In a move that may be symptomatic of the tough times facing independent broker-dealers, Advisor Group's private equity-lead owners have demoted its CEO, Erica McGinnis.

Her ouster returns former Cetera Financial Group CEO and current Advisor Group executive chairwoman, Valerie Brown, to the CEO spot atop an IBD, at least temporarily.

Erica McGinnis

"I think it's a sign of the times. Get ready for more of this," says Timothy Welsh, the founder and president of Nexus Strategy. "This probably had … more to do with the players involved wanting quick hits that nobody could deliver on.” Only the strongest IBDs capable of rapidly acquiring other firms are likely to fare well in the current contraction, Welsh says.

Read more: A shakeout for the nation's-biggest IBDs

Tightened regulation has eliminated many of the IBD industry's strongest revenue streams. Market leaders LPL Financial and Ameriprise recently forbade their brokers from receiving some 12-b1 fees and A shares, which could prompt smaller IBDs like Advisor Group to follow suit, Welsh says. And nontraded REIT sales, another historically strong revenue producer for IBDs, have fallen sharply this year, he adds.

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During her three years as president and CEO, while Advisor Group was owned by insurer AIG, McGinnis touted her approach to mergers and acquisitions, which was driven more by due diligence than any imperative to grow too quickly.

For now, McGinnis will serve as executive vice president, focused on transitions, according to a statement. She could not be reached for comment on her future plans, including how long she might choose to stay in her new role.

Headquartered in Manhattan, Lightyear Capital finalized its purchase of the BD in May. With more than 5,200 advisers, Phoenix, Ariz.-based Advisor Group comprises four broker-dealers: FSC Securities in Atlanta, Ga.; Royal Alliance in New York; SagePoint Financial in Phoenix; and Woodbury Financial Services in Oakdale, Minn.

Valerie Brown

McGinnis's demotion ends the short-lived pairing of two women atop one of the country's largest brokerage firms.

"We've ventured into a new category, [in which the] executive chairman and CEO are both female," McGinnis said in January in a joint interview with Brown and Lightyear founder Don Marron. "With our enthusiasm and energy, is that a strategic advantage? I would say yes.”

Brown is no stranger to swift changes driven by the dictates of private equity. Two years ago, she abruptly left her post as CEO of Cetera Financial Group months after the since-disgraced nontraded REIT kingpin Nicholas Schorsch, co-founder of RCS Capital, purchased the firm from Lightyear.

Advisor Group represents a second act for the team of Brown and Marron. Marron bought Cetera from insurer ING in 2010 and tapped Brown to help take it independent. In supplanting McGinnis, Brown takes up the day-to-day reins of the independent broker-dealer.

"In any sort of competitive executive situation, the first order of business is to take out your rival and maybe that what's happened," Welsh says. But broader economic forces also may have forced Brown's hand, he thinks.

"You have to get some gregarious, engaging top person to instill confidence in investors and advisers that they are going in the right direction," Welsh says.

"You also need someone with flash and sizzle to take the spotlight off" the poor fundamentals in the IBD space, he says. "You're going to have to start recruiting like crazy just to stay flat."

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