Larry Roth is out at Cetera Financial Group, and will be replaced by the chairman of its parent, Robert Moore, in a move anticipated after the company said earlier this week it was considering a leadership change.
"It is a surprise," says Tim Welsh, a consultant with Nexus Strategy, of the change atop the second-largest independent broker dealer in the country, with about 9,000 advisers. "Given all of the turmoil there, you need to have some consistency in leadership and [Roth] was it."
Cetera positioned the departure as the next logical step following its pre-approved Chapter 11 bankruptcy earlier this year. Roth is widely admired for guiding Cetera through a difficult stretch of years that included the bankruptcy of its parent, RCS Capital, and the delisting of its public stock.
Roth will continue to serve as a consultant to Moore for an unspecified period of time during the leadership transition, Moore said in an interview. The leadership change will be effective Sept. 12.
"Larry has been a fantastic contributor to the company during a very challenging set of circumstances and time. I'm very pleased that he will continue to assist me and the broader team during the transition process," Moore said.
Cetera ran into troubles after being acquired by nontraded REIT kingpin Nicholas Schorsch's firm RCS Capital. An accounting scandal at another Schorsch-owned firm bled into public perceptions of Schorsch's leadership at RCS. The bankruptcy, completed with the approval of most of the RCS creditors, severed Schorsch's ties with RCS, which has since been renamed Aretec, which is Cetera spelled backward.
"It’s not entirely fair for Larry Roth, because without his leadership, it’s possible Cetera could have gone into extinction this year," Jeff Nash of Nash Consulting, said in a statement. "Larry leaving Cetera is a loss for the company, but not necessarily surprising. You have wartime CEOs and peacetime CEOs, and pretty obviously Cetera has chosen to place Larry Roth in the wartime CEO category."
Moore will be replaced as chairman of Aretec's board by current board member Robert Dineen. At the same time, Moore is also leaving his current position as CEO of the large Chicago-based institutional asset manager Legal & General Investment Management America.
Moore said advisers can expect a number of announcements in coming weeks about "new tools and resources … [and] significant progress in previously disclosed orderly wind-down and divestiture activities with respect to non-core firms in our network."
Cetera plans to shut down two of its BDs, VSR Financial Services and Investors Capital, this fall.
Aretec shareholder David King, managing director of Fortress Strategic Capital – one of the supporters of the RCS bankruptcy reorganization – expressed confidence in Moore via a statement.
"As a shareholder who is in this for the long term, I recognize Cetera's strong value-creation opportunities, and I'm enthusiastic about Robert Moore becoming the CEO," King said. " Robert is widely known throughout the industry as a passionate advocate for advisors, with broad based leadership experience."
MOVE TO SAN DIEGO HQ?
With Moore's ascension to the CEO spot, now most of Cetera's top executives are working out of San Diego, a trek of at least two hours from Cetera's headquarters in El Segundo, Calif., to the north and closer to Los Angeles.
Read more: Cetera picks up second LPL veteran exec
In addition to Moore, Cetera's president, Adam Antoniades, and its CFO Jeff Buchheister (formerly of LPL) all live in or close to San Diego.
When asked if Cetera might consider moving its headquarters to San Diego, Moore said it would not.
"I have a home north of San Diego and, so, accessing El Segundo is not that much different than accessing the city of San Diego," Moore said of his home in Solana Beach. The drive to El Segundo from Solana Beach is 104 miles compared with a 22 miles drive into San Diego.