Review of Commonwealth Financial Network 2021

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Reviewed By

Updated on Wednesday, October 20, 2021

Commonwealth Financial Network is an independently-owned financial advisory and investment management company. It notably does not specialize in directly assisting investors —rather, it supports independent advisors with its advisory and consulting services, technology platform, investment research and portfolio management. The firm has over $133 billion assets under management (AUM) and approximately 2,600 advisors, among them holders of certifications like the CFP® and CPA.

The bottom line: Investors can access Commonwealth Financial Network’s portfolio management, retirement planning and wealth management consulting through their individual advisors.

  • Portfolios range from third-party, preset models to fully customized
  • Financial planning services available
  • Disciplinary disclosures reported
Assets under management: $133,519,406,156
Minimum investment: $1,000 and up, depending on the type of account
Individual investor to advisor ratio: 125:1
Fee structure: A percentage of AUM, hourly charges, fixed fees, commissions
Headquarters: 29 Sawyer Road, Waltham, MA 02453
Website:www.commonwealth.com
Phone: 718-736-0700

All information included in this profile is accurate as of October 15, 2021. For more information, please consult Commonwealth Financial Network’s website.

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Overview of Commonwealth Financial Network

Joe Deitch established the firm as the Cambridge Group in 1979, and it was renamed Commonwealth Financial Network in 1981. Deitch remains with the firm, serving as chairman.

Today, Commonwealth Financial Network is a wholly owned subsidiary of the 1979 Holding Company, LLC, a subsidiary of Gratitude Holdings, Inc. A Deitch family trust owns 25% or more of Gratitude Holdings, Inc.

Commonwealth Financial Network’s pros

  • Low investment minimum: One of Commonwealth Financial Network’s portfolio options, the PPS Select passive portfolio fund, requires only a $1,000 investment minimum. This makes it much more accessible compared to many other firms, which can require minimums in the hundreds of thousands.
  • Range of portfolios offered: From completely customized portfolios to third-party, preset model portfolios, Commonwealth Financial Network offers a wide range of investment strategies and asset types to meet a variety of investment needs and goals.
  • Industry awards: Commonwealth Financial Network has achieved recognition in its industry, having recently won several industry awards and ranking as the highest firm for Independent Advisor Satisfaction on a J.D. Power survey for the eighth consecutive time.

Commonwealth Financial Network’s cons

  • Focuses on advisors, not investors: The firm focuses on supporting asset managers, not investors — you’ll have to look to your individual advisor to access the firm’s services on your behalf.
  • Potential conflicts of interest: Advisors at Commonwealth Financial Network are financially incentivized to recommend the firm’s proprietary portfolios. This presents a potential conflict of interest as advisors may be motivated to recommend certain portfolios over others.
  • Maximum fees are higher than the industry average: As an example, the maximum annual management fee for many of Commonwealth Financial’s programs is 2.25% for accounts of less than $750,000. This is well above the average total fee in the industry — 1.17%, according to a study from RIA in a Box.
  • Disciplinary history: The firm has disciplinary disclosures. See more on this below.

What types of clients does Commonwealth Financial Network serve?

Commonwealth Financial Network serves both high net worth and non-high net worth individuals, although it works with 19 times the number of non-high net worth individuals. (For reference, the SEC defines a high net worth individual as a person with $750,000 assets managed by an advisor or who has a net worth of at least $1.5 million.) The firm’s next largest client groups are corporations or other businesses.

Commonwealth breaks its investment programs into three suites — Preferred Portfolio Services (PPS) Custom, Select and Direct — and each of which has a different set of investment minimum requirements for the various options within those suites. For instance, the PPS Select Passive Portfolio Fund requires a low minimum of $1,000, but that minimum can go up to $500,000 for the PPS Select Fixed Income SMA Program.

The table below outlines the typical minimum requirement ranges for the three suites:

Commonwealth Financial Network Investment Minimums
ProgramInvestment minimum
PPS Select$1,000 to $500,000
PPS Direct$25,000 to $250,000
PPS Custom$25,000 to $50,000

Services offered by Commonwealth Financial Network

Primarily a support for investment advisors, Commonwealth Financial Network’s services aim to assist financial professionals. Independent financial advisors could take advantage of practice management, marketing, technology, compliance and research services.

As an individual investor, you could benefit from the firm’s investment solutions, advisory and planning services, accessible through your advisor. Services that can be funneled to clients via an advisor include retirement consulting and wealth management.

Here is a full list of the services individuals could get through Commonwealth Financial Network:

  • Investment solutions
    • Third-party asset managers
  • Financial planning
    • Retirement plan consulting
    • Wealth management consulting

How Commonwealth Financial Network invests your money

Commonwealth Financial Networks offers three investment programs: PPS Custom, PPS Select and PPS Direct. These programs are designed to meet a range of client investment philosophies, needs and objectives. As such, they can use a variety of investment products and approaches, as outlined in the table below:

Commonwealth Financial Network Investment Advisory Programs
ProgramProgram type, manager and typical investments
PPS CustomType: Completely customized
Manager: The independent advisor
Typical investments: Stocks, bonds, mutual funds, ETFs, UITs, variable and fixed-indexed annuities and alternative investments
PPS SelectType: Model portfolios
Manager: Commonwealth Financial Network
Typical investments: Mutual fund and ETF portfolios, equity portfolios, fixed income portfolios and variable annuity subaccount portfolios
PPS DirectType: Model portfolios based on risk profile
Manager: Commonwealth Financial Network or third parties
Typical investments: There are four subaccount options that offer mutual funds, ETFs, individual equities, fixed income securities and other investments

The firm also offers clients access to third-party asset management programs, which are managed by outside advisors rather than by Commonwealth. These portfolios typically include investments such as stocks, bonds, ETFs, mutual funds and derivatives.

Fees Commonwealth Financial Network charges for its services

Commonwealth Financial Network may charge several types of fees depending on the service provided and/or the portfolio selected.

For investment advisory services, each portfolio has a specified advisor and program fee that’s based on a percentage of a client’s assets under the firm’s management. Maximum advisor and program fees generally range from 0.75% to 3.00%. In addition, clients may also pay an annual account fee, transaction charges, third-party custodial fees, monthly flat insurance fees, mutual fund or money market 12b-1 fees, sub-transfer agent fees and distributor fees.

Consulting services may be negotiated on an hourly, flat or fixed-fee basis. Commonwealth Financial Network caps hourly fees for wealth management consulting at $500 per hour. Retirement plan consulting fees are also capped at $500 an hour, or at a maximum of 1.50% when stated as a percentage of assets under management.

Commonwealth Financial Network disciplinary disclosures

Commonwealth Financial Network has two disciplinary disclosures on its record. For reference, the SEC requires all registered investment advisors to disclose any civil, regulatory or criminal actions that occurred within the last 10 years that could impact a client’s evaluation of the business or management on their Form ADV filings.

Commonwealth reports the following disclosures, both of which the firm self-reported to the SEC and FINRA, respectively:

  • The SEC found that, from January through March 2014, Commonwealth failed to disclose conflicts of interest and charged higher fees than were necessary for clients’ mutual fund share classes, which resulted in a violation of certain regulations. The firm paid a fine of $1.4 million and prejudgment interest of $210,603 to settle the issue.
  • From December 2009 to January 2012, Commonwealth’s email surveillance system failed to review about 12.6 million outgoing emails from associated persons. These failures resulted in a violation of FINRA rules. Upon self-reporting the issue to FINRA, the firm reviewed its policy and the outgoing emails and also accepted a censure, as well as a fine of $250,000.

For further information, visit the firm’s Investment Adviser Public Disclosure (IAPD) page.

Commonwealth Financial Network onboarding process

Commonwealth Financial Network does not serve clients directly. As such, your onboarding process as a client will differ depending on your advisor. That being said, the process typically follows four steps:

  1. Request an initial meeting: Reach out to schedule an initial meeting.
  2. Speak with an advisor: In the meeting, you and the advisor will discuss how their services and expertise may suit your objectives and requirements.
  3. Review the advisor’s recommendations: Consider their guidance, and decide whether you would like to accept, alter or reject the recommendations.
  4. Continue to communicate: If you become a client of the firm, you can expect to review any quarterly and annual documents and speak with your advisor if your objectives change.

Where Commonwealth Financial Network is located

Commonwealth Financial Network has nearly 1,100 office locations. In its Form ADV filed with the SEC, it lists offices in the following 15 states:

  • California
  • Connecticut
  • Illinois
  • Kansas
  • Massachusetts
  • Michigan
  • Minnesota
  • Nebraska
  • New Hampshire
  • New York
  • North Carolina
  • Ohio
  • Pennsylvania
  • Texas
  • Utah

In addition to its physical office locations, Commonwealth Financial Network is registered to serve investors in all 50 states, plus the District of Columbia.

Is Commonwealth Financial Network right for you?

Commonwealth Financial Network focuses on providing services to financial advisors, not to individual investors. An advisor who works with the firm may be right for you if you’d like access to a wide selection of investment strategies and asset allocations. The firm also has low investment minimum requirements for some of its programs, making it accessible to investors without a high net worth.

However, Commonwealth Financial Network may not be right for those who prefer to directly communicate with their money manager, as it mainly works through independent advisors. Would-be clients should also be aware of potential conflicts the firm may have related to its proprietary products.

Before settling on an advisor, it’s important to consider your options and do some research. Our financial advisor tool can help you start your search for an advisor who meets your needs.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.