Commonwealth exploring how best to help family-run firms

With many independent financial advisors employing or working with family members, one of the largest firms in the channel is building specific programs and tools for such teams.

An admittedly "unscientific" internal poll that drew more than 700 responses on the internal financial advisor desktop platform of Commonwealth Financial Network revealed that half the participants are part of what it calls "family practices," or an advisory firm in which an advisor and a relative of a planner are on the same staff, according to Kristine McManus, Commonwealth's chief advisor growth officer. She also cited research from a firm called Collaborative Consulting suggesting 40% to 50% of independent advisory practices fit the label.

Commonwealth

The findings highlight how "family dynamics" can make an impact on difficult questions around succession planning, workplace roles in advisory practices and many ways that "you bring baggage" to any business-related topic when it involves a spouse, child or another relative, McManus said in an interview this week. Hundreds of advisors attended a gathering for family practices at the firm's annual conference last fall and a webinar Commonwealth held with Collaborative, and the firm is planning for more networking in the future among the group.

"Our goal is to really help our advisors with all of these issues," McManus said.

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Commonwealth, which is the No. 6 firm on Financial Planning's IBD Elite rankings with more than $2 billion in annual revenue, consistently earns the best grades for advisor satisfaction among its peers in part through an intensive focus on practice management. 

With many ready examples of spouses and multiple generations of advisors operating out of the same firm, Commonwealth's nascent push to hold panels sharing the best practices and potentially launch study groups could prompt other firms to follow suit in one form or another as the industry confronts a succession challenge. At least 36% of advisors plan to retire in the next decade, according to a report last week by research firm Cerulli Associates.

Working with family members brings the satisfaction of spending more time with a spouse or a son or daughter while building a business, but it can also pose challenges without the right boundaries between home and the office and an understanding of everyone's job roles, according to advisors who warn it may take time or become impossible to find the balance.

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Hauppauge, New York-based Mitlin Financial, a Carson Partners firm, gets its name from a family connection to founding advisor Larry Sprung and his wife of 22 years, Marketing Director Denise Milano Sprung. Her grandfather Mitchell and his mother, Linda, died within a few hours of each other on the same day just before the spouses met, so they chose a combination of their late forebears' first names for the advisory practice. Denise became a full-time employee in October 2020 after previously working on her book blog "Shh Mom's Reading" and other projects out of the firm's office while assisting the practice's marketing on a part-time basis.

"I'm so passionate about what we're growing here," Denise said, crediting a family-like approach at Carson that recently saw more than a half dozen staff members from the corporate office attend their son's hockey game, as well as long-term relationships with the practice's clients. "Some of them have known our boys since they were born," she added.

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The pair views the understanding of the firm she gained as a part-time marketing guru and the acknowledgement of the fact that Larry is an early riser while Denise is more of a night owl as integral to their success. With her advice and guidance to Larry to "be more himself on social media" through hockey videos and a podcast with much less structure than its original version, the firm's online presence has turned into a growth area for the firm.

National wealth management firms like Carson and Commonwealth can help advisors tap into the benefits while avoiding the risks by aiding in discussions about a loved one's role in a practice, Larry said.

"Without having that kind of direction, it causes a lot of friction, because nobody knows who or what is supposed to be doing what," he said. "Having that practice management or business consulting is really helpful in that regard."

Commonwealth tries to assist its teams that may have spouses, parents, siblings or other family relationships with those discussions through methods like Predictive Index behavioral assessments that identify staff members' strengths and weaknesses, according to McManus. The consultations often include discussions on how to keep long-term employees engaged with the business while outside the founding family and the best approach to take for instances where one child has joined the business but another prefers to stay away entirely.

"We just introduced five firms to each other," McManus said. "There are lots of these things that we can do to help them over and above the programming and content that we develop. They always learn from each other."