Commonwealth adds firm's largest incoming recruit of the year

As the volume of megamoves keeps up with last year's blazing pace, a billion-dollar retirement plan and wealth practice dropped its brokerage of more than three decades for Commonwealth Financial Network.

Cedar Rapids, Iowa-based Strategic Financial Solutions — which has seven financial advisors and $1.4 billion in assets across retirement plans and individual clients — aims to grow by 12.5% to 15% a year in annual revenue after leaving Principal Securities, according to President Larry Witzel. Commonwealth unveiled the new team on Aug. 16, two months after it made the transition, FINRA BrokerCheck shows.

At least 20 independent teams or wealth managers with $1 billion or more of client assets have changed brokerages or sold themselves in 2022, which is roughly on track to meet last year's total of 29, according to Financial Planning's count of recruiting moves. In the case of Strategic Financial, the firm had a "great partnership" with Principal but saw the need to go with a more independent firm that doesn't manufacture any products, Witzel said in an interview. The Labor Department's new guidelines on 401(k) plans and other employee retirement accounts prompted the firm to rid itself of potential conflicts of interest, he said.

"We wanted somebody who would know where we're coming from right off the bat but could also help channel us to some nice growth moving forward," Witzel said.

Representatives for Principal, which has its Des Moines headquarters roughly a two-hour drive to the west of Strategic Financial's offices, didn't respond to requests for comment.

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In terms of the number of independent advisors and client assets switching brokerages or selling equity, the billion-dollar moves are already bigger this year than in 2021. More than 3,100 independent reps with $209 billion in client assets have announced or completed transitions this year, compared to 2,285 with $189 billion for the entirety of 2021. The moves include massive acquisitions of independent brokerages and megamoves by wealth managers from the bank and credit union channels to Commonwealth rivals LPL Financial and Advisor Group.

Similar relocations from wirehouses or other employee advisor firms, or from wealth managers owned by insurance companies or asset managers, will maintain the same level for the next several years, according to recruiter Michael Terrana of the Terrana Group. Advisors' decisions usually involve companies' management, pay grids and cultures, Terrana said.

"Internally, I tell my team there will be five to 10 more years of this kind of movement," he said. "They don't have the ability to do business the way they want to do business."

Strategic Financial works with 85 to 90 employers that have more than 12,000 retirement plan participants and $900 million in assets, with the rest of its business coming from individual clients, according to Witzel. Besides him, the company's other advisors are: Bert McClintock, Brian Brandt, Jeff Haugse, Jordan Kuehner, Steven Bragg and David Spanier. The practice launched in 1990 with Principal as its brokerage.

Their new brokerage is "delighted to welcome the firm" to its ranks, Managing Principal Becca Hajjar said in a statement. "The Strategic Financial Solutions team is laser-focused on achieving clients' objectives through a high-touch consultative approach."

The incoming team is the largest of the year announced by Waltham, Massachusetts-based Commonwealth, a privately held firm that is one of the largest independent wealth managers. The firm's annual revenue soared 22% to more than $2 billion last year as the No. 6 firm on Financial Planning's IBD Elite rankings.