Barnaby Grist thinks that he has found the industry's “sweet spot.”
The newly appointed executive vice president of wealth management at Cetera Financial Group has been charged with integrating the securities and advisory businesses at the new independent-brokerage venture and attracting a growing number of hybrid advisers.
“When you look at where growth is going to be, [the] sweet spot is that integration,” said Mr. Grist, former senior managing director of strategic business development at The
Charles Schwab Corp.'s custody unit, who joined Cetera in February.
Cetera is controlled by private-equity firm Lightyear Capital LLC.
Mr. Grist joined Cetera shortly after it purchased three independent-broker-dealer firms from troubled ING Groep NV.
He reports to Cetera chief executive Valerie Brown.
Mr. Grist left Schwab after a management shuffle put Bernard Clark, senior vice president of sales and relationship management, in charge of Schwab's custody business.
But Mr. Grist said that he wasn't pushed out of the industry's biggest custodian.
“I didn't leave Schwab — I joined Cetera,” he said.
Cetera “is very much an entrepreneurial, nimble opportunity, so it feels very different from any of the custodial firms,” Mr. Grist said. “I can only speak highly of Bernie Clark — he was my key relationship” at Schwab, he added.
In fact, “Schwab can be a great partner” along with other custodial firms in building services for hybrid advisers at Cetera, Mr. Grist said.
The brokerage industry is better-positioned than custodian firms to serve hybrid advisers, he said.
Integration is “difficult for firms that don't have direct relationships with advisers,” Mr. Grist said.
“One thing I like here is that we can shape the desktop that advisers use,” he said. “Once you see what advisers experience every day, you [have] the ability to build the pipes you need.”
It is harder for the large custodians to address those needs, Mr. Grist said.
“Even a Fidelity [Investments], which has a clearing and custody organization, because they don't have that direct relationship with advisers, they don't have the experience with the daily use” of two systems by hybrid advisers, he said.
“Just sticking the building blocks together doesn't do it,” Mr. Grist said.
“What has to be done is to bring a deep understanding of advisers to the development” of the technology, he said.
“That's hard for a lot a firms. The larger they are, the harder it is,” Mr. Grist said.
He pointed to a new document-imaging system that Cetera is introducing as an example of one integration effort.
Cetera clears through Pershing LLC and a self-clearing unit of one of its broker-dealers, PrimeVest Financial Services Inc.
PrimeVest serves banks and credit unions with 1,400 representatives who manage $25 billion in assets.
The other Cetera units are Financial Network Investment Corp. and Multi-Financial Securities Corp.
Financial Network has regional directors who act as branch managers in providing training and support to reps who want coaching, Mr. Grist said. It has about 1,000 brokers and $15 billion in assets.
Multi-Financial is a “classic” independent broker-dealer with $40 billion in assets and 2,400 reps running their own shops, Mr. Grist said.
“We see substantial opportunity with all three” firms, he said.
PrimeVest has been getting more interest from financial institutions lately, Mr. Grist said, and Multi-Financial “is sort of the hidden gem in the network because it's been a little less visible due to the ING brand.”
Cetera plans to keep the brokerage firms as separate units catering to different types of brokers, though some branding might be changed.
“I think we'll be recruiting from the wirehouses and from some of the other [independent] broker-dealers. We're in winning position because [wirehouse and regional-firm] advisers are pretty fed up with the conflicts” at their firms, Mr. Grist said.
“Some firms, many of them, are still struggling to emerge” from the financial crisis, he said.
But Cetera is in better shape, Mr. Grist said.
“We are set up and have capital to invest … in the operation … That's a big change, frankly. A lot of these [Cetera] firms have been operated for cash flow, rather than [growth],” Mr. Grist said.
Another advantage for Cetera is that Lightyear's founder, former PaineWebber Group Inc. chief executive Donald Marron, understands the industry, Mr. Grist said.
Mr. Marron has said that the independent-adviser model is well-positioned for growth.
