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Practice Management > Building Your Business > Recruiting

What Recruiters Are Saying About Cetera's New Growth Guarantee

By John Manganaro

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What You Need to Know

  • Incoming advisors will see 38% faster growth versus peers, Cetera promises, or their affiliation fees will be refunded, up to $2,400.
  • The GrowthLine program provides a customized growth plan and marketing support.
  • While the growth guarantee is a relatively novel marketing tactic, it is unlikely to change advisors' affiliation decisions, recruiters say.

Cetera has introduced what it is calling the industry’s first guaranteed growth program for newly affiliated advisors.

Incoming advisors will see at least 38% faster growth relative to their peers, Cetera promises, or their affiliation fees will be refunded.

Recruiters say the approach has some promise, but they don’t expect it will change the game for Cetera’s incoming advisor flows.

The “Cetera Growth Guarantee,” announced Monday, is for newly affiliated financial advisors and institutions participating in the firm’s GrowthLine program.

GrowthLine and the new guaranteed growth program are components of the firm’s Growth360 suite of practice development tools, which was initially launched in 2021 as a peer-based benchmarking methodology and strategic growth framework developed to help affiliating advisors expand their practices.

“Since the launch of our Growth360 program in 2021, Cetera has proven its ability to meaningfully grow advisor practices with tools and offerings that focus holistically on driving organic growth,” said Adam Antoniades, CEO of Cetera Financial Group, in the announcement. “Three years later, we are committed and confident in Cetera’s ability to help advisors grow their business faster than they would anywhere else in the industry.”

What’s Being Guaranteed

Under the official terms published on Cetera’s website, if an affiliating advisor joins a broker-dealer or RIA affiliated with Cetera Financial Group and participates in GrowthLine, they should be eligible to participate in the guarantee program.

The guarantee kicks in if such an advisor fails to grow their assets under administration “at least 38% faster than [their] peer group during the year following the latter of the date [they] complete the program or [their] four month affiliation anniversary.”

In such a case, the terms spell out, the BD or RIA will refund affiliation fees for that year, up to $2,400, upon the request of the advisor. The advisor’s “peer group,” in turn, includes “all individuals who registered with a Cetera Company before 2020 and remained registered throughout the measurement period and who had verified assets under administration exceeding $20 million at the beginning of the measurement period.” 

The firm notes that the GrowthLine program is a marketing program and does not seek to improve clients’ account performance or provide investment advice. Additionally, market performance is excluded from the comparison.

Cetera’s Recruiting Efforts

Cetera reports that, thus far, the GrowthLine program, which is available to all Cetera advisors and valued at more than $150,000 in services, has served more than 1,000 advisors with a data-backed track record of outpacing the growth of other advisors. Firm leaders say financial professionals who have used the growth evaluation tools report greater clarity on the best opportunities to grow their practices, and they receive customized resources and guidance to capture new revenue. 

This expansion of the GrowthLine program comes less than a year after the firm announced its 1.2 billion acquisition of Avantax. The combined entity — assuming that most Avantax advisors and staff move to Cetera in the months and years ahead — would include 12,075 financial professionals, $424.8 billion in AUA and $163.6 billion in AUM.

“While other firms offer growth resources for advisors, too often they don’t accurately measure success, make unsubstantiated claims and entail a financial cost outside of an advisor’s affiliation fees, which is not the case at Cetera,” Antoniades said. 

According to Antoniades, GrowthLine provides a customized and integrated growth plan that brings together “a powerful combination of data, segmentation, AI and technology,” paired with a full-service marketing strategy, planning and execution. He said the program ultimately provides Cetera advisors with a holistic sales and marketing transformation designed to drive maximum customer lifetime value, and this is why the firm is confident in offering the new guarantee. 

A Novel Approach to Recruiting?

Asked whether Cetera’s claim that its new “growth guarantee” is indeed an industry first, several advisory industry recruiters said that was more or less true, and they agreed the announcement was an interesting development in the fast-evolving world of financial advisor mergers and acquisitions. However, they are unsure whether the move will dramatically affect the firm’s recruiting success or result in many advisors making different affiliation decisions than they otherwise would have.

“The closest program I can think of is at Ameriprise,” said Jason Diamond, executive vice president and senior consultant at Diamond Consultants. “I don’t know that the Ameriprise group goes as far as explicitly guaranteeing a certain amount of growth, but their willingness to support incoming advisors is a big part of their secret sauce, in my view. They say something effectively similar about faster growth, and as with the Cetera announcement, they tie it back to the data that shows advisors grow faster and stronger post-affiliation.”

Diamond said he expects the new approach will resonate well, at least with some advisors seeking a new approach to affiliation.

“If you are an advisor who is worried about growth, or if you are specifically seeking faster growth as a key driver of your decisions about your affiliation model, this will clearly resonate,” Diamond said. “However, in my experience, there is a sizable swath of advisors — more than not — who are already in high-growth mode. They’ve been crushing it, thanks to the strength of the markets and for other reasons.”

Thus, Diamond said, the question is whether advisors who are already growing strongly will see such a guarantee as an important value-add coming from Cetera — let alone if it will prove determinative in their final affiliation decision. For his part, Diamond doesn’t see this as “a total game changer” with respect to advisor flows to Cetera, “because growth just isn’t such a big pain point you hear about.”

“Maybe this will be most attractive to those up-and-coming advisors with, say $500,000 to $1 million in revenue, who might need help turbo-charging growth to get to the next phase in their business,” Diamond said. “Will it attract that prestigious corner office team? I doubt it. Ultimately, I would say the guarantee is novel, and I personally think the concept is very valid. Cetera can say, ‘We know we help advisors grow, and we’re putting our money where our mouth is.’”

Risks to Cetera?

Mark Elzweig, president of the executive search consulting firm Mark Elzweig Co., broadly agreed with Diamond’s take, asserting that advisors seeking new affiliation opportunities will find this to be an attractive value proposition.

“Most advisors who are considering switching firms want to join a firm that has resources to help them grow,” Elzweig said, noting that he doesn’t personally work with Cetera. “The growth guarantee underscores Cetera’s commitment to doing exactly that.”

As Elzweig and Diamond both noted, most firms who are actively recruiting advisors today showcase their business-building resources to prospective recruits, and those advisors who utilize them are generally successful in growing their businesses.

“So, I don’t think that this will be a game changer for advisor recruiting,” Elzweig said. 

Diamond agreed, noting that the new guaranteed program is probably better thought of as a sales or marketing tactic rather than a fundamental change to the recruiting approach.

“It’s like saying you can try the mattress and you can send it back if you don’t like it, but not many people end up sending back a mattress,” Diamond said.

Simon Hoyle, recruiter and founder at RIA Choice, added that this news is best understood as “one of Cetera’s efforts to attract advisors while broker-dealer retention efforts overall approach a fever pitch” in light of independent RIA growth and large transition packages being available. He said the important takeaway from the news is that Cetera is willing to stake a clear claim on its advisor growth targets, a fact which should interest advisors. 

“The goal is to ignite advisor curiosity and engage with potential recruits,” he argued. “The growth guarantee seems to have little downside risk for Cetera. If the eligible advisor misses the growth target, they are refunded a maximum of up to $2,400 of their affiliation fee, according to program terms and conditions. However, it is standard for independent broker-dealers to cover advisors’ initial registration fees. Once an advisor is on board, it’s stressful for their practice to change regulatory firms again soon, as it can influence client perception and retention.”

Credit: Adobe Stock

John Manganaro

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