Cetera acquiring two B-Ds from MetLife

Apr 7, 2013 @ 12:01 am

By Bruce Kelly

Cetera Financial Group is continuing its aggressive expansion, announcing last Friday that it had agreed to acquire two independent broker-dealers from MetLife Inc. for an undisclosed sum.

The two MetLife broker-dealers, Tower Square Securities Inc. and Walnut Street Securities Inc., have 800 financial advisers and registered reps between them.

Cetera chief executive Valerie Brown said the firm is laying the groundwork for a “smooth as silk” transition of the advisers. The company this week will begin a road show to introduce executives to the Walnut Street and Tower Square advisers.

Ms. Brown didn't mention specific details of a retention package for the advisers, but said, “Like any deal, we'll help [advisers] with transition” costs. We think this is an easy transition [for the advisers] and they can benefit from the tools we have.”

INSURERS WANT OUT

Many large insurance companies are getting out of the independent-broker-dealer business because of the high risk and tight margins prevalent in the industry today.

Spreads on sales of variable annuities, once a huge money maker, have tightened in the wake of record-low interest rates. This has caused insurers to re-evaluate whether they want to remain in the risky business of product distribution.

InvestmentNews first reported Cetera's imminent acquisition of the two MetLife broker-dealers March 1.

MetLife is not completely exiting the independent-broker-dealer industry. It continues to own two other independent broker-dealers, MetLife Securities Inc. and New England Securities Inc., but advisers at those firms operate much more as captive insurance agents, meaning they work more closely with the insurance company and less as independent financial advisers.

Tower Square and Walnut Street, which both have been steadily losing representatives and advisers in recent years, will be folded into the largest Cetera broker-dealer, Cetera Advisor Networks LLC, which has more than 2,000 financial professionals. The firm last year generated $360.5 million in total revenue.

"SUPER OSJs'

Cetera Advisor Network operates via large branches or “super OSJs,” short for office of supervisory jurisdiction, in the nomenclature of independent broker-dealers. That is a similar structure to Tower Square and Walnut Street.

Most of those branches are located in the Midwest and Northeast.

Craig Markham, president of Tower Square and Walnut Street, will join Cetera Advisor Networks as a senior vice president, according to a statement. He will oversee the transition of the two firms.

After the deal's close, the timing of which wasn't included in the statement, Cetera Financial Group will have more than 7,000 reps and advisers under its umbrella, and $130 billion in client assets.

Cetera recently has been one of the most active buyers of independent broker-dealers — last year, it acquired Genworth Financial Investment Services and later re-christened it Cetera Financial Specialists LLC.

The independent-contractor broker-dealer industry is likely to continue to see mergers and acquisitions, Ms. Brown said.

“It's not my perspective that the industry is through with consolidation,” she said.

Cetera's network of independent broker-dealers was born in 2010 when private-equity firm Lightyear Capital LLC, run by former Paine Webber Group Inc. chairman and chief executive Donald Marron, bought three broker-dealers from Dutch insurer ING Groep NV.

bkelly@investmentnews.com Twitter: @bdnewsguy

0
Comments

What do you think?

View comments

Recommended for you

Upcoming Event

Jul 10

Conference

Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video

Events

BNY Mellon's Pershing's Sholes: Growth, tech shaping the future of advice

What's top of mind for advisers today? Tom Sholes of BNY Mellon's Pershing says the huge growth in the RIA space is driving innovation.

Latest news & opinion

Meet our new 40 Under 40s

For a fifth year, InvestmentNews is proud to shine a spotlight on the amazing accomplishments and potential of top young financial professionals.

Merrill re-evaluates commission ban in retirement accounts

The wirehouse's wealth management group announces a fresh look at the ban now that the DOL rule is on the brink of death.

10 biggest retirement mistakes

Adhere to enrollment deadlines and distribution rules or pay a hefty penalty.

DOL fiduciary rule on brink of death as key deadline passes

Justice Department didn't petition the Supreme Court to rehear the case. A mandate from the 5th Circuit would finally lay the fiduciary rule to rest.

Finra to overhaul broker information system, cut compliance costs for broker-dealers

The move is intended to cut compliance costs for firms as well as make the registration and disclosure process more efficient.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print