Cetera Financial Group announced today a definitive agreement to acquire Tower Square Securities and Walnut Street Securities, two venerable independent broker-dealers owned by MetLife (MET).
Under the deal, the 800-plus advisors in those two IBDs will become part of Cetera Advisor Networks, the former Financial Network Investment Corp. (FNIC) broker-dealer and one of Cetera’s four IBDs, which has a business model similar to the acquired BDs where individual reps work with “super-OSJs,” or what Cetera calls regional managers.
When the acquisition is complete, which Cetera CEO Valerie Brown said could happen within three to four months, Craig Markham, president and CEO of Tower Square and Walnut Street, will join Cetera Advisor Networks as senior vice president of advisor relations. In that role, Markham will have responsibility not only for sales and support but also for the transition of the two firms into the Cetera family.
In an interview Friday, Brown and Doug King (left), CEO of Cetera Advisor Networks, spoke of the acquisition process and how Cetera is speaking to reps at the MetLife IBDs.
Brown declined to provide any financial details on the acquisition, saying only that both MetLife and Cetera will seek approval from FINRA for closing the purchase. Adding the 800 representatives and their $25 billion in assets under management from the to-be-acquired BDs would give Cetera a total of more than 7,000 advisors and more than $130 billion in assets.
“We realize that advisors have a choice in where they put their business,” said Brown, who reported that the Cetera team had spoken to a number of Tower Square and Walnut Street’s super-OSJs. “We need to earn” those reps’ business every day, she said, adding that the Tower Square and Walnut Street reps would benefit from ownership that is solely focused on their business and is thus “not competing for capital.” King said the geographic dispersion of reps at the two firms will give Cetera Advisor Networks a much stronger presence in the Midwest and the Northeast.
In addition, since Cetera, Walnut Street and Tower Square have the same clearing firm—Pershing—King said there “won’t be a lot of repapering” for reps and their end clients. While MetLife had a good platform, he said, those reps Cetera has spoken to are excited at the kind of support—in marketing, technology, succession planning and especially social media—that Cetera’s scale can provide. He and Brown, King said, will be “on the road telling that story for several weeks” to additional reps from the two MetLife IBDs.
As for what the acquisition means to Cetera over all, Brown (right) said “this is a significant add to our scale,” noting that Cetera would hire additional support staff in its California and Des Moines, Iowa, service centers, and would be “making offers” to more associates at Tower Square and Walnut Street.
“We believe we have the best of both worlds,” with its four different BDs serving specific groups of advisors, she said. “When we have an opportunity for a recruit, we say ‘let’s see what fits you best.” Moreover, “when an acquisition is a good cultural fit,” she said, and can help individual reps grow, “it’s important for our growth.”
Broadly speaking, Brown said Cetera was interested in “advisors, branches and firms that are interested in prudent growth, in learning new ideas and embracing change.” More concretely, she voiced Cetera’s support for dually registered advisors who are “focused on serving their clients through all phases of their lives.”
As for what differentiates Cetera and is appealing to the MetLife IBD reps, “the fact that we support social media is a big, big win for their advisors,” said King. He and Brown admitted that social media support has become “table stakes” for broker-dealers, arguing that firms that provide structure and support around social media will be the ones that succeed. Not only is “social media where websites were a decade ago,” Brown said, so is mobile technology. “Mobile is critical,” she said, promising that for Cetera “the next phase is building out our technology for mobile.”
Almost a year ago to the day, Cetera acquired the Genworth Financial Investment Services broker-dealer, adding it to a network that included the then-named Financial Network Investment Corp., Multi-Financial Securities Corp. and PrimeVest Financial Services. In September, Cetera embarked on a renaming and rebranding process that has since been completed.
Under that initiative, Financial Network Investment Corp. was renamed Cetera Advisor Networks; Multi-Financial Securities Corp. became Cetera Advisors. Self-clearing PrimeVest Financial Services, which focuses exclusively on financial institutions—banks and credit unions—has become Cetera Financial Institutions, and Genworth Financial became Cetera Financial Specialists and maintain its focus on supporting tax and accounting professionals.
Cetera itself grew out of the ING broker-dealer network and is owned by the private equity firm Lightyear Capital.
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