September 3, 2013

Genworth, Cetera Close Unit Sales Deals

‘We are getting back to our roots,’ says Genworth Financial Wealth Management President and CEO Gurinder Ahluwalia

As private equity’s attraction to the advisor industry stays strong, Genworth Financial Wealth Management and Cetera Financial Group both announced the completion of business sales on Tuesday.

Genworth Financial Wealth Management, located in Pleasant Hill, Calif., is moving forward as an independent company with the completion of its sale from Genworth Financial (GNW) to a partnership of two private equity firms, Aquiline Capital Partners and Genstar Capital.

Officials with the parent company said in March that the deal would take a $40 million after-tax loss, with $35 million recorded in the first quarter. Genworth Financial said proceeds from the deal would be used to address its debt due in 2014 or before. The company will continue to use the Genworth Financial Wealth Management name until it announces a new name later this year.

Gurinder Ahluwalia, president and chief executive of Genworth Financial Wealth ManagementGurinder Ahluwalia (left), president and CEO of Genworth Financial Wealth Management, said the firm’s new investment partners shared a belief in the importance of independent financial advice and a commitment to serving advisor clients.

And unlike the firm’s former publicly held owner, the new private equity owners offer the firm greater flexibility without the worries of reporting quarterly results as part of a larger corporation.

“In many ways, we are getting back to our roots and looking forward to taking our business to the next level,” Ahluwalia said in a statement.

In a phone interview, Ahluwalia added that the firm’s new name will be announced sometime between the end of October and the new year.

“We want a name that embodies where we are today and the importance we place on serving the advisor,” he said. “Today is our first day as an independent company, and we’re very aware that we are in the business of helping advisors become more successful.”

Ahluwalia said he feels enthusiastic about his firm’s future because private partners Aquiline and Genstar are equally enthusiastic about growing the business . “It’s really fun when you have an alignment around that objective. We feel more empowered as an organization. There is flexibility in being able to take the longer view on what’s really serving the advisor.”

Genworth Financial Wealth Management is now developing products and services to support advisors and their clients. In the coming months, the firm plans to introduce new investment solutions and more efficient processes for managing client assets on its platform. The firm has approximately $20 billion in assets on its platform and helps more than 6,000 advisors.

Cetera Financial Group, meanwhile, on Tuesday announced the completed acquisition of MetLife’s two independent broker-dealers, Tower Square Securities and Walnut Street Securities. With those closed deals, the company has added approximately 800 advisors and more than $25 billion in client assets.

Cetera, a privately held, independent broker-dealer, now serves approximately 7,400 advisors with more than $141 billion in total client assets, including more than $33 billion in fee-based advisory assets.

“We are excited to be given the opportunity to serve these advisors. Helping them deepen their relationships with their clients and grow their practices is at the core of what we do,” said Cetera CEO Valerie Brown in a statement. “This acquisition will also be a win for our current advisors as we benefit from the expertise that Tower Square and Walnut Street have in the retirement and insurance markets.”

Tower Square and Walnut Street will join one of Cetera’s four firms, Cetera Advisor Networks. Advisors with Tower Square and Walnut Street are located throughout the country, and will expand Cetera’s footprint in the Midwest and Northeast. Cetera is headquartered in El Segundo, Calif.

In 2010, ING Groep completed the sale of three of its four independent broker-dealers (FNIC, Primevest and Multi-Financial) to Lightyear Capital, which used them as the basis for Cetera.

“We’ve begun building personal connections with these advisors, and are impressed with how well they fit the culture of this firm,” said Doug King, president and CEO of Cetera Advisor Networks, in a statement. “We look forward to the new ideas that this group brings to the firm.”

The new advisors will gain access to Cetera’s broker-dealer and RIA resources, including its wealth management and technology platform, new fee-based financial consulting programs, and its Connect2Clients and C2CSocial marketing platforms.

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