Cetera steps up recruiting game for 2021

Cetera closed out 2020 on a high recruiting note, logging a slew of new hires in December generating more than $13 million in annual revenue.

The firm’s success has carried over into January with another 20 hires from firms such as JPMorgan, Edward Jones, LPL Financial and others. It’s a result of stepped-up efforts to woo advisors to the IBD’s ranks — and comes at a time of heightened industrywide competition for talent.

In order to source new talent, Cetera beefed up its ranks. Last year, the firm hired John Pierce as head of business development. He was previously with Stifel Financial, a regional broker-dealer, where he helped entice over a number of wirehouse advisors. In August, Cetera hired James Flewelling and Paul Baldovin as in-house recruiters.

Pierce said that the firm has shifted its hiring strategy.

“We have altered our focus in two key areas — if the financial professional embraces growth, and has a growing advisory business, we have augmented our transition assistance. Transition dollars are fungible, so we have moved away from concentrations in direct, TAMP, or annuity business and are using that capital for those that embrace advisory business,” Pierce said in a statement.

The firm’s multiple brands help attract advisors, says Frank LaRosa, a recruiter and president of Elite Consulting Partners in Moorestown, New Jersey.

“If you are an advisor who wants to be multi-custody, they have that. If you are an advisor who wants to be a CPA, they have a community for that. If you want to just be alone and not be bothered by the mothership, they have a solution for that. It really depends on what you want to accomplish as an advisor,” he says.

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Cetera’s push comes at a moment of increasing recruiting efforts and competition across the industry.

“When there is so much motion going on, firms have to step up and take advantage of the activity,” says LaRosa. Some of that activity, he says, is being driven by the experiences of the coronavirus pandemic.

“You are effectively independent,” LaRosa says. “You are working from home. Your assistant is remote. You’re not seeing clients. You’re not seeing your manager. So people are thinking, ‘Hey, if I am working remote now, then why I am I getting just a 40% payout?’”

Jodie Papike, a recruiter specializing in the independent advisor channel, agrees. “I’m seeing more interest among wirehouse or employee advisors wanting to know what it would look like to be independent — any form of independence,” says Papike, president of Cross Search, which is based in Encinitas, California.

In addition, recent industry consolidation has caused some independent advisors to consider switching BDs, according to Papike. The quality of service from headquarters is another major theme driving career changes, she adds. “Complaints about service levels is the No. 1 complaint I have heard from advisors,” Papike says.

The competition for advisor talent has spurred some firms to raise their transition deals and recruiting bonuses. For particularly big teams and elite advisors, this may be some firms' only chance to win them over. They might not make another career move for years, if ever, LaRosa says.

Raymond James CEO Paul Reilly said that rivals had recently boosted their deals for financial advisors, particularly in the employee channel. Reilly did not name specific competitors, but said his firm had been prompted to up its recruiting deal.

“We have also enhanced our recruiting packages to remain competitive,” Reilly said, without going into detail.

Stifel Financial CEO Ron Kruszewski, whose firm fields nearly 2,300 advisors, also said the market for advisor talent has become more heated. “I like to think that one of the reasons it’s gotten very competitive is that we’ve gotten very active,” Kruszewski told analysts Jan. 29.

Rating revised
Cetera, which was once owned by RCS Capital, has more than $260 billion in assets under administration and 8,000 professionals across its five brands, according to the firm. The IBD is now owned by private equity firm Genstar Capital and it started the year on a positive note as credit agencies give the firm good marks. Moody’s revised its outlook for Aretec, the IBD’s parent company, saying the firm was resilient to adverse conditions.

“Aretec’s stabilizing financial advisor base and growth strategy focused on advisor recruiting helped support its CFR,” Moody’s said in a Jan. 21 report.

Moody’s cautioned that credit challenges for the firm included advisor retention and a difficult interest rate environment. Ratings analysts also noted that Cetera and rival firm Advisor Group, which also got an upgrade, are two private equity-backed firms that are carrying much higher leverage than publicly traded peers in a highly competitive sector.

“Our company’s strong financial health, which reflected a significant increase in cash reserves during 2020, is guided by stewardship to our financial professionals, employees and stakeholders,” Cetera CFO Jeff Buchheister said in a statement. The firm’s capital structure enables it to “maintain responsible levels of capital deployment, even during times of uncertainty,” he added.

Among the hires Cetera picked up in late 2020 was James Ciocia, an advisor of 33 years who was previously with National Securities. He moved his Tampa, Florida-based practice to Cetera Financial Specialists, one of the firm’s five brands, on Dec. 3, according to FINRA BrokerCheck records.

Advisor Paula Derwick left Avantax Advisory Services to affiliate with Cetera Advisor Networks on Oct. 30, according to BrokerCheck records. Derwick, who has three decades of industry experience, is based in Olean, New York.