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Cetera to retain about 25 advisors, $1B in client assets from departing OSJ

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Cetera Financial Group will retain about a quarter of the advisors and production of a major office of supervisory jurisdiction decamping to rival LPL Financial.

Regional director Cheryl Kunstle of Cetera Advisor Networks expects to keep 25 to 30 advisors with $1 billion in client assets and $5 million to $6 million in production out of the Exemplar Financial Network, Kunstle says. Most advisors opting to join LPL will have left by the end of the year, according to Kunstle.

The move by the Chicago-area OSJ, which has nearly $4 billion in client assets and about 110 producing advisors, followed at least six other new ex-Cetera teams LPL has announced in a series of press releases since late August. The No. 1 IBD added a net 125 advisors in the third quarter to reach 16,174 overall.

On the other hand, LPL is also fighting to retain as many advisors as possible in its hybrid RIA channel before Bill Hamm’s Independent Financial Partners leaves to launch its own IBD next year. LPL’s largest hybrid RIA, Private Advisor Group, has grabbed at least six teams with $1 billion in client assets from IFP.

Exemplar President David Hubbard, who had been co-director of the OSJ at Cetera alongside Kunstle, will keep the Exemplar brand name as an LPL affiliate. Kunstle, whose direct practice is called Tartan Financial Services, will not adopt a new doing-business name for the remaining OSJ region for the time being, she says.

Hubbard and Kunstle operate from nearby offices in Crystal Lake, Illinois. Some Exemplar advisors are staying at Cetera because they have confidence it is “a good firm for the future,” says Kunstle, a former Cetera business development executive.

“I’m very familiar with the entire system, and it’s very near and dear to my heart,” she says. “Change is never the most pleasant thing.”

She adds that the split of the region between rival IBD giants LPL and Cetera has been devoid of any ill will at the ground level among the two groups of advisors or their management teams.

Hubbard and LPL didn’t respond to requests for comment. Representatives for Cetera’s home office didn’t respond to requests for comment.

Staying with the same IBD is the “path of least resistance” for many advisors, according to recruiter Jon Henschen. He says that LPL’s higher recruiting offers, the walking back of a restriction on joining hybrid RIAs and other major changes in recent months have also made it “more enticing” to advisors than the firm has been in the past.

“The larger the producer group you have, the more difficult it is to get uniformity in decision-making,” Henschen says. “I’ve seen some producer groups where only half the group switches over and the other half stays behind.”

Firms’ head counts show how they’re responding to a challenging time in which experts predict the number of advisors to fall in coming years.
September 17

LPL and Cetera, which is led by onetime LPL President Robert Moore, have been on contrasting paths this year. LPL has been fanning out its resources as part of what will amount to $250 million in spending in 2018 on recruiting, technology and organic growth investments.

The six firm, 7,700-advisor network and parent firm Aretec did not hit the recruiting trail as intensely while undertaking a capital structure review and later agreeing to sell a majority stake to private equity firm Genstar Capital. The deal closed in early October with a reported price tag of $1.7 billion.

Cetera had been using and developing good tech even before the PE deal, according to Kunstle, who says Genstar’s backing will only boost its offerings. She had previously served as head of business development for seven years at Cetera Advisor Networks after getting her start in asset management.

“I think I have a very good, well-rounded perspective on all sides of this business,” she says. “I do love to help others succeed, that’s really what drives me.”

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