Savvy Wealth founder and CEO Ritik Malhotra believes that Commonwealth Financial advisors are choosing to join his team because it reminds them of their old firm before its recent acquisition by LPL Financial. However, some may argue that it’s the thoughtful gestures that are making the difference.
In April, Malhotra took to LinkedIn to share a post about the “acquisition relief boxes” that his firm was sending to hundreds of Commonwealth advisors and teams. LPL Financial had just announced its plans to acquire longtime rival Commonwealth for $2.7 billion, and many saw this as a recruiting opportunity.
The efforts to attract Commonwealth advisors have proven successful, with recent recruiting announcements and industry data reflecting the trend. Despite LPL’s confidence in retaining the majority of Commonwealth’s assets, advisors continue to leave the firm.
A Recruitment Strategy with a Personal Touch
Malhotra revealed that his firm mailed between 700 and 800 acquisition relief boxes to Commonwealth advisors, containing Savvy-branded aspirin, brownies, and cookies. Each box also included a handwritten note from Malhotra, offering support and presenting Savvy as a potential new home for these advisors.
Savvy Wealth, a technology-driven RIA established in 2021 managing over $3 billion in client assets, is among the many firms benefiting from the exodus of Commonwealth teams. The firm recently welcomed three new additions to its roster.
However, Savvy is not the only destination for departing Commonwealth advisors. Other firms, such as Merit Financial Advisors, Osaic, Cetera, and The AmeriFlex Group, have also successfully recruited Commonwealth teams. This trend follows months of advisors moving to firms like Raymond James, Kestra, Cambridge Investment Research, and Arkadios Capital.
LPL Financial’s acquisition of Commonwealth was largely based on retaining at least 90% of the $285 billion in assets under Commonwealth’s management at the time of the purchase announcement. LPL CEO Rich Steinmeier mentioned in an earnings call that the firm is on track to meet this retention goal.
An Increase in Commonwealth Departures
According to industry-tracking firm AdvizorPro, over 400 advisors have left Commonwealth since the acquisition plans were unveiled. This accounts for more than 13% of Commonwealth’s total advisor count of 2,900 at the time.
Hesom Parhizkar, AdvizorPro’s founder and chief product officer, noted that while headcount figures are significant, the key metric for LPL Financial is the retention of assets rather than advisors.
Parhizkar observed a recent surge in departures that could continue through the holiday season, as advisors have more time to consider their options. He also mentioned that many advisors may be waiting for year-end commission payments before making a move.
Reasons for Choosing Savvy Wealth and Merit Financial Advisors
One advisor who recently left Commonwealth is Ed Wildermuth, a senior financial planner at Mosaic Wealth Advisors in Carmel, Indiana. Mosaic, managing $250 million in assets, was one of the firms recruited by Savvy this month. Wildermuth expressed surprise at LPL’s acquisition of Commonwealth, where he had been since 2020.
Wildermuth explained that the news of the acquisition prompted him to evaluate whether staying at Commonwealth was in the best interest of his clients. This led him to explore other options, ultimately leading him to join Savvy Wealth.
For Blueprint Wealth Advisors, a hybrid RIA in Chicago, the acquisition of Commonwealth by LPL served as an opportunity to seek new avenues for growth. With $1.2 billion in assets, Blueprint decided to partner with Merit Financial Advisors, known for providing equity ownership stakes to employees of acquired firms.
The leaders of Blueprint noted that the acquisition by Merit was a strategic move aimed at accelerating growth and ensuring a shared purpose among team members. This decision marked Merit’s 13th acquisition of the year, with Blueprint becoming its first office in Chicago.
The Benefits of Equity Ownership in Affiliations
Merit Financial’s practice of offering equity ownership to employees fosters a sense of commitment and alignment towards long-term success. This approach appealed to Blueprint Wealth Advisors, who viewed it as an opportunity for sustained growth over the next decade.
By consolidating under the Merit brand, Blueprint aims to streamline operations and enhance client experience, a strategy that has proven successful for Merit in previous acquisitions. This unified branding approach enables Merit to expand its reach and impact more clients positively.
Commonwealth Advisors: An Elite Group
Merit President Kay Lynn Mayhue acknowledged the quality of advisors typically associated with Commonwealth, emphasizing the cultural fit and selectivity of the firm in admitting new members. She highlighted the importance of shared values and a client-centric approach in building a successful advisory practice.
Malhotra noted that while the care packages were a thoughtful gesture, advisors were drawn to Savvy Wealth for its commitment to innovation and client service. The firm’s offer of ownership shares and a focus on growth resonated with many departing Commonwealth advisors.
Ultimately, the decision to join a new firm is driven by a combination of factors, including cultural alignment, growth opportunities, and the potential for equity ownership. As advisors navigate the changing landscape of the financial industry, firms like Savvy Wealth and Merit Financial Advisors are positioning themselves as attractive destinations for top talent.
