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Tax-focused IBD leans into legacy — but under a new name

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HD Vest and 1st Global are combining into a new company called Avantax Wealth Management — and with the name change comes a new headquarters and new leadership.

“We have a history of transformation,” says Enrique Vasquez, president of wealth management at parent firm Blucora. “We’re leveraging the best of both organizations. What we’re trying to do is move forward with providing the advisors with all the tools to help them grow, help them develop professionally.”

In his first interview since he was hired this summer, Vasquez, the former CEO of Cetera Financial Specialists, discussed Blucora’s plans for the melded wealth management unit. Blucora purchased 1st Global in May for $180 million and the firm announced the new name on Sept. 9.

HD Vest had already completed a series of dramatic changes in the wake of its own acquisition by Blucora — the owner of tax preparation software TaxAct — from private equity owners in 2015 for $580 million. HD Vest switched its custodian and its advisory platform, along with putting its first minimum client-asset levels in place for advisors, prior to the 1st Global deal.

HD Vest CEO Bob Oros' exit last year to HighTower Advisors added another moving part at the firm, which is itself relocating in the Dallas-Fort Worth area. Still, some longtime HD Vest and 1st Global advisors have expressed support for Blucora’s approach.

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Avantax’s name is similar to that of a flea and tick medicine for dogs and cats called Advantix, notes Carolyn Armitage, a former HD Vest employee and a managing director at investment bank and consulting firm Echelon Partners. But it fits the brand and naming trends, she says.

Without “wealth management” the name “sounds like the latest pharmaceutical product being marketed on TV,” she wrote in an email. But since the firms “have such strong brands in the industry and a deep history of their formation, it is more advantageous to create a new brand so neither of the two firms feels jilted in the selection.”

CPA-planner pioneer Herb Darwin Vest sold HD Vest to earlier parent Wells Fargo in 2001. An HD Vest advisor and an executive left the firm to start 1st Global in 1992. The breakaways served large accounting practices, while HD Vest focused on sole-practitioner CPAs and EAs.

Advisor Jack Oujo, who has been affiliated with HD Vest for his entire 26-year career, leads a team of 10 employees managing $460 million in client assets out of his eponymous practice in Wall, New Jersey. Clients have welcomed recent tech upgrades and not really noticed other alterations to Avantax.

“Times change, and here we are 25, 30 years later. So I think it's an appropriate time to do this, especially with 1st Global coming on,” says Oujo, who received a “muted reaction” after he sent an email blast to clients notifying them of the new name. “I don’t think it does matter much to clients. The client is the boss, and I report to the client and Avantax reports to me.”

Katie Connors, an advisor with Hauppauge, New York-based AVZ Wealth Management, has aligned with 1st Global for her entire tenure of more than two decades. She leads a team with another full-time advisor and 7 securities-licensed CPA partners managing $450 million in client assets.

She says she looks forward to using the automated tax-strategy tool HD Vest rolled out earlier this year. The software reviews accounts for tax-smart asset location, Social Security, and loss harvesting and other strategies. It reminds Connors of 1st Global’s full-scale view of planning.

“That independence and objectivity has been tremendously significant in us maintaining our relationship with 1st Global for the past 20 years, and I expect it to continue,” Connors says. “It's not necessarily picking the best stock, it's 'how does it all work together?' I am so excited about that because that's always been a manual process for us.”

Both Connors and Oujo attend study group-style meetings of advisors that have been held at the respective firms for years. The HD Vest chapters and 1st Global Wealth Management Instruction and Networking meetings will be renamed and enhanced together starting at the beginning of next year, according to Vasquez.

Jack Oujo, Enrique Vasquez and Katie Connors, Avantax Wealth Management
From left to right, longtime HD Vest financial advisor Jack Oujo, Blucora President of Wealth Management Enrique Vasquez and 20-year 1st Global financial advisor Katie Connors are three of the people powering the new Avantax Wealth Management.

Vasquez expects his team to move in May or June to Blucora’s under-construction headquarters in Coppell, Texas from its current east and west campuses in the Metroplex. He outlind at least four other new roles in the executive ranks for the combined wealth management unit.

David Knoch, president of 1st Global and chairman of FSI’s board, will oversee a tax-smart institute at Avantax. Jeff Magson will manage enterprise growth initiatives, Rob Jackson will be in charge of advisory platforms and Tim Stewart will be head of business development.

The two IBDs span 4,200 advisors with more than $67 billion in client assets. Blucora CEO John Clendening has said the unit will generate around $500 million in revenue this year. HD Vest has already switched its name, and 1st Global will fold into Avantax upon regulatory approval.

Avantax’s brand enables it “to really lean into what we believe is our unique differentiator” as a wealth management firm for tax professionals, Vasquez says. He aims to place Avantax’s focus on helping advisors grow through customized, tax-smart services.

“We have advisors at all levels. We want to make sure that we meet them where they are,” Vasquez says. “We want to make sure that we provide them at a local level and then hold team members accountable for the growth and development of our advisors.”

Fittingly for a firm of accountant advisors, the name change became official in Blucora’s books after it wrote down a goodwill impairment charge relating to the value of HD Vest’s trade name. The brand had an estimated carrying value of $52.5 million at the end of the second quarter.

No monies will change hands as a result, though, and the name change “would be startling” if Herb Vest were still involved with the firm, according to Echelon’s Armitage. It’s savvy to include “tax” in the name and the switch shouldn’t come as much surprise, she says.

“Additionally, naming your firm after yourself is out of season right now,” Armitage says. “This fresh, new brand can be the zipper bringing the two organizations back together.”

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