In a recent article written in Investment News Larry Papike is quoted discussing the current developments within the Cetera umbrella of broker dealers. Larry Roth, who was recently named head of Cetera Financial Group, this week, announced that they are looking for a buyer to purchase all ten of their broker dealers.
“The Cetera advisers are the ones being impacted by what’s happening at RCAP, and they had nothing to do with this,” said Larry Papike, president of Cross-Search, a recruiting firm.
Advisors affiliated with Cetera Financial Group have felt uneasy for over a year now, as the stability of their parent company has been shaken by several negative events. This new news makes the future even more uncertain as there is no way to predict who the new owner will be and what kinds of changes may be implemented.
“Margins are thin at Cetera, in the low single digits, Mr. Papike said, and a potential buyer would probably want to see current management cut expenses and integrate the back offices of the dozen or so different broker-dealers under Cetera’s roof before making an offer.”
“It’s going to be very difficult to get somebody to buy it,” he said.
The broker dealers under the Cetera umbrella are Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions, Cetera Financial Specialists, First Allied, Girard Securities, Investors Capital, Summit Brokerage, The Legend Group and VSR Securities. In all, 9,500 financial advisors are affiliated with Cetera Financial Group.
Many of the advisors that chose to affiliate with their individual firm, did so because of the unique culture at the broker dealer. That culture includes employees in their back office and their distinctive value proposition. Any attempt to consolidate firms could dramatically alter the advisor experience.
News of the firms being up for sale did not come as a huge surprise to many who had been following the events affecting the firm as of late.
So what does the future look like for the advisors affiliated with the Cetera broker dealers that are up for sale?
Only time will tell.