After LPL deal, $1.3B National Planning firm bolts for Commonwealth
October 19, 2017
By Tobias Salinger, FinancialPlanning
A father-son firm managing $1.3 billion in client assets opted for Commonwealth Financial Network rather than remaining with National Planning through the transition of its advisors to LPL Financial.
Stuart and Michael Paris of Paris International “would have never left” National Planning if the firm’s assets had not changed hands in LPL’s big recent acquisition, Michael Paris said this week. The Great Neck, New York-based firm chose the fourth largest independent broker-dealer over the largest one.
LPL’s Aug. 15 purchase boosted its own prospects while helping recruiting efforts for its competitors. The boutique-like model of Commonwealth stands as an alternative to increasingly large firms like LPL in the bifurcating IBD space, a study found earlier this month. LPL is too big for Paris, Michael Paris says.
“It’s a significant cultural difference from where we were, where we chose to go and what would have been the do-nothing alternative,” Paris says, expressing concern that LPL’s status as a publicly traded firm gives it a greater fiduciary responsibility to its shareholders than its advisors.
A spokesman for LPL said he had no immediate comment on the firm’s departure. A spokeswoman for National Planning parent Jackson National Life Insurance, which sold the assets of its four National Planning Holdings BDs to LPL, declined to comment on Paris’ exit.
CHANGE UNDER PRESSURE
Paris specializes in employer retirement plans while also offering individual advisory services, with about $1 billion in plan assets and an additional $300 million in individual client assets, according to Paris. His father started the practice in 1970, and it had been with National Planning since 1999.
The firm serves as an office of supervisory jurisdiction with a smaller footprint of four other registered representatives, Paris says. With a company motto of “give to give” rather than “give to get,” he and his father chose Commonwealth over several other potential suitors under a tight deadline early next month.
“Nothing like doing eight months of work in about two,” Paris says. “Commonwealth finished a very close second to NPC for us 17 years ago. The same people who welcomed us 17 years ago were the people who welcomed us today.”
Paris is also switching its custodian from Pershing to Fidelity’s National Financial Services under the move, he notes. The firm’s assets will move over “as soon as administratively possible,” with about 80% of the assets expected to make the transition within the next 45 days, according to Paris.
Revenue at the firm’s new Waltham, Massachusetts-based BD rose 6% last year to $1.07 billion despite a 2.5% drop in total revenue among the nation’s 50 largest IBDs. Commonwealth serves 1,710 advisors managing about $92 billion in advisory assets and $52 billion in brokerage assets, according to the firm.
“This is a team that values relationships as much as we do and provides the same support to its clients that we strive to provide to the advisors we work with,” Commonwealth managing principal for business development Andrew Daniels said in a statement about the firm’s latest pickup.
Daniels has said the firm sees a recruiting opportunity in the LPL-NPH deal. The firm added 94 new advisors in the first three quarters of the year, and “we remain committed to careful growth with advisors and practices that fit our culture,” spokesman Todd Estabrook adds in an email.
National Planning recently lost two teams to Securities America and one to Royal Alliance Associates. Commonwealth, Cambridge Investment Research, Cetera Financial Group, Voya Financial Advisors and Ladenburg Thalmann firms loom large as potential landing spots, according to recruiter Jon Henschen.
One group of advisors told Henschen they were so exhausted by firms’ recruiting efforts that they began dozing off during a company’s technology demonstration. The LPL-NPH deal has prompted “a feast” for firms eager to peel off NPH advisors prior to their transition to LPL, Henschen says.
“They’re really busy doing home office visits and in discussions and getting offers and following up,” Henschen says. “I’ve had a hard time getting a hold of people.”