Frequently Asked Questions (FAQs)

Company structure

1. How many advisors do you have, and how many home office employees do you have to support them?
2. Where are you located?
3. Will Commonwealth stay independent and privately owned?

Investment and product offerings

1. What products and services do you offer?
2. Can you tell me about what you offer for fee-based asset management programs?
3. Can I do insurance business at Commonwealth?
4. What research support do you provide?
5. Do you offer any financial planning software?

Operations

1. Who is Commonwealth’s clearing firm?
2. What kind of transition support do you have?
3. Can you tell me about your Compliance department and your approach to compliance?
4. Can you tell me about technology at Commonwealth and what you provide?
5. Does Commonwealth provide marketing support?
6. Does Commonwealth provide practice management support?

Cost and payouts

1. What are your fees?
2. What is the payout?
3. Do you have any quotas?
4. What are your transaction costs for mutual funds, equities, etc?

Company structure

Q: How many advisors do you have, and how many home office employees do you have to support them?
A: Commonwealth has approximately 1,100 active producing advisors and a home office staff of almost 400, which gives us an advisor-to-staff ratio of 2.8:1— one of the best in the business.

Q: Where are you located?
A: Commonwealth has two home office locations: Waltham, Massachusetts, and San Diego, California.

Q: Will Commonwealth stay independent and privately owned?
A: Commonwealth is 100-percent owned and controlled by the management of the firm. The ownership and management have been stable and consistent since 1979. All eleven principals of the firm have been with Commonwealth between 14 and 29 years.

For many reasons, Commonwealth clearly looks to remain a privately held firm. First and foremost, the principals of Commonwealth are relatively young; they love what they do, whom they do it with, and have absolutely no intention of retiring from the business anytime soon. Second, as one of the few remaining truly independent firms, we have a competitive advantage in the marketplace by remaining independent. In short, we think we’d be crazy to sell a nicely growing business we love to an insurance company or a bank that would immediately alter a culture we’ve spent nearly three decades cultivating.

We also do not foresee going public. In our estimation, companies go public for two reasons: it’s either a liquidity event for the owners, or the company needs access to the broader capital markets to fund an expansion beyond what it can internally finance. Commonwealth’s ownership has no need or desire to "cash out." We’re very satisfied running our broker/dealer and do not harbor international ambitions—and the last thing we want is the pressure of quarterly numbers driving our management decisions.

The bottom line is that building this broker/dealer has been our lifework and that retaining the autonomy to manage it while remaining true to our core principles is essential. We value our independence in much the same manner that our advisors value theirs.

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Investment and product offerings

Q: What products and services do you offer?
A: Commonwealth is a full-service broker/dealer with a complete range of investment and insurance products available to our advisors and their clients in a completely non-proprietary environment. These products include, but are not limited to, over 13,000 mutual funds; individual equities; options; fixed income products; precious metals; limited partnerships and private placements; variable annuities; and variable life, term, whole life, disability, and long-term care insurance.

Q: Can you tell me about what you offer for fee-based asset management programs?
A: Commonwealth’s fee-based asset management program, Preferred Portfolio Services^® (PPS), provides the entire infrastructure required to operate virtually any type of fee-based asset management practice. Our programs allow our Investment Advisor Representatives (IARs) to manage portfolios on a fully discretionary basis, or to delegate the security selection and rebalancing of portfolios to our sub-advisors utilizing individual equities, mutual funds, or exchange-traded funds. Among the available turnkey programs are PPS Select, Symmetry Partners, and Capital Allocation and Management, just to name a few. From compliance guidance and advisory agreements, to research and Internet-based performance reporting, our fee-based programs are cutting edge. Read more about our advisory services programs.

Q: Can I do insurance business at Commonwealth?
A: Yes. Commonwealth has its own full-service general agency. Insurance is one of the fastest-growing areas of the firm. While our advisors are not required to run their fixed insurance through us, most choose to do so for a number of reasons. These include complete underwriting and sales support—including illustration preparation and ordering medical requirements—competitive pricing from over 50 carriers, and a staff who truly see themselves as your business partners. Also, insurance commissions are added to your securities production for payout and conference qualification purposes. Find more in our Planning & Insurance section.

Q: What research support do you provide?
A: We offer an extensive third-party research package directly through our website, COMMunity Link^®. This package consists of Value Line^®, Standard & Poor's, Argus, Forefield Advisor, and Morningstar^® Advisor Workstation^SM. The monthly cost for this package is $166.66; however, this cost is subsidized 20 percent for every $100,000 of gross production generated, which means it’s free for those earning $500,000 or more. We also conduct extensive proprietary mutual fund research for the benefit of our advisors and will perform portfolio reviews and create custom investment proposals free of charge.

In addition, Commonwealth Research offers a discretionary managed account platform—PPS Select. The platform offers five distinct model portfolios that incorporate an array of mutual fund and exchange-traded fund choices. Each portfolio is engineered to seek consistent, long-term risk-adjusted returns and leverages the expertise of Commonwealth's Investment Research team.

Q: Do you offer any financial planning software?
A: Commonwealth offers a customized version of MoneyGuidePro™ to our IARs. MoneyGuidePro is an Internet-based financial planning program that offers goal-based planning and retirement income planning; it also includes insurance needs analysis, asset allocation, portfolio optimization, employee stock option planning, and simple estate planning.

Also available is NaviPlan, which appeals to both the novice and the experienced planner by featuring options that range from the bare basics to highly comprehensive plans. NaviPlan Standard offers goal-based planning, while NaviPlan Extended is designed for sophisticated cash flow-based planning and estate planning.

Money Tree is our third offering. Money Tree’s TOTAL Planning System packages two of Money Tree’s most popular programs, giving you the goal-based planning of Easy Money with the comprehensive cash flow planning of Golden Years. In addition, the TOTAL Planning System includes Strategic Solutions, which creates retirement planning presentations to explain complex concepts to clients.

Commonwealth IARs may charge financial planning fees under Commonwealth’s corporate RIA.



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Operations

Q: Who is Commonwealth’s clearing firm?
A: We have been clearing with National Financial Services LLC (NFS) since 1987. We were their first non-bank correspondent, and we remain one of the largest independent broker/dealers using their clearing services. Commonwealth is a member of both the Advisory Board and the Service Steering Committee NFS has established for its top correspondent firms.

What many advisors might initially fail to appreciate is how different a clearing firm will look depending on which broker/dealer they are accessed through. For our part, we have chosen not to delegate key functions like transfer of assets and cashiering to NFS, and we’ve chosen to pay for upgraded optional services (e.g., expanded tax reporting) on behalf of our advisors. Perhaps of paramount importance, we’ve invested considerable time and money internally developing technology to customize the NFS experience for Commonwealth advisors.

Q: What kind of transition support do you have?
A: Many new advisors tell us that their transition experience truly cemented their decision to join Commonwealth. An advisor may only move once or twice in his or her career, but our Transition professionals do it every day, so we know how to help you avoid the pitfalls. Our 30-member Transition team is the most proactive in the industry; we guide you every step of the way, baby-sit Automated Customer Account Transfers (ACATs) to ensure the fastest possible transfer of assets, and provide personal training to get new financial professionals and their staffs up to speed. Needless to say, we also have a wealth of experience contending with non-compete contracts. Learn more about how we make the transition process easy for you.

Q: Can you tell me about your Compliance department and your approach to compliance?
A: Commonwealth has an outstanding Compliance team who truly see themselves as advisors’ partners and counselors. These are real people who are there to help advisors remain compliant in our highly regulated, dynamic industry. From a fundamental perspective, our decidedly selective approach to advisors enables Compliance to move past designing policies and procedures to the lowest common denominator so they can focus on appropriate guidelines for reputable, established producers. For more information, visit our Compliance section.

Q: Can you tell me about technology at Commonwealth and what you provide?
A: Our solutions are designed not just for you, but from your point of view. We put ourselves in your shoes—and behind your desk—so we can develop tools to simplify your life, save you time, and help you be as productive as possible.

Everything you need to run your business is available through your browser 24/7—from Client360°^®, which lets you see and manage the complete picture for each client in once place, to Work in Progress, where you can track the status of your paperwork in real time. And, you can access the New Account Wizard, which lets you establish an account number, fund the account, and start trading immediately.

We never stop looking for ways to make your life easier—and your business more successful. Learn more about the technology Commonwealth has to offer.

Q: Does Commonwealth provide marketing support?
A: Commonwealth’s Practice Management department provides marketing support and expertise through consultation, template collateral material, off-the-shelf marketing campaigns, and customized development, when appropriate. The Practice Management marketing consultant serves as an extension of your own in-office staff. Find out more about how we can help you with your marketing efforts.

Q: Does Commonwealth provide practice management support?
A: Nearly unique in the industry, Commonwealth has a fully staffed Practice Management department dedicated to developing our advisors’ practices. From the big picture (writing a sensible business plan), to staffing, training, marketing, efficient workflows, and succession planning, we offer personal consultation focused on your individual situation and goals.

At Commonwealth, there’s no additional charge for our Practice Management and Marketing consultation. Some firms charge an á la carte fee for using these services. Our philosophy is very different; we don’t think we have to charge you a fee to help you. We help you grow because it’s good business and it makes sense.

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Costs and payouts

Q: What are your fees?
A: There are only three required fees that advisors must pay to do business through Commonwealth:

• Errors and Omissions (E&O) Insurance: $1,950/year
• Licensing, registration, and bonding fees (which vary depending on which and how many states a advisor is licensed in): approx. $400/year
• Technology Fee: $150 per month, per licensed advisor

Advisors using our fee-based platform, PPS, will receive enhanced payouts. Those who have PPS assets under management of at least $25 million will qualify for a quarterly payout based on a percentage of their PPS management fees, starting at 90 percent and rising to a maximum of 95 percent.

PPS Assets Under Management $250,000,000 + $150,000,000 + $100,000,000 + $50,000,000 + $25,000,000 + $10,000,000 +

Payout 95% 94% 93% 92% 90% B/D commission payout

Commonwealth has one of the most competitive payout structures in the industry. Don’t be fooled by oversimplified promises in ad copy; real commission contracts include a laundry list of fees, ticket charges, and product types. The only way to understand the bottom line for your individual practice is to perform an in-depth, customized analysis. We would be delighted to do this for you.

Please also note: You pay your broker/dealer for services. Too many advisors don’t realize that:

• Most broker/dealers do not offer similar services.
• These incremental differences have a significant impact on an advisor’s bottom line.
• While it is important to understand your payout, it may be even more critical to understand the services that the brokerage firm provides, as well as the impact they will have on your practice. In this day and age of books and records and shrinking margins, many broker/dealers are pushing even more work down onto their advisors. Our goal at Commonwealth, on the other hand, is to relieve your offices of as much administrative burden as possible, so you can focus on revenue-generating activities.