Valerie Brown is back.
The most prominent female executive in the independent broker-dealer industry disappeared from the industry after abruptly leaving her post as Cetera CEO in 2014. At that time, REIT kingpin and RCS Capital founder Nicholas Schorsch predicted the industry had seen the last of her.
"She could" return, he mused that year. "She could, but I don't think that's in the cards."
As with so many of Schorsch's other Cetera-related predictions, that one, too, turned out to be wrong.
Brown emerged this week as the future executive chairwoman of AIG Advisor Group, following its sale by insurer AIG to private equity firm Lightyear Capital and Public Sector Pension Investment Board, one of Canada’s largest pension investment managers.
"I am so excited about the opportunity to contribute to this industry again," Brown said in an interview with Lightyear founder Donald Marron and Advisor Group CEO Erica McGinnis.
SMART OR LUCKY?
After Schorsch's firm RCS Capital Group bought Cetera in 2014, Schorsch said that Brown would play "the key role to running the entire business." Brown was gone two months later. She has never publicly disclosed her reason for leaving.
Given all that's transpired, Brown's departure from Cetera now looks either canny or simply fortuitous. Once the second-largest independent broker-dealer in the country in terms of advisor count, RCS Capital shares collapsed in 2015 after an accounting scandal at another Schorsch firm, American Realty Capital Properties. RCS Capital stock has since been delisted and the company has filed for bankruptcy.
In the meantime, Lightyear and Marron, Cetera's former private equity owner and Brown's former boss, respectively, set about doing something with the controversially high $1.15 billion purchase price Lightyear reaped for selling Cetera to Schorsch.
When Marron learned AIG was seeking to divest itself of its brokerage arm, he stepped up as a buyer.
As this all unfolded, Brown says, she was busy doing other things, having moved her family to Jackson Hole, Wyo., away from Cetera's headquarters in Southern California.
"To be honest with you," she says, "I was not looking for a new role."
Yet the allure of working with Marron, a longtime collaborator, proved irresistible. When she had been at ING, Brown had helped orchestrate the sale of the firm's brokerage assets (later renamed Cetera), to Lightyear in 2010.
"The partnership with [Lightyear] brings value," Brown says. "They have a lot of knowledge in this area. They are very innovative. … We will be able to bring access to products that [Advisor group advisors and clients] may not have had access to before."
Also appealing was the chance to work with McGinnis, who will continue as CEO after the sale to Lightyear closes.
"When Lightyear asked, 'Hey, what would you think about talking with Valerie’ [for the chairmanship] we recognized that there are a lot of similarities,” McGinnis says. “Valerie has walked many days in my future shoes."
LARGEST WOMAN-OWNED IBD
The combination of Brown and McGinnis makes Advisor Group the largest woman-run IBD in the country.
"We've ventured into a new category," McGinnis says. "With our enthusiasm and energy, is that a strategic advantage? I would say yes."
Diversity drives strength in a management team, added Brown.
"By the way," Marron interjects, gender "never came up in any of the discussions. Strong women make great allies."
When it comes to the strategic direction of the firm, McGinnis thinks, the change in ownership will speed up the path she already charted for Advisor Group, but not fundamentally alter it.
"We will continue to invest in the business," McGinnis says. "We are also going to continue to invest in our people… through acquisition and recruiting… We think that this is a very stable and mature platform and that is what Lightyear saw value in."
With 5,200 independent advisors, Advisor Group comprises four broker-dealers: FSC Securities, Royal Alliance Associates, SagePoint Financial and Woodbury Financial Services. Its advisors manage $160 billion in client assets.
"This industry goes through change on a constant basis," Marron says. "You have a client base that is growing, a powerful client base that is interested in IRAs and 401Ks. … You have at the same time choppy markets, very low interest rates.
"What you have to do is think strategically. But not too far ahead," he adds, "and have a firm that is set up to be flexible."
'I LOVE THIS INDUSTRY'
"I love this industry," Brown adds. "I think having scale is going to matter."
As Brown and Marron move forward, together once again at the helm of an IBD, it seems fair to ask them what they think of all that's befallen the parent company of Cetera, the company they spent so many years building.
In response, the conversation momentarily dried up.
It's "very hard for us to talk about a public company," Marron says. "You can move the price of the stock by the things you say."
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