Today represents a wonderful milestone for MJ Everson Financial, Inc. – Five Years With Commonwealth Financial Network.
I thought I’d touch on a term that is often unclear and what it means to us and to you – broker-dealer. Our industry, financial advice, is one that can be confusing to outsiders. First, the language. IRA, SEP, 401(k), Roth, RMD, margin, loss, broker-dealer…it is a language that can be difficult to understand.
Here is a definition form the website Investopedia – A person or firm in the business of buying and selling securities, operating as both a broker and a dealer, depending on the transaction.
Yea, I’m sure that clears it right up for you? So, someone who works for a big Wall Street firm, say Morgan Stanley, works for a broker-dealer (BD). And our firm is associated with a broker-dealer, too. Commonwealth Financial Network (Commonwealth) out of Waltham near Boston.
We feel that Commonwealth is different than any BD in the business. Why is Commonwealth unique? We could compare CFN to the largest publicly held independent BD, called LPL. LPL spent the entire past decade recruiting advisers on board in what appeared to be a mad rush to increase revenue in order so they could list their company publicly and the founders could ‘cash in’ on the IPO. In doing so, they not only alienated their old advisers but it doesn’t appear that they spent too much time vetting those newly recruited advisors. There is a cost to doing business this way. LPL is now finding that out.
Commonwealth, on the other hand, is still owned by Joseph Deitch and a handful of Principals who either founded the company or who have played an integral role in growing it to the firm it is today. They like to say they are “Anything but Common.” And they back it up. These folks tell me every year there is no plan to go public, cash out or sell to the highest bidder. The peace of mind that gives us is hard to convey.
Let me give you one small example why Commonwealth is different in their approach to this business. In the financial news this week there are two stories that likely flew under your radar. Many of you own an investment in your portfolio known as ‘alternative.’ Lately, because of the varying level of quality in these investments, regulators have been having a look at the sales practices around them and also the quality of the actual investments.
Now, Commonwealth would never tell me or push me toward any specific investment that they’d want me selling to a client. That’s because they are independent and have no proprietary investments they need sold. But they do look at the quality of alternative investments such as Real Estate Investment Trusts (REITs) and they do a large amount of due diligence on alternative investments before they will allow them into the Commonwealth adviser’s platform.
Two years ago, during the annual Commonwealth conference, one of the Commonwealth advisers asked a question during a session on REITs. He wondered why Commonwealth had not approved for sale a particular investment from a company named American Realty Capital Properties or ARC.
The gist of the answer was that Commonwealth’s research team was not thrilled with that company’s recent acquisition spree, didn’t like the leverage employed and were worried about some of the activity they saw and concerned what that might mean for investors. Two years ago, mind you.
Last week, that same company was in the news quite a bit. Like the article above on LPL, the news is less than positive. LPL is being hit with bad press for declining revenue, increasing regulatory fees and fines and also made news for finally deciding to pull all ARC products from their platform. We see ARC like a race car which blew a tire and is tumbling over and about to hit the side wall. It isn’t good. Luckily, in this case, our business and your accounts are exposed to neither company’s foibles.
We don’t worry that tomorrow we’ll read Commonwealth is going public. We feel confident that our computers and your private info will not be hacked, thanks to industry leading technology at Commonwealth. We know your needs and ours are fully supported with independent experts. Sounds so simple, yet so few firms can say this.
I’m proud that our company was founded on August 1, 2001. But to be honest, we became a very real and mature firm on November 9, 2009. That’s when we switched to Commonwealth. With their invaluable partnership, we have made our little firm into a well-organized business that serves the needs of some very select folks -you! Today, we celebrate 5 years with our broker-dealer. We couldn’t be happier!
Matthew Everson (CA Insurance Lic. #0C73126) is a Registered Representative and Investment Adviser Representative with/and offers Securities and Advisory Services through Commonwealth Financial Network, member www.FINRA.org/www.SIPC.org, a Registered Investment Adviser.
This communication is strictly intended for individuals residing in the states of AZ, CA, CO, IL, MA, MT, NV, OR, TX, WA. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services.
We are located at 1423 13th Street, Santa Rosa, CA 95404
Our phone number is 707-968-7237.
We ask that you do not call this address & number for any marketing or solicitation. It is reserved for clients and prospective clients only. http://www.commonwealth.com/termsofuse.html