40 Cetera Advisors Depart, Citing Pressures From RCS Bankruptcy

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Despite Cetera Financial Group's public assertions that its financial advisors are not being affected by its parent company's bankruptcy filing in January, 40 of its advisors beg to differ.

A group of Williams & Company advisors, who were formerly affiliated with Cetera's Legend Group, have joined PlanMember Securities.

"They wanted to get out in front of being sold to someone else and control their own destiny," says PlanMember spokesman Richard Ford.

Before deciding to file for bankruptcy, Cetera's parent, RCS Capital, went looking for potential buyers for Cetera and some believe a sale could still loom in the IBD's future.

In a statement, Cetera spokesman Joseph Kuo said the advisors' departure is normal attrition. "We typically expect some advisor attrition during the first quarter of each year," Kuo said.

However, RCS said in an earlier SEC filing that its troubles are having an impact on its advisors.

"Cetera Financial has been susceptible to the financial distress at parent RCS Capital Corporation and, more recently, has experienced a strain in its financial advisor network, including with respect to recruitment and retention of key personnel," the filing says.


It adds: "Even though the registered BDs and RIAs are not debtors in these cases, however, their mere association with the debtors carries significant risks. The independent retail advice business is conducted through a network of independent financial advisors that are free to move their business to competing broker-dealers on short notice. Those advisors and their customers may be leery of transacting business and maintaining accounts with subsidiaries of bankrupt entities."

When asked if the Williams advisors had felt these pressures, Ford said, "For sure."

PlanMember, based in Carpinteria, Calif., does retirement planning for teachers and nonprofit employees. It has 500 registered representatives, $8 billion in AUM and more than 140,000 customer accounts, according to its website.

A family-run firm based in Grandville, Mich., Williams & Company specializes in 403(b) and 457(b) retirement plans and serves nearly 4,000 account holders in Michigan, Oklahoma and Nevada. Together the advisors manage $450 million in client assets.


In his statement, Kuo added:

"We continue to perform above our initial recruiting and retention targets set for 2016, and consistent with previous years. While we're not surprised that specific advisor departures would generate higher visibility than usual given recent past parent company issues that are now behind us, we find most of our advisors are focused on supporting their clients through this period of market turmoil and preparing their practices for significant regulatory change that is right around the corner, rather than engaging in complex transitions of their business that may not best serve their clients at this time. Beyond this, and as a matter of policy, we do not comment on advisors no longer affiliated with our network."

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