An LPL Financial practice with $180 million in assets under management has bolted for Commonwealth Financial Network, in what marks at least the fifth exit from LPL by a hybrid practice since a change in its RIA policies.

Tony LaJeunesse of TL Financial Group cited LPL’s new requirements pushing assets to the corporate RIA as part of the reason for what he described as a difficult and “double-big” decision to leave LPL and his office of supervisory jurisdiction. Commonwealth announced the Detroit-area practice's move on May 15.

Commonwealth fee revenue

In November, LPL said it would cut fees on the corporate platform while mandating that new incoming advisors have at least $50 million on it before joining a hybrid practice. The departures since then include one of LPL’s largest hybrid RIAs, Independent Financial Partners.

The nation’s largest independent broker-dealer has added nearly 1,900 advisors to grow to 16,067 in the last six months, mainly driven by its acquisition of National Planning Holdings. At the same time, rivals like No. 4 IBD Commonwealth has also grabbed some 1,300 NPH advisors amid record recruiting results.

Commonwealth’s newest addition, which is based in Southgate, Michigan, had been adding about $20 million in assets under management per year under LPL and its hybrid RIA-OSJ, Advantage Financial Group, according to LaJeunesse. The size of LPL and a “good cultural fit” with Commonwealth drove TL Financial into its fold, he says.

“Our fees are looking to go up and our services are going down. So it’s not rocket science from there,” LaJeunesse says. “They’re becoming so big that, for a firm like mine, I just believe Commonwealth is going to have a better competitive advantage. And that’s the key thing.”

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One of the biggest notable losses came from Merrill Lynch, which lost a team managing $1 billion to the independent space.

An LPL spokesman and Joe Russo, the CEO of Cedar Rapids, Iowa-based Advantage Financial, didn’t respond to requests for comment on TL Financial’s departure.

CEO Dan Arnold told analysts on the firm’s last earnings call earlier this month that the firm has built the hybrid platform to provide “appeal and flexibility” for bigger practices that want to use it.

“We made the policy change that we did last year that helped strengthen our overall alignment with these large enterprises,” Arnold said. “They've been good partners at helping us work through those changes. And now we're committed to helping them grow just like any other practice.”

LaJeunesse has spent more than five years at LPL since aligning with the firm in 2012, and previously worked for about four years with National Planning, according to FINRA BrokerCheck. A veteran of more than 15 years in the industry, he also serves on the board of directors of FSI.

The practice also includes advisors Michelle LaFuente and Erin Wozniak and five support staff members. Teachers and automotive professionals from “engineers right down to the guy working on the line” make up most of its client base, LaJeunesse says. He specifically praised Russo’s stewardship as his OSJ manager.

“Joe has been great, I don’t want anything bad said about them,” LaJeunesse says. “It hurts, but it’s just where I find my practice is at, so it’s just nothing personal at all. AFG is going to go on and do great things.”

Advantage Financial’s RIA listed 46 registered representatives with more than $880 million in AUM in its last SEC Form ADV. After placing advisory assets under its prior LPL affiliation on Advantage Financial’s hybrid platform, LaJeunesse’s practice will use the corporate RIA with its new BD, he says.

“We warmly welcome TL Financial Group to Commonwealth,” Andrew Daniels, the firm’s managing principal for business development, said in a statement. “They care deeply for their clients and their community — shared values that affirm a strong partnership fit.”

The Waltham, Massachusetts-based Commonwealth has nearly 1,800 advisors with roughly $156 billion in client assets. Aside from Commonwealth, only three other individual IBDs and three networks generated more than $1 billion in revenue in 2016, with Commonwealth’s rising by 6% to almost $1.1 billion that year.

Tobias Salinger

Tobias Salinger

Tobias Salinger is an associate editor for Financial Planning, On Wall Street & Bank Investment Consultant.