In an effort to leverage its increasing scale while maintaining the independence of each of its four B-Ds, Cetera Financial Group is rebranding each of those companies with new names that all begin with Cetera.
Despite the name changes, Chief Executive Valerie Brown says Cetera remains as committed as ever to independent firms and advisors.
"One of the things that we don't want to convey is any confusion that we are consolidating - because we are not. We are unifying," Brown says. "Our four different B-D RIAs have different value propositions in the marketplace."
THE NEW NAMES
That guarantee of continued independence is, in large part, why advisors like John Brackett say they support the name change. Brackett's father-in-law was one of the original founders of Financial Network, which is now Cetera Advisor Networks.
"It cements Cetera's commitment to maintaining our independence rather than just calling us LPL or [simply] Cetera," he says. "I have been with this group of men and women since 1976, so I have been through many ownership changes and we have always been able to maintain our independence."
Carina Diamond, a planner in Akron, Ohio, with Multi-Financial which is now Cetera Advisors, says the new name structure makes the strength of Cetera obvious to advisors. "Before it was always a little more abstract," she said. "There are so many valuable resources available to advisors at each of the Cetera companies, and now they feel even more accessible."
The four rebranded independents are as follows:
. Genworth Financial Investment Services, acquired earlier this year from insurer Genworth Financial, largely comprises advisors with expertise in tax and accounting. It will become Cetera Financial Specialists, eliminating confusion about any continued association with its former owner.
. Multi-Financial Securities, consisting of entrepreneurially minded advisors who, according to Brown, prefer a direct connection to the home office, is being renamed Cetera Advisors.
. PrimeVest, with advisors in banks, credits unions and other financial institutions, will become Cetera Financial Institutions.
. Financial Network, composed of advisors grouped into regional networks, will retain its regional orientation, becoming Cetera Advisor Networks.
"To me," Brackett says, "[This] says they aren't going to roll us all up and treat us all the same because, if that happened, I would lose advisors."
BORN FROM THE CRISIS
Cetera itself was born two years ago. In the wake of the 2008 recession, ING spun off three of its advisor networks. Brown, who had been CEO of ING's advisor division, helped negotiate a sale to a New York private equity firm, Lightyear Capital.
The new company, based in El Segundo, Calif., adopted the name Cetera from the Greek et cetera, which means "and others." The name was chosen to emphasize the focus on others, whether that means advisors in its network or those advisors' clients. Its 6,500 advisors manage roughly $103 billion in assets under management.
The rebrand is about accessing the power of scale, Brown says. The company is now one of the largest networks of independent B-Ds on the annual FP50 list of the largest independents in the country.
This year's survey emphasized the importance of scale in the independent B-D space, where downward price pressure and the mounting cost of technology and compliance are forcing some smaller firms to accept buyout offers or close. In fact, some experts say they think the business model for the independents is broken.
Many also predict the industry will consolidate down to about 10 larger firms and a smattering of statistically insignificant mom-and-pops.
"One thing I know is there is strength is numbers," Brackett says.
POWER TO THE BIGGIES
Such pressures help explain why the top three companies in the FP50 - LPL Financial, Ameriprise Financial Services and Raymond James Financial Services - just keep growing. Some of those firms' profit margins are double those of midsize firms.
The name change, which was expected to win regulatory approval, will help "each firm benefits from the continued momentum behind the Cetera name," Brown says. But, as always, Cetera will continue to walk that fine line of both touting its size while continuing to emphasize its built-in customization, she says.
"You can get that boutique feel," as Brown puts it, "but not have to sacrifice all the benefits of scale. You can have your cake and eat it too."
Under wraps for much of this year, the rebrand process entailed councils of advisors from each of its four B-Ds providing input. Brackett sat on his firm's council and continually shared his view that regional cultural differences were important.
"The West Coast has a very specific culture and the East Coast has a specific culture and so do their B-Ds," Brackett notes. "Our fear has always been that when these big companies come in and swallow up these B-Ds that they would convert them all into one B-D."
HOLDING ON TIGHTLY
For years, Brackett says, he felt this fear so strongly that he carried all of his firm's most critical materials with him everywhere in his briefcase. This was during the years when Financial Network changed hands from Aetna to ING and then to Cetera.
"My briefcase was huge," Brackett recalls, especially after the market downturn of 2008, when uncertainty ruled the markets and he was notified that ING was going to sell us to "whomever. My loyalty is to the 400 advisors who make up BAR Financial. I can tell you I was very nervous."
Brackett now insists he's relaxed enough to lug only about half of those materials around with him. The trust he's built up with Brown and Cetera, he says, has helped.
"Industrywide, this is a big statement," Brackett says. "I said to Valerie [Brown], 'Wow, this is cool. You can't take it back.'"
Retaining independence is as personal for Brown as it is for Brackett. When she was 36 and working at Bain Capital, Brown's father offered to hand over his advisory business to her. At the time, he was a regional vice president covering the Pacific Northwest for A.G. Edwards in Boise, Idaho. After Brown said no, her father, who is now in his late eighties, retired. She thinks he might still be working today had he gone independent.
It's easy to read a measure of paternal-like fealty into Brown's insistence upon independence for Cetera advisors like Brackett. Most of them retain their own DBAs. Some of them, if they so choose, will even be able to hang on to their old B-D names as a DBA that they will manage if they want to.
"That is just absolutely fundamental to being independent," Brown says. To which, Brackett adds, "I can't think of another firm that did that. That's huge."
TALKING IT THROUGH
The next step in the rebranding process, she says, is lots of dialogue with all of the company's 6,500 advisors to answer questions. Of course, the company will give out newly minted tchotchkes bearing the Cetera name. While such changes are common in financial services, letting go of the individual B-D names may not necessarily be easy for advisors who are inclined, because of their independent natures, to balk at orders from on high.
"In 1983, we came up with Financial Network," Brackett recalls. "We have changed our logo three times, and that was even disturbing. [The name] is the one thing that has remained the same through Aetna, through ING, through Cetera."
In the final equation, however, the rebrand may not make a lot of difference to the most important constituency: the clients, Brackett says.
"One of my guys is Walnut Creek Wealth Management. Does his clients know who Cetera is? No. They just know Bernie," Brackett says. "Each one of us, we are all legends in our own minds."
Ann Marsh is a senior editor and the West Coast bureau chief of Financial Planning.