix]You also said you outsource all advisory to 3rd party managers...is that managers themselves or is it 3rd party platforms like assetmark or SEI?[/quote]

One BIG concern for me w/ going indy is the lack of Wealth Management resournces like the ones found in the big firms. Although seldom, I do sometimes have to pickup the phone and talk to attorneys, CPA's, etc... in our private client group and that's key to my type of business. Can you expand on your experience w/ LPL in this area? Also by establishing that relationship w/ a local General Agent how are you compensated via LPL for that business?

[quote=joedabrkr] [quote=csmelnix]

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that's where I tend to use on the investment proposal side v others.  That's why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

[quote=indywanab]

One BIG concern for me w/ going indy is the lack of Wealth Management resournces like the ones found in the big firms. Although seldom, I do sometimes have to pickup the phone and talk to attorneys, CPA’s, etc… in our private client group and that’s key to my type of business. Can you expand on your experience w/ LPL in this area? Also by establishing that relationship w/ a local General Agent how are you compensated via LPL for that business?

[quote=joedabrkr] [quote=csmelnix]

Now I have some more understanding of your thought process.  I would agree on the WMProposal - that's where I tend to use on the investment proposal side v others.  That's why I do the planning with it.

I asked what your idea of wealth management was for the pts you already stated.  A few questions in follow up:  1.  Do you do tax planning for your clients  2.  What involvement do you have in the estate planning end?  That is, are you using local attorneys more often than not or are you doing the planning yourself?  3. How do you do your insurance business or plan to do it as an independent?

As you quarterback all this, how do you consolidate and present it?  How are you tracking and scoring results etc.?  How do you plan on doing this as an independent?

I would second Joe's experience with the LPL Insurance Associates. They are trying to get it together, and claim that they will be rolling out VUL products in the 4th quarter of this year.

For simple term, I use Hartford's online system. I can get instant quotes for the client online, and then submit the app electronically through Hartford. For policies over $1M, they are pretty competitive. They payout for LPL is 85% of the 1st year premium. Other than submitting the app, and having the client sign the policy receipt, you don't have to do much of anything.

Our wealth management/private client group is actually all professionals (CFA's, CPA's, Attorneys, CFP's) not failed brokers. They actually are REALLY good but of course limited in the type of advice they are willing to provide due to the limits compliance places on them/us. Still when talking w/ HNW and UHNW prospects the ability to show them those resources goes a LONG way in impressing them and making them feel like we have all they need (whether is true or not). That's the biggest concern I have w/ going indy. As a matter of fact I ran into an old friend of mine this weekend who is the managing director at a mid-tier investment bank in Chicago. He wants me to call him once I'm set up w/ my own shop because he said they run into situations where their clients come into $20MM - $30MM after the sale of their business and they are often asked for a referral. My friend's question was "What kind of resources/experts will you have onboard to trully give high end advice to clients like these?" His comment is he'd rather refer a client to us since he & I have known each other for 10+ years and he said he can trust me but the question about high end resources in the area of wealth management came up and this is something I have to figure out before I launch my practice.

Check out the demos on eMoney Advisors at

http://www.emoneyadvisor.com/emacorp/advmarketing_demos.htm

This will give you a good idea of the tool. If you like this tool and are w/ LPL you'll be very happy knowing that LPL is rolling this out to their reps for a VERY, VERY DISCOUNTED price!

Indyw - appreciate the responses; we may have some similar things in eachother's practices.  As you do your due dilligence my suggestion or point of emphasis would be that ask the questions I asked of you and make sure the explanations fit the answers you gave me.  Commonwealth is a great firm for many reasons but my time spent looking at them every so often, they really lack the resources to service my business in the areas you are looking at.  There is a lack of tax and attorney professionals there to help with case design or estate planning etc... compared to what I have had here at LPL.  LPL having their own trust company is a huge benefit from that standpoint, though, I don't often use them for trust administration the people available to address questions, help with planning etc. have been strong.  In terms of tax planning, estate attorneys and all that...being indy has helped me build a wealth management platform for my practice; it's not complete but is filling - I do have 3 in house CPAs, they are licensed and do their own business, I would love to bring in an attorney but too many ego's in one office have made it difficult.  One of things that certainly would keep me from going to CW at this time is none of the CPAs in house is responsible for doing $100k in GDC and as it was explained to me, CW wouldn't let them join as a result.  Kind of p'd me off given that it's my business not theirs.

Also, really dig down with Commonwealth on their 3rd party managers, as I said before, they are lacking in choice on the individual managers but have a great selection of vendors to choose from that do overlay management and combine managers (like SEI, brinker, pac fin. group etc).  On the insurance side, I have worked with a few GAs, as well as the FMOs and it's hit or miss.  I don't have a great liking to the LPL Ins. associates platform either; the beauty with the local GA is I get far greater service on the underwriting side for multiple product than I get anywhere else and that is a great benefit for the client. 

Now my disclaimer...LPL has been great to and for me, my business is better than I ever imagined.  But....LPL is not what they were when I first came here 5 plus year ago either.  Their service has slipped both in time to answer but most importantly in accuracy of information.  I never had to question the info I received from the service center until about 12 months or so ago...now I do.  I don't like the aggressive growth they are on right now either, particularly given my business model.  As they continue to grow, they are building this box that we all are going to have to play in or compliance won't be happy.  I am seeing the changes already, I am seeing where they were once flexible they no longer are or they are making it very difficult to do things related to my business model that I once could do.  I don't foresee that getting better.  Yet, they offer more options than what I have seen with other b/ds I have looked at to include commonwealth... Their technology makes or helps my practice stay efficient more than what others appear to do too.  A time may come though were the trade off with flexibility/independence will win v the efficiency and technology though.  We shall see.

csmelnix and indywanab:  Have either of you taken a look at the RIA route?  If so, why did you rule that out?

Malcolm,

I have very limited knowledge of the only-RIA option. As far as I understand setting up your own RIA is a) more work - no BD there to help with the backoffice systems, tools, etc... b) more costly - you'll have to do your own compliance and c) RIA's can only charge fees so anything relating to commissions (insurance, annuities, mutual funds for small accounts, is not doable as an RIA). These are all guesses at this point so if I'm wrong please enlighten me. What I do see most people do is to associate w/ an IBD and set up their own RIA AS WELL to allow for more flexibility. Any comments?

I haven’t really looked at the RIA.  Biggest reason, I still have some commission business but also, needing a CCO in my model is not what I want to add to my overhead at this point.