Cetera builds out recruiting team, advisor support after Genstar deal
Genstar Capital has completed the largest independent-broker deal purchase of the year as the private equity firm acquired majority ownership of Cetera Financial Group. The 7,700-advisor IBD is now building out its new recruiting team and rolling out new financing and equity participation programs.
The purchase closed last week, according to Cetera Head of Business Development Michael Murray, who declined to discuss any further details or terms of the transaction. The PE firm paid about $1.7 billion, people familiar with the matter told Bloomberg.
Cetera and Genstar agreed to the deal in July, five months after the El Segundo, California-based firm and parent Aretec retained Goldman Sachs for a capital structure review. Cetera’s management retained a significant stake in the company, whose parent emerged from bankruptcy protection in 2016.
Murray came to Cetera in May from LPL Financial to serve as the first head of business development over Cetera’s network of six IBDs, which generated almost $1.8 billion in revenue in 2017. He has since tapped new executives for his team from Kestra Financial and Allianz Life Financial Services.
In addition, Cetera unveiled loan programs aimed at advisors’ succession planning and lead generation efforts and an employee stock ownership offering for current and incoming advisors. Since May, the network has also added more than $650 million in client assets through recruiting.
The capital from the Genstar deal means Cetera will be able to carry out its vision “without being distracted by quarter-to-quarter earnings,” says Murray.
“With us, you essentially get the best of both worlds,” he says, noting that the six IBDs add up to a larger whole. “You get the small firm feel with the personalized touch and service and the advantages of having a large firm behind you.”
The largest IBD network is integrating data analytics into its recruiting and client leads after embarking on other major changes in recent months.May 10
Ron Carson’s firm and other major practices within the IBD network praise its choice of a new PE backer.July 20
The owner of RIA aggregator Mercer Advisors has pledged to maintain the IBD network’s current structure under the deal.July 17
Cetera appointed Jeffrey Bottorff, a onetime LPL recruiter who had formerly served as a regional vice president of business development at Kestra, to be its division manager for business development. He now reports to Murray.
In an emailed statement, Kestra Senior Vice President for Business Development Dan Schwamb confirmed Bottorff’s move.
“We thank Jeff for his contribution and wish him well with future endeavors,” Schwamb said.
Cetera also hired Kevin Frank to report to Bottorff as the senior recruiter for the region including Indiana, Ohio, Pennsylvania and New Jersey. With prior tenures at Fidelity, AXA Distributors and Lincoln Financial Group, Frank came to the IBD network from his role as a retirement consultant at Allianz.
A spokesman for Allianz declined to comment on Frank’s departure.
On the heels of the Genstar deal closing, Cetera launched its so-called advisor alignment program, which includes the loans and the company stock plan. In a nod toward engaging with advisors, the company also formalized six existing advisor councils and started an enterprise-wide advisor council.
At least a half dozen advisors will serve on the six existing councils focusing, respectively, on marketing, events, advocacy, technology, advisor growth, service and diversity. Advisors will also be part of the company-wide council, which is led by CEO Robert “RJ” Moore.
Cetera did not provide details of the loans and the equity participation framework, other than to state that the financing would come from “attractive, growth-oriented loans” and the stock ownership plan would be open to new and current advisors alike.
“Advisors have had past opportunities to participate in the direction and growth of organizations like ours, but that opportunity has been limited to the top producing advisors,” Moore said in a press release. “We are creating opportunities in which a greater number of existing and new advisors are incentivized to participate, and ensuring that their influence is an integral part of our mutual success."