The 6,600 advisors in Cetera Financial Group’s network were caught by surprise Thursday by news of a planned sale to RCS Capital.

“I’m sure my advisors are going to be aggravated,” says John Brackett, referring to the hundreds of advisors he manages at San Francisco practice BAR Financial.

He got the news from one of his East Coast representatives in the morning just as he was stepping off an exercise bike. “I was like, ‘What?’ ” Brackett says.

Neither Cetera Chief Executive Valerie Brown nor Nicholas Schorsch, chairman of RCS Capital, responded to multiple requests for comment on the deal in general, or on Cetera advisors' reaction in particular.

If approved by regulators, the $1.15 billion deal would make RCS Capital, also known as RCAP Holdings, the equivalent of the second-largest independent broker-dealer in the country -- after LPL Financial -- by number of advisors. The newly combined retail advice platform will have approximately $1.7 billion in revenue, 8,900 advisors, $191 billion in assets and 2.6 million clients, company executives said at Thursday's press conference.

The Cetera deal comes on the heels of RCAP’s purchase of independent B-D First Allied Holdings and several other smaller IBDs last year.


The deal took some Cetera advisors aback, partly because the four firms that make up the Cetera network went through a highly publicized rebranding -- putting the Cetera label on each firm’s official name -- less than a year and a half ago.

“We just went through all that crap,” Brackett says. “I don’t want to do that again.”

But he and other Cetera advisors also think the RCAP deal could be a good thing.  After having listened to a conference call with the leadership of Cetera and its current parent, private equity firm Lightyear Capital, advisor Dave Hubbard concludes that “it’s going to be business as usual on a day-to-day basis. … They are going to do what they can to help us grow.”

Hubbard, the president of Exemplar Financial Network in Crystal Lake, Ill.,  also praised the leadership of RCAP -- which, until it began acquiring independent B-Ds last year, was best known as an innovator in non-traded REITs -- as “very creative entrepreneurial people that have done remarkable things in the real estate area.”

“Time will tell as to how the B-D acquisitions work out,” Hubbard says. “But if they keep all of our management in place, you’ve got some of the best management in the business running our firm.”

That's one of the reasons that Cameron Thornton of Cameron Thornton Associates in Burbank, Calif., says he's excited about Cetera's new owners.

"Being acquired by a company of the stature of RCAP, I think it’s going to be terrific," Thornton says. "My understanding is there will be absolutely no change in the Cetera leadership. There will be no change on the field."


The deal also ends a guessing game about when Cetera's private equity ownership would spin the network off as a public company; RCAP is already publicly traded. “We know the endgame now,” Brackett says.

He says he’s not worried about the management of Cetera going forward. His firm’s IBD has been bought out three times thus far, he says, and none of these transactions materially affected its performance.

“From my perspective, I don’t really give a crap. At BAR Financial, we are big enough,” Brackett says. “So now I am going to sit back and say [to RCAP], ‘Who are you? What do you want from me?’"

If the answer isn’t satisfactory, Hubbard says, advisors can always leave. “If something happened,” he says, “we would have options to do something different.”

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