Fight over board that controls Avantax coming to a head

A struggle for seats on the board of Blucora Inc., which owns the independent broker-dealer Avantax Investment Services Inc., is heading for a showdown as shareholders on Wednesday will vote on two separate slates of board members, with a larger RIA shareholder pushing for an overhaul of Blucora's board membership and the election of its group of four candidates.

Last month, the dissident registered investment adviser shareholder, Ancora Holdings Inc., took aim at the Blucora board in a letter to Avantax's 3,750 advisers, criticizing it for mishandling the broker-dealer, which focuses on advisers who are also tax professionals.

"Avantax can become a gem of the wealth management industry and a growing, thriving business if its advisers finally receive the respect, support and treatment they deserve," wrote the slate of four board candidates proposed by Ancora, which owns 3.4% of Blucora's outstanding shares.

First among those four independent director candidates was Frederick DiSanto, chair and CEO of Ancora, which manages $8.7 billion in assets across a variety of RIAs.

"We are writing to you today to emphasize that our slate understands advisers such as you have suffered for far too long due to Blucora's missteps and poor decisions," according to the letter. "While we imagine you are frustrated by recent fee hikes and poor support, you should know that all four of us are committed to helping build a better Blucora if we are elected to the company’s ten-member board."

Last year, InvestmentNews reported that Avantax was in the process of levying a new $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.

On Monday morning the board of Blucora fired back, noting in a letter to stockholders that, since it replaced its CEO and CFO in January 2020, the company had "undergone significant, positive change," including hiring a new team in its wealth management business to focus on technology, aligned pricing of advisory services and created more localized support for advisers.

DiSanto did not return a call Monday morning to comment, and a spokesperson for Blucora also did not return a call.

Blucora has purchased two broker-dealers in half-a-dozen years to expand into the wealth management business. In October 2015, the firm announced its acquisition of HD Vest Financial Services Inc. for $580 million from private equity owners, and in 2019 it said it was paying $180 million in stock for 1st Global Inc., an independent broker-dealer that focuses on taxes and CPAs.