What LPL’s Massive $2.7B Commonwealth Deal Means for Advisors

LPL Financial is known for big deals. They may have outdone themselves this time.

The largest independent broker-dealer in the US announced Monday that it will acquire Commonwealth Financial Network in a $2.7 billion all-cash deal, marking one of its biggest acquisitions ever in an increasingly competitive independent broker-dealer industry. The purchase, expected to close in the second half of this year, will add roughly 2,900 independent advisors managing some $285 billion in assets to LPL’s ranks. The deal’s size far outstrips the firm’s $800 million purchase of Atria Wealth Solutions, which closed in October.

Industry consolidation is making big networks progressively bigger, leaving less room for smaller firms to breathe. “The name of the game is scale,” said Frank LaRosa, CEO of Elite Consulting Partners, adding that smaller firms today struggle to handle heavy regulatory oversight and come up with the capital needed for technology upgrades.

Kind of a Big Deal

A deal of this size, especially an all-cash one, made waves in the industry this week (and late last week as at least two industry publications first reported “chatter” about a prospective acquisition). LaRosa expects to see more transactions similar to the Commonwealth deal this year, and added that advisors shouldn’t get too comfortable with their current firms even when leadership tells them “we are not selling” or “we would never sell to a huge firm.”

“We’re not exactly in a monopoly situation, but there’s a reason why monopolies are illegal,” LaRosa told Advisor Upside, adding that more of these types of deals could limit not only consumer choice but advisor choice. “It takes some of their power away,” he said.

Are We Clear? One of LPLs biggest advantages when it comes to acquiring firms is that it’s self-clearing, LaRosa said, meaning it doesn’t rely on a third party to execute trades and have custody of client assets. Ultimately, it’s cheaper and faster for advisors to start trading once they join the LPL fold. Self-clearing has helped LPL reach its massive size, with 29,000 financial advisors managing $1.7 trillion in client assets:

• In 2024, LPL’s recruited assets reached a record of $149 billion, up approximately 86% from the previous year, according to the company. 
• In just the last three months of 2024, LPL added 5,000 advisors to its network through its acquisition of Atria and partnership with Prudential. 

“To compete with LPL, more firms like Cetera, Osaic, and others need to seriously consider the idea of being self-clearing,” LaRosa said.