With news Tuesday that Atria Wealth Solutions is buying Next Financial, some industry watchers are wondering what the parent firm will do as a follow-up act.
The Next purchase is Atria’s fourth since it was formed in 2017. Once complete, the group should have more than 1,900 independent advisors and about $65 billion in total assets.
“With Atria now owning a bank channel (Sorrento Pacific), credit union (CUSO Financial) and now two independent broker-dealers (Cadaret Grant and Next), they are looking increasingly similar to Cetera’s model with broker-dealers filling different channels but dominated by independent broker-dealers,” said recruiter Jon Henschen in an interview.
“It is not clear yet where Atria wants to take the broker-dealers, be it a short-term play of two to four years and flipping the firms for profit, or growing larger scale and going public with a timeline of five to nine years,” Henschen added.
But Atria — which has the financial support of Lee Equity Partners — insists it wants to forge its own path.
“We are not following an acquisition strategy,” said Atria CEO Doug Ketterer in an interview. “We are building something unique and want to be different in how we serve financial advisors.”
While scale is “the nature of the beast” when it comes to growing a business, hiring and building a platform for digital engagement, Ketterer admits, Atria’s vision “is not [just] that.”
Advisors traditionally have turned to BDs as “a utility through which they do business, get things done, etc.,” he explains. “Today, the world has changed, and advisors increasingly need a partner to give them resources, support, practice management and up-to-date platforms.”
Along with the technology, Next’s advisors should be able to benefit from Atria’s work in credit unions and banks. “We have seen the hypotheses come true in Technicolor with Cadaret Grant and expect it to do so for Next,” he explained.
‘An Extension, Not an Integration’
The independent broker-dealer was “looking for a while to not [just] sell but find a partnership,” according to President Barry Knight. “We were content to go it alone and wanted to transition [only] with a partner who could see that one plus one adds up to three.”
The two firms met about 14 months ago. “I thought we had something here and was impressed with the [Next] team and where it was going,” Ketterer explained. “It seemed like we had more going on that we could do together.”
Both firms insist that building tech platforms that appeal to younger clients is a key motivation behind the tie-up.
“We believe we have a winning model for Next’s customers and Cadaret Grant’s, too, when it comes to services and support for the FA to do a great job and build their practices,” according to Ketterer. “That’s the mindset, which gets us excited.”
Next advisors and employees should also be pleased about getting a shareholder payout, Knight says, as Atria is buying all of Next Financial’s shares.
“The proxies are in the mail today,” he said. “We wanted to find the opportunity and partnership agreement that we could take with pride to shareholders and advisors. We can tell them, ‘This is an awesome deal.’ ”
As for the proprietary platform that Atria is rolling out for some operations, it includes a client portal with consolidated statements, easier search functionality and personalization. “It’s got a heavy focus on making it easy for clients to do business in one click,” said COO Eugene Elias.
Before passing the technology to Next, for instance, “We want to listen and partner with them, spend some time getting to know their pain points and to engage and assess first.”
According to Ketterer, this technology approach is about following best practices: “We see it as an extension, not an integration or rollup.”