Cetera offers succession buyouts

Program targets regional directors and small- to mid-sized BDs

Jan 4, 2013 @ 3:57 pm

broker-dealers, cetera
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Cetera Advisor Networks LLC is offering its regional directors and small to mid-sized broker-dealers the opportunity to sell their businesses to the firm when they're ready to retire.

The new program is designed to provide Cetera directors — many of whom are also practicing advisers — with some liquidity for the practices they've built with the firm and to keep their clients with Cetera.

“It's a succession strategy for the directors and it's a retention strategy for us,” said Doug King, president of Cetera Advisor Networks — formerly Financial Network Investment Corp. The broker-dealer is one of four owned by the Cetera Financial Group.

Michael McCormick, a 63-year-old Cetera regional director based outside of Pittsburgh, is customer No. 1 of the new program.

Cetera purchased his firm, Benchmark Financial Network, and will continue to compensate him for the next five years as he transitions out of the business. He'll share regional co-director duties with Timothy Miller, who just joined the firm from the private banking side of Wells Fargo & Co. Benchmark has 75 advisers and six offices.

“I'm not retiring, I'm just realigning my activities,” said Mr. McCormick, who plans to spend more time with his children and grandchildren. “Cetera gave me the opportunity and I'm taking advantage of it.”

Mr. McCormick had other options. “We've been bombarded with calls from other broker-dealers. I just didn't feel they had anything better to offer than Cetera.”

With thousands of advisers now approaching retirement age, the need for succession strategies is becoming more acute.

“A lot of advisers just aren't prepared to exit their businesses,” said Dennis Gallant, president of financial services consulting firm GDC Research. “This is a good idea from Cetera. It won't make sense for every adviser, but I expect other firms will do more of this kind of thing, as well.”

Mr. King hopes to use the same model to attract small and midsize brokers (under $100 million in revenue).

“There may be broker-dealers out there who are tired of the regulation and the hassle of running their businesses. This allows them to come in under Cetera, have a liquidity event, and keep their own name,” Mr. King said. “The biggest advantage for them is that they stay in control.”

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