Going Independent—Twice

An LPL advisor re-evaluates his options and finds his way to Commonwealth

A former New Jersey-based LPL advisor, Jim King began his career in 1987 as a currency trader. After spending six years on the insurance side of the business, he wanted to be his own boss and have the ability to control his own destiny. Having grown tired of all the surprises that seemed to come along with being an employee, he felt there was something special about walking into his own office and being his own boss.

With those thoughts in mind, Jim joined LPL and launched his own firm. He really enjoyed the early years with LPL and his business grew nicely. At that time, LPL had about 1,500 financial advisors and was considered a warm and friendly environment, with great accessibility to what he needed. “They were the Yankees,” he said.

Then once LPL went public, he felt everything changed. The accessibility he once enjoyed no longer existed, the environment became more bureaucratic and the people he “grew up with” were all leaving for the same reasons that Jim felt hindered and concerned about. At the very least, Jim believed it was time to evaluate his options.

When Jim and I first began talking, things were “good enough”. It was 5 years later when Jim called me and said, “I’m doing some soul searching, let’s talk.” He had hit a point where the frustrations were building up to an intolerable level. The average production per advisor under the LPL umbrella had dropped from about $500k to $200k. When he would call the firm’s operations center to get a question answered, the average hold time was 20 minutes—and that was just to get a reference number. In his eyes, LPL was starting to feel wirehouse-like and clients were complaining about the reports they received. The warmth was gone, and he no longer felt as if he was part of a team.

Jim yearned to feel appreciated and be a part of an organization that was going to better support him and his business, with state of the art technology and marketing materials that would impress his clients and prospects. He looked at a few alternative independent broker dealers, as he felt the RIA space felt “too independent” to him and did not offer enough upside. What he valued most was having a team behind him, with support, technology and a formal compliance department.

As he shared in a recent interview with me, Jim found everything he needed to continue servicing his clients and building his business with another broker dealer: Commonwealth Financial Network. While Jim’s story is not unique, it portrays what many advisors go through in the course of their career: The realization that the frustrations have mounted and have reached a tipping point. Not everyone has the courage to do something about it. But, Jim did.

Diamond Consultants: Jim, why did you first decide to go independent?

Jim King: “After years of being an employee, I was tired of all the ‘haircuts’ that were being taken on my business. I wanted to be my own boss, and wanted to have control of my own destiny. There’s nothing like it.”

DC: What was it like at LPL?

JK: “I spent fifteen years there, and back in the day it was a great firm. Everyone knew one another, support was good, people were warm and friendly, and the home office was very accessible. Once the firm went public, it all changed. There was no real accessibility to management, no one knew who you were, average production decreased and all the people I grew up with were leaving.”

DC: As you set about your due diligence, what options did you consider?

JK: “I looked at Raymond James Financial Services and the independent side of Ameriprise. But nothing came close to being part of something like I have with Commonwealth. One hour into the home office visit in Boston, I knew it was for me. I liked how the leadership at the firm were ‘wicked’ smart and experienced, seasoned professionals who understood me and the mindset of the upper-end advisor.”

DC: Did you look at the RIA channel at all?

JK: “Originally, I did not consider the RIA channel—being totally alone was not for me. What I valued most was having a team behind me that would include a formal compliance and marketing department, technology, and support. I wanted to affiliate with another broker dealer, even if it meant that I would still be under FINRA supervision and not the SEC. I wanted to feel like I was part of a family again, along with having the support to further grow my business.”

DC: What was it about Commonwealth that sealed the deal for you?

JK: “They are a small, heartfelt group of people who want to help their advisors. I’m able to sit with management—it’s like an extension of my own office. They have an army of people that genuinely care. I can pick up the phone and have people who want to help. Everyone is so nice, and I feel like they really want to help me grow.”

DC: Was the transition from LPL difficult?

JK: “The transition team is tremendous at Commonwealth, just shy of spectacular. I moved $108mm in assets from LPL to Commonwealth in 12 days with great support during the whole process.”

DC: How did your clients respond to your move to Commonwealth? Did they notice a difference between the broker dealers?

JK: “Clients really did see the change: they love Commonwealth. The statements are nicer, the tools are better, the systems are superior, the marketing pieces are professional and the reporting more sophisticated. Plus, because I have a strong team behind me, I have more opportunities than ever before with my own book and marketing plans that enforce my ability to really grow. Clients notice how much happier I have become—I don’t have to spend time defending the firm anymore.”

Opportunity – and a second chance – are revealed in the details

Jim’s story reminds us that – even in the independent space – not all firms are created equal. There exists a wide range of options for an advisor to choose from, each with different levels of freedom and control, and Jim’s feedback – and results – prove that.

While a move an advisor made a decade or more ago may have been right then, it certainly doesn’t mean that it is still right as time lapses and business grows and changes. As such, it is smart to re-evaluate periodically to ensure you are still in the best place to serve your clients.

Those things that frustrated Jim were the very things that propelled him to seek something better—and what he found was a second chance at success.

Post-Script

Over the past three years, Jim has grown a total of 66% and his average client size is now $600k (and the top 80% of his book are clients with an average of $2.1mm in assets). He credits his incredible growth with the home office support he receives, allowing him to be more efficient. In a recent conversation, Jim said, “This was the best move I’ve ever made.”

Browse all Case Studies…