$1B enterprise drops Cambridge, eyes national expansion strategy

Berger Financial Group
Register now

In one of the largest moves out of the independent broker-dealer sector this year, a 16-advisor enterprise with $1 billion in assets under management went to the full RIA channel.

Berger Financial Group crossed the billion-dollar AUM mark last week, after ending its relationship of nearly 20 years with Cambridge Investment Research this past summer, according to April Bortscheller, an advisor and the firm’s vice president of operations. Only about 1% of the firm’s assets remain in brokerage accounts, Bortscheller says.

Berger, which is based in the Twin Cities, has an employee stock ownership plan and it’s seeking to grow through more M&A after making 11 deals since 2010. Although some advisors have affiliated with Purshe Kaplan Sterling Investments as their BD, the full RIA move represents the third largest out of the IBD channel in 2020, according to company recruiting announcements tracked by Financial Planning.

The enterprise has a team of six CPAs and other tax professionals as well as an in-house investment unit. Berger is also using a third-party compliance consultant as the staff of 40 takes on more duties under its new setup. Bortscheller praised Cambridge as “a good partner.” She says Berger aims to add more locations beyond its existing three offices in Minnesota and Vermont.

“We've just had more opportunity to internalize a lot of the things that Cambridge was doing for us,” Borthscheller says.

Asked about the team’s departure, Cambridge spokeswoman Cindy Schaus issued an emailed statement.

“We continue to support choice for financial professionals in how they manage their independent businesses and serve their clients,” Schaus said.

The Plymouth, Minnesota-based firm’s staff and advisor ranks are 50% women, which is notable in an industry where fewer than a quarter of CFPs are women. Founder Larry Berger, who’s a CFP and CPA, had been affiliated with Cambridge for 18 years before the team’s official departure from Cambridge on July 31.

Berger’s ESOP plan enables advisors to retain a stake in the firm after selling their practice. Their “ideal M&A target” are practices with about $100 million in AUM and one or two advisors, though Berger acquired one with two times that many assets in 2016, according to Bortscheller.

“We are currently in negotiations with a few different acquisitions,” she says. “If now is the time and people are looking for a change, I would say explore those opportunities.”

The firm’s move from Cambridge is the tenth largest recruiting move of any type announced in the IBD channel this year. Cambridge has been on the receiving end of another move in the top 10, when it added a $1.5-billion enterprise earlier this year. While not a recruiting move, it also acquired a smaller IBD which dropped its FINRA registration and brought $4 billion.

In terms of firms that went full RIA from the IBD channel, only two moves have been larger than Berger’s in 2020: Captrust acquired a former First Allied Securities team with $1.6 billion and Wealth Enhancement Group purchased an ex-Securian Financial enterprise with $1.3 billion.

For reprint and licensing requests for this article, click here.
Going independent Recruiting Career moves M&A Independent BDs RIAs Cambridge Investment Research Purshe Kaplan Sterling Investments Premium Access
MORE FROM FINANCIAL PLANNING