Account fees, bonuses likely topics at Thursday's Cetera, Avantax confab

Cetera Financial Holdings senior management is planning a webinar Thursday afternoon with Avantax Inc.’s financial advisors to discuss questions raised by some of the 3,100 advisors in the wake of Cetera's announcement earlier this month that it's buying the tax-specialized broker-dealer for $1.2 billion.

The advisors have plenty of questions for Cetera's leaders Mike Durbin and Adam Antoniades, who will be on the 1 p.m. CDT call, according to one Avantax insider, who spoke confidentially. The top question for Avantax financial advisors could very well be the fate of a highly unpopular charge instituted three years ago against some clients.

At that time, Avantax management levied a $60 annual fee for advisers’ accounts at outside money managers, a popular way for advisers to conduct business directly with mutual fund companies like American Funds. Called direct to fund, or DTF, by advisers, the method is a simple way for advisers to sell mutual funds to clients. 

Another issue likely to be raised is the status of the clearing firm used by Avantax Investment Services Inc., the broker-dealer, which currently clears trades with Fidelity's National Financial Services. Cetera uses Pershing.

One more item likely to be talked about will be which Avantax financial advisors will get bonuses, known as "transition assistance" in industry parlance. Such bonuses are typical in broker-dealer acquisitions as a way to hang onto advisors — and their clients.

"Advisors are getting inundated with offers from other companies," the Avantax insider said. "There's chum in the water and everyone is chasing them down."

Notice of the meeting was filed Tuesday with the Securities and Exchange Commission but details were only released internally to Avantax financial advisors.

A spokesperson for Cetera declined to comment about the meeting or potential issues to be discussed. Cetera Financial Group is a giant network of broker-dealers with 9,000 financial advisors and $341 billion in client assets. 

Durbin is CEO of Cetera Holdings, which owns the broker-dealer network, Cetera Financial Group, where Antoniades is chief executive. Also scheduled to participate in the webinar are Chris Walters, CEO of Avantax, and Todd Mackay, president of Avantax Wealth Management.

The issue of a retention bonus could raise questions because not all advisors are in line to be paid one, observers noted. Cetera made that clear in an SEC filing Sept. 11, the day the acquisition of Avantax was announced.

"Cetera has indicated they will offer transition assistance for certain firms, as appropriate, and that any allocated assistance will vary by firm and be at the discretion of Cetera," according to the filing. "You will receive a separate communication with the details in the coming weeks."

Meanwhile, one industry observer noted that Cetera has been stressing that it intends to keep Avantax at arm's length.

"The message is that Cetera’s going to leave Avantax alone," said Jodie Papike, CEO and managing principal of Cross-Search. "Cetera values the clearing relationship with Fidelity's NFS, the business model of working with CPAs, and the brand."