Sometimes Commonwealth Financial Network is like the booster club that used to annoy you in high school. Their zeal can be deafening, but you envy their enthusiasm. And it's hard to argue with success. The company manages $22.5 billion in assets, boasts $212 million in revenues, and expects to rake in $250 million in 2004.

Commonwealth is one of the largest independent broker-dealers in the nation and may well become the largest privately owned independent if LPL Financial Services goes public, as LPL executives suggest it will at some point. At present, Commonwealth shares another trait in common with giant LPL: dual offices in Boston and San Diego. But when one looks beneath the surface, Commonwealth's private ownership may explain why it has grown at a much faster clip than most of its rivals.

Unlike many other broker-dealers, with employee-to-rep ratios in the ten-to-one category, Commonwealth boasts a mere four employees per rep, making for a very cozy home office. That reinvestment in the business does not seem to have hurt the company, which has seen its revenues grow by an average of 27% per year over the past ten years. "We choose only the best and we give them our all," says Joe Deitch, founder, chairman and CEO. "A knee-jerk bean-counter reaction might be to cut overhead, but our response is, let's take on the best reps and employees. Maybe they cost us 20% more on average, but we'll get 50% to 60% higher productivity in the long run."

Peter Wheeler, president of the firm, is a daredevil surfer who serves as Deitch's right-hand man and is known internally as "Joe's reality check." But when it comes to business, he's Mr. Cautious. He sums up Commonwealth's philosophy this way: "Some broker-dealers lose sight of the fact that our reps are the reason for our success. We very firmly recognize that our reps are our clients and our bosses."

Recruiting is another area in which Commonwealth sets itself apart. The company's recruiters are not paid on commission, and have no assigned regions. "As a result I have no interest in jamming someone into the system who doesn't belong there," says Janice Hart, vice president of national field development.

The firm rejected 35% of prospective reps last year, due to low production, compliance or corporate culture issues. "The fact is, it's easier to say no at the beginning than to ask someone to leave after they join," Deitch says. "We do an intense amount of screening to distinguish between the merely good and the great. Given that you don't fire people for being merely good, we do our best to find the great fit right from the start."

The firm recently opened an office in San Diego and has seen its number of reps west of the Mississippi triple in four years. "From a recruiting standpoint we are more like 'gatekeepers of the firm' than salespeople," Hart says. "We want to surround ourselves with nice people who share our value system. We view this as a decision for life. Once they come on board, we consider them family."

Among reps, Commonwealth is known as a service-oriented company. "We wanted our service to be so good that reps would break out in a cold sweat if they had to go somewhere else," Deitch says.

When the company first started in 1979, Deitch gingerly proposed "superior service" as a stated goal. But by 2001, when many competitors were slashing costs in reaction to the bear market, Commonwealth decided to go beyond what anyone else had to offer and aim for "indispensable service." What followed was a yearlong crusade in which elected volunteers from each department came together to form an "indispensability team." Everything, no matter how small, was put under the microscope.

"We see quality control as a front-end process-identifying errors before they're made-rather than a back-office function," says Janet Reckman, vice president of operations. "People in the departments know what's wrong and how to fix it, and that's not unique to Commonwealth. What is unique is the way we embrace it as part of our corporate culture and empower people to speak up and offer creative solutions."

The tech department engineered a way to make every rep's name, along with their outstanding cases, pop up on a screen the moment they phoned in. The front desk people strove to answer calls in less than eight seconds, and addressed reps by their first names as soon as they picked up the phone. Compliance and operations became more integrated, in tune with sales and recruiting. The company ramped up the number of conferences and road shows it offered, and instituted programs not only for reps but also for their assistants. Meanwhile they beefed up transition and practice management services through a combination of hands-on training and new technology initiatives. Employees, too, were rated on their initiative in providing "indispensable service" as part of their annual performance reviews.

At the end of the year, the "indispensability team" drafted a "Declaration of Indispensability," framed on parchment, with language reminiscent of the Declaration of Independence. At a barbecue held on company grounds, employees wore three-cornered hats, and every employee signed with a plumed pen. The framed Declaration holds pride of place in the lobby of corporate headquarters.

The company is able to follow through on service in large part because of its flat structure and lack of bureaucracy. Unlike most large brokerage houses, Commonwealth does not have legacy systems, old IBM mainframes or UNIX systems to contend with, says Ed Sefton, chief information officer. "For better or worse, we use Microsoft for everything, which makes it extremely easy to build and deploy new technology. The real value is tying information from multiple sources into one seamless report, and providing one-click access to the rep, whether they're driving in their car with a Web-enabled telephone or sitting on the beach with a PDA." As the role of the financial advisor expands, Commonwealth feels the pressure to meet and exceed expectations.

"Our corporate culture also facilitates technology change very quickly and that's rare," Sefton says. "There's very little bureaucracy. Decisions are made quickly at the ground level. Anybody in tech has the power and authority to make changes. Also, we don't work on a fixed budget. I meet with the principals once a month, and if a need is identified, the money is there for it. Commonwealth is the most agile company I've ever worked for, with a completely flexible budget."

Commonwealth's unique sense of corporate culture can be traced to founder and majority shareholder Joe Deitch, a former financial advisor whose happy-go-lucky demeanor disguise a powerful ambition. "I founded the company in 1979 with no capital, no experience and no clue," he says. "I just knew I wanted to surround myself with like-minded people who made going to work a pleasure." Apparently others agreed; The seven principals alone have worked at the company for a total of 140 years.

Profit sharing, annual bonuses and a stock-sharing program have helped attract top talent. During the three-year recession that followed the 2000 tech bust, Commonwealth increased its marketing budget, boosting morale and ensuring that it would come out on top following the crisis.

Deitch considers it a cornerstone of his business that he does not have the conflicts of interest that have plagued some of his competitors. Like many companies in the 1980s, Commonwealth invested in some real estate deals, but Deitch quickly saw the potential conflict of interest and unloaded them. "Fortunately we never had to confront the hard decisions that some others firms do, and we want to keep it that way," he says. "Plus, not being public, and not having a hired gun for a CEO whose short-term bonus is a function of the increase in the stock price, we can think and act in the long-term best interests of all of us."

According to his colleagues, Deitch is a nurturing presence, a man who values personal and professional growth, a fun and professional business environment, brainstorming and being challenged. He admits that creative puzzling-solving is his favorite pastime. Luckily he is free to be an "idea man" because Wheeler, in Deitch's words, "is much more the grounded pragmatist who is knee-deep in today's operations. We're both strident about quality and honesty, but we have a tendency to play devil's advocate with each other, which makes for more intelligent decisions."

Or, as Wheeler puts it, "Joe's the eternal optimist and I'm a pessimist. I need to rein him in and he needs to cheer me up." That openness to challenge has permeated the entire company, with everyone urged to speak out about a problem or propose a better way.

If it's any testament to the company, employees don't rush off when the clock strikes five, often remaining after work for a pick-up softball game, or classes in yoga, infant CPR, even Japanese flower arranging, all subsidized by the company.

Deitch says he has no plan to sell his business or go public in the near future-for now. "Commonwealth enjoys the good fortune of being privately held and having a long-standing management team who share similar values. Thus we don't have divided loyalties to our reps, a corporate parent, and ourselves. There's no reason to sell because we've enjoyed many years of strong results, and therefore cash flow and liquidity are not issues. As for the enjoyment angle, as the majority shareholder, I have had the luxury of crafting my own schedule and job description," he says, speaking over the telephone from a vacation home at Cape Cod.

Yet he acknowledges that could change. "As the world changes and opportunities present themselves, we may want some amount of liquidity, especially if it's at a high multiple, however there is nothing on the foreseeable horizon that beckons," he says.

The firm does have a succession plan that includes a hierarchy of transition, with right-hand man Wheeler first in line. But the problem, says Deitch, is not so much an orderly transition as an unexpected problem. "With that in mind, we have placed the majority of Commonwealth's stock in a voting trust to skip probate, and have identified enough people and procedures to accommodate just about any eventuality with barely a hiccup."

With this kind of confidence, Deitch can admit to a different kind of selfishness, not the kind you would expect from an emerging tycoon whose private company is now firmly on the radar screens of Wall Street investment bankers who would love to take Commonwealth public. "I want to look forward to going to work in an environment I enjoy, and I want my colleagues to feel the same," Deitch says.