“Commonwealth is one of the highest quality firms in the industry,” said Roth. “It was just ahead of most in terms of building out its technology and its fee-based business, to the point where they were offering a 100% fee option so you could just be a pure RIA. I think they’re a little bit ahead of the others.
“If you look at their business, they’re private to the extent that they publish information, the vast majority of their advisors still have their Finra license, though they don’t do much commission business over there at all. They’re an example of where most firms are going to be.”
Roth said that as broker-dealers struggle to retain revenues from spreads on cash management and revenue sharing from mutual funds, they have greater incentive to create and enlarge a fee-based revenue stream,
Commonwealth has also emphasized intentional growth focused on quality in lieu of quantity – Daniels said the company is satisfied with a calculated, slow-growth approach focused on a small number of providers with above-average production.
As a result, most of the advisors Commonwealth now recruits are fee-oriented wealth management generalists, said Daniels. Despite its size, the firm attempts to keep a high-touch, intimate, boutique feel with its advisors, and as a result, it sees little attrition.
“I appreciate that growth is critical to survival, but I never want to grow at a rate that compromises the thing that makes us attractive in the first place,” said Daniels.