Stay tuned for more big change atop Cetera Financial Group.

That was the message Cetera CEO Larry Roth sent out to his 9,000 advisers at the country's second-largest independent broker dealer, telling them it may announce leadership changes within the next couple of days.

Larry Roth
Larry Roth

"Please be assured that changes to our leadership structure — if any — will be driven by the best interests of the advisers and institutions we support, with a focus on our part of ensuring seamless and uninterrupted service," Roth wrote in an email that instructed advisers to "refrain from engaging" with members of the media.

'MOMMY AND DADDY' DIVORCING?

Roth said his message was prompted by a press report last week that Cetera's chairman Robert Moore would be replacing Roth atop Cetera. Roth called that story "speculative." One such account appeared in RIABiz.com.

"So, mommy and daddy aren't necessarily getting a divorce, but we are talking about it," one regional leader at Cetera said, upon reading Roth's email. The person requested anonymity, given Cetera's media blackout.

It makes sense for Cetera to part ways with its well-regarded CEO at this point, said Ron Sallet, a former senior vice president with Dynasty Financial Partners and now an industry consultant.

Given all of Cetera's problems in recent years, its private equity owners likely want to put a new regime in place, Sallet said. Calls to two of Cetera’s private equity owners, Eaton Vance Management and Fortress Investment Group, were not immediately returned. A third, Carlyle Investment Management, declined to comment through a spokesman.

Nontraded REIT kingpin Nicholas Schorsch purchased Cetera in 2014 for more than $1 billion through RCS Capital, only to preside over the collapse of RCS over the next year and a half after a scandal at another one of his companies.

REPAINTING THE WALLS

The company's stock was delisted earlier this year, after dropping to near zero. Many Cetera advisers lost substantial sums in the collapse.

Roth led RCS through a prepackaged bankruptcy, supported by most of its largest creditors. It emerged from bankruptcy in May. In so doing, RCS renamed itself Aretec, which is Cetera spelled backwards, and elected a new board. Moore, LPL Financial's former president, joined as chairman at that time.

Roth's departure would help Cetera's effort to move forward, especially as the IBD — known for selling high-commission nontraded REITs sold by Schorsch's firm American Realty Capital — seeks to come into compliance with the Department of Labor's new fiduciary rule, says Sallet.

"They want to say, 'Yes, all those things took place, but not on our watch. We've changed the senior leadership,'" says Sallet, who describes himself as a friend and admirer of Roth, who was CEO of AIG Advisor Group before taking over Cetera. "You almost need to repaint the walls, even though the walls were a nice color to start with.”

He adds: "Someone had to draw the long straw."

Cetera also plans to shut down two of its BDs, VSR Financial Services and Investors Capital year.

Both are known for selling high-commission products, Sallet says.

"The stronger of the [IBD] organizations are the ones with fewer hangovers," Sallet says.