Savvy Wealth founder and CEO Ritik Malhotra likes to think Commonwealth Financial advisors are joining his team because it reminds them of their old firm before its recent acquisition by LPL Financial. But maybe it was the aspirin.
Malhotra in April took to LinkedIn with a post about the “acquisition relief boxes” — essentially care packages — his firm was sending to hundreds of Commonwealth advisors and teams. LPL Financial had just announced its plans to buy longtime rival Commonwealth for $2.7 billion, and many firms saw it as a recruiting opportunity.
Those efforts continue to bear fruit, as revealed by recent recruiting announcements and industry data. Even as LPL executives express confidence about retaining the bulk of Commonwealth’s assets, advisors keep steadily heading for the doors.
A recruitment strategy mailed with a wink, and a personal note
Malhotra said in an interview this week that he and his colleagues eventually mailed between 700 and 800 acquisition relief boxes — filled with Savvy-branded aspirin to relieve takeover-related headaches, brownies and cookies.
“And then there was a handwritten note coming from me, just offering that, ‘Hey, maybe Savvy could be helpful,” Malhotra said.
Savvy Wealth, a tech-heavy RIA founded in 2021 and now managing more than $3 billion in client assets, finds itself among the many firms benefiting from a steady outflow of Commonwealth teams. Three more additions were announced just this month.
But it’s far from the only destination for advisors departing Commonwealth amid its incorporation into the much-bigger LPL. Recent weeks have also included announcements of Commonwealth teams recruited by Merit Financial Advisors, Osaic, Cetera and The AmeriFlex Group. That follows months of outflows to these same firms and others like Raymond James, Kestra, Cambridge Investment Research and Arkadios Capital.
LPL Financial has predicated the economics of its $2.7 billion acquisition of Commonwealth largely on its target of retaining at least 90% of the $285 billion that Commonwealth had under management when the purchase was announced. Speaking on an earnings call last month, LPL CEO Rich Steinmeier said about 80% of those assets are already under contract to move to LPL, “on track for the 90%.”
An uptick in Commonwealth departures
The industry-tracking firm AdvizorPro counts more than 400 advisors who have left Commonwealth since the purchase plans were announced in late March. That’s more than 13% of the total headcount of 2,900 advisors Commonwealth then had.
Hesom Parhizkar, AdvizorPro founder and chief product officer, said the headcount figures are telling. But for LPL Financial, far more significant is the tally of assets it manages to retain.
Parzhikar has noticed an uptick in recent departures that he said could continue into the holiday season, as advisors see their day-to-day slow down and find more time for making a move. He also said many commission payments are tied to the end of the year, and advisors may be waiting for those to come in before changing firms.
“So my guess is in December, things will pick up,” he said. “And then after mid-January, it’s going to be, as those commission checks hit, ‘See you, guys.'”
Why advisors left for Savvy Wealth, Merit Financial Advisors
One of the advisors to leave Commonwealth in recent weeks is Ed Wildermuth, a senior financial planner at the RIA Mosaic Wealth Advisors in Carmel, Indiana. Mosaic, which has $250 million under management, was one of the three Commonwealth recruits Savvy announced this month. The other two were Horizon Advisory Group, with $108 million under management in Houston, and Atticus Wealth Management, with $37 million under management in Macomb, Michigan.
Wildermuth said in a recent interview that he was surprised that LPL was buying Commonwealth, where he had been since 2020.
“We really loved Commonwealth,” Wildermuth said. “And when that news happened, we took it as an opportunity to just kind of evaluate the landscape out there of, you know: Was it in the best interest of clients? Did it make sense to stay where we were? Or was this an opportunity to evaluate: Is there a better place to serve our clients?
For Blueprint Wealth Advisors, a hybrid RIA in Chicago, that better place turned out to be the serial RIA-acquirer Merit Financial Advisors. With $1.2 billion under management, Blueprint was one of the largest advisory groups attached to Commonwealth before its incorporation into LPL.
The leaders of the 20-person Blueprint team, Nick Wilkins and Ryan Evans, said in an interview Thursday that they weren’t looking to leave Commonwealth until the news of its acquisition broke. As it turned out, the deal was a “blessing in disguise,” Wilkins said.
Blueprint had benefited greatly from its nearly 14-year association with Commonwealth, Wilkins said. But it was looking for new sources of growth.
The benefits of equity ownership of other affiliations
Merit Financial, an Atlanta-based firm with more than $20 billion under management, provides employees of the firms it acquires with equity ownership stakes. That positions them to reap the rewards of business success in future years.
“I really think about this as a merger and a path to real growth and putting your foot on that accelerator,” Wilkins said of the move to Merit. “Because we’re in no way thinking about retirement. We’re thinking about growth — what the next 10 to 15 years looks like.”
Evans said he and his Blueprint colleagues considered many different possible partners before deciding to go with Merit. He said they worked with a consultant to help them choose, but it still was almost like having a second job sorting through the many types of firms eager to welcome Blueprint and deciding which was the best fit.
“We tried to educate ourselves as quickly as we could, because there are so many different variations,” Evans said.
Blueprint marks Merit’s 13th acquisition this year and gives it its first office in Chicago proper. Like all firms brought into the fold, Blueprint will be dropping its own brand and taking on Merit’s.
Merit President Kay Lynn Mayhue said the single name helps ensure that everyone at the firm is moving in the same direction.
“That is going to continue to allow us to grow organically much faster if we had a bunch of bifurcated brands and we were trying to manage multiple different websites and SEO and digital marketing,” she said.
“The custodial referral programs aren’t even going to take a look at you if you don’t have that consistency from a branding and a client experience,” she said about services like Schwab Advisory Network, which helps member RIAs find prospective clients. “So it just enables us to impact so many more people on the client side positively by being that one company.”
Commonwealth advisors an elite group
Mayhue said it’s always welcome when the teams she and her colleagues are courting are of the quality that tend to be found at Commonwealth.
“I think they were very picky on who they let in the door, from a cultural standpoint,” she said. “A lot of the 1099-model broker-dealers, they’re only looking at numbers.”
Malhotra said he has no special insight into what LPL is doing with its general retention goals and can only speak to his own experience courting Commonwealth advisors. He said it’s clear no one joined Savvy just because of a care package.
But the outreach did prompt a good number of Commonwealth advisors to connect and learn more about the firm. What they found struck at least some as welcomingly familiar, he said.
“I think in their minds, they’re thinking of Savvy as not just a continuation of Commonwealth, but the speed at which we are improving the platform. It reminds them of a lot of the early days of Commonwealth,” Malhotra said.
Like Merit, Savvy offers ownership shares in itself to firms that join. Recruited teams get to keep their brands while generally paying for the services they receive from Savvy with a portion of the revenue they generate.
Malhotra agreed with Mayhue that equity offerings help give everyone at a firm a sense of shared purpose.
“People say, ‘Hey, this really does feel like we get to be part of the journey,'” he said. “And it just reminded people of — if I could have gone back to the early days of Commonwealth, wouldn’t it have been nice to have some equity and skin in the game?”
