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Financial Planning > Behavioral Finance

What Next Financial Advisors, Clients Can Expect After Atria Deal

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Next Financial President Barry Knight is pleased and busy with the details of Atria’s purchase of the independent broker-dealer that he leads.

“It’s been [more than] 10 days since this was announced, but it feels like one big long day,” Knight said enthusiastically in a recent interview about the deal, which was announced on Jan. 8.

Next’s operations include 500 indie financial advisors and $13 billion in client assets. It has about 300 shareholders — including FAs, employees and some outside investors, who have bought shares in the company over the past 20 years.

These shareholders have until Feb. 8 to approve the Atria deal. “We have been getting back the proxies, and the reactions have been overwhelmingly favorable,” Knight said.

(Atria wrapped up its purchase of broker-dealer Cadaret Grant in October.)

Advisor Comp

As for what Next advisors can expect in terms of their payout grid and benefits going forward, “We spent much time in discussions with Atria prior to the transaction,” he explained.

“In the short term, nothing is going to change,” Knight said. “And much will be added in terms of resources, technology, and intellectual and financial capital, which [Atria] brings to the table.”

He points to technology and processing platforms, such as those used by Atria-owned Cuso Financial, as an example of what Next “would have had to develop and build on its own with limited resources.”

Knight also says that cuts to back-office staff are not expected from the deal. “When you look at the relative newness of Atria, there’s a need for people,” he added. “Some jobs could shift in the long term,” but it will depend on how the business evolves.

Wirehouse Pros, Cons

Atria CEO Doug Ketterer and COO Eugene Elias spent years at Morgan Stanley. “They understand high-quality, client-facing platforms and have helped build some extraordinary tools, which should benefit companies now owned by Atria,” Knight said.

“They blend the intellectual capital that you get from the wirehouse environment and deliver it with a cultural understanding and belief in the independent space,” he explained. “They see this and [our] advisors as a place to bet for the future of the industry.”

While the Wall Street-based wirehouses in general have a “strongly held belief that their model is superior,” Ketterer and his Atria colleagues “have come to see the independent channel as a better solution for the serving clients,” according to Knight.

“Their relationships and technology experience are aligning very well in the Main Street independent channel,” he said. “Their belief, after 20 years in the wirehouses, is that they don’t see the best opportunities for the future in that channel.”

As for Next’s investor clients, they do not have to do any re-papering with the Atria deal. Their assets will continue be processed by BNY Mellon Pershing.

“We are still Next, and our clients are still our clients …,” Knight said. “There’s very little change, and that was important to us as company — to find a solution that is not disruptive and that gives us the best opportunities.”

— Check out What’s Next for Atria After Buying Next Financial? on ThinkAdvisor.


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