Larry Roth heads the Cetera Financial Group.

The head of Cetera Financial Group, a group of independent broker-dealers owned by RCS Capital (RCAP), says the firm isn’t likely to sold or spun off any time soon and is focusing on day-to-day operations. 

After sister firm American Realty Capital Properties (ARCP) revealed $23 million of accounting errors in late October and RCAP pulled out of a deal to buy part of Cole Capital from ARCP in early November, executives made it clear they were considering all options on a call with investment analysts about two weeks ago.

“There’s been no conversation around selling [Cetera],” said Cetera President Larry Roth, in an interview with ThinkAdvisor.

Roth adds that he and other executives spoke with affiliated advisors earlier this month and that “regular communications will continue.”

“It’s business as usual,” he said. “We are making technology upgrades and other investments, including one [about the Business Plan Challenge]. There’s not a lot of concern, to be honest.”

Challenge Winners

Cetera said early Tuesday that it had picked 61 affiliated advisors to receive a total of $6.7 million as part of its Business Plan Challenge program.

The awards aim to help the winning advisors move aggressively to implement growth plans. According to Cetera, which includes 11 broker-dealers and about 9,700 reps, the broker-dealers fund the plans with support from RCS Capital and Cetera.

“The broker-dealers are very well capitalized and have been so for a long time,” Roth said. “Retention through the third quarter and into last month was north of 97%, based on revenue, and recruiting has picked up in the past 90 days … business remains very strong.”

Independent advisors and advisor groups submitted close to 400 applications for the challenge grants, according to Cetera.

“This past June, RCS Capital CEO Michael Weil and others talked about how to best invest in the firm,” explained Roth. “It makes more sense to invest in the current practices of advisors, along with IT and services, than anywhere else, given the size of the firm today.”

Cetera shared news of the Business Plan Program with advisors in June. “Advisors were excited and see it as the best way to grow,” the Cetera executive said.

Those who didn’t receive a grant can rewrite their business plans, and we will continue to see how to best support them,” said Roth.

The winning plans, he adds, are likely to be highlighted by the individual broker-dealers. “It’s up to the CEOs of the participating businesses, but we’re confident some of this information will be showcased at our annual educational meetings. There’s always a lot to learn from other financial advisors.”

Winning Group

“At the annual conference, First Allied put out a challenge,” said Timothy Connor of McKinley Financial, the winning firm,  in an interview. “What would it take to double revenue, not just go up — but make a big move? We submitted our thinking.”

McKinley Financial, which is based in Redwood Shores, California, put together a plan “essentially involving the community in the heart of Silicon Valley,” Connor explained.

“There are a million smart people around us,” the advisor said. “We are trying to reach out to high-tech firms, university groups and foundations in the community and are partnering with them to bring education to our market area — education about how to retire wisely and [how to afford to] send kids to college.”

The partnership of three advisors wants to “take advantage of the grant to do a first-class job,” Connor said. “We now have the hard work of making this happen … of getting the public we serve to view us as a financial advisory firm interested in helping them better understand issues around meeting their retirement goals, securing their retirement and hopefully sending their kids to college.”

Over years, he says, McKinley Financial — like many others — has pushed to make business improvements and grow by, say, 5% by doing more of the same or cutting costs, he says.

But doubling their business means “You have to have new, exciting ways of doing things,” Connor explained. “We thought, ‘Even if we didn’t win, it’s a great catalyst to redo the business.’ We’re delighted we won.”

— Check out Realty Capital Says Cetera Spinoff ‘On the Table’ on ThinkAdvisor.