Five executives at the sprawling Cetera Financial Group broker-dealer network, with 9,600 registered reps and financial advisers, have recently left. The five are from First Allied Securities Inc. and J.P. Turner & Co., two firms in the network.
Three senior First Allied executives, chief operating officer Tiy O'Neal, former general counsel Rob Moses and Robert Holcomb, former president of First Allied Wealth Management, left the firm at the end of last year.
On Monday, Ms. O'Neal was named president of Lucia Securities. She did not respond Thursday to a request to comment about why she left First Allied. Mr. Holcomb and Mr. Moses could not be reached for comment.
Meanwhile, the two founders of J.P. Turner, former CEO Tim McAfee and ex-president William Mello, have retired and have not been replaced, according to the company's profile on BrokerCheck. Mr. McAfee retired this month, according to his profile on LinkedIn while Mr. Mello left the firm at the end of December.
J.P. Turner's chief operating officer, Dean Vernoia did not return a call for comment. Mr. McAfee and Mr. Mello could not be reached for comment.
It is not clear if the management departures were part of any type of reorganization at Cetera or if the company will take advantage of the departures to save money by eliminating positions.
Cetera is the retail brokerage and wealth management subsidiary of RCS Capital Corp., or RCAP, the broker-dealer holding company founded by real estate investment
trust czar Nicholas Schorsch, which has been on an acquisition tear the past year and a half. It has closed 11 separate broker-dealer acquisitions since June 2013. Just this month it
closed two such acquisitions.
Over the past year, RCAP has stressed that it expects to see $57 million to $65 million in cost savings through “synergies” by combining certain operations. Last summer, Cetera CEO Larry Roth said the company would combine its due diligence and research groups.
“The industry would expect to see some
consolidation in certain areas of the RCAP or Cetera Financial Group, where there is overlap,” said Brad Fay, president of IBD Search, a recruiting firm that focuses on independent broker-dealers. “In my opinion, the units most likely affected at this point would be accounting, compliance and legal.”
RCAP hit a speed bump in the fall when a related company, the large publicly traded
REIT American Realty Capital Properties Inc., revealed at the end of October that it
intentionally failed to correct a $23 million accounting error from the first half of 2014. A
number of broker-dealers temporarily suspended sales of nontraded REITs sold through RCAP's wholesaling broker-dealer, Realty Capital Securities, at that time, hurting sales revenue.
(More: RCS Capital Corp. suffers big revenue hit in fourth quarter)
RCAP posted a loss of $119.6 million in 2014 compared with a profit of $98 million in 2013,
according to the company's annual report.
That hasn't translated yet into a decline in service to advisers, noted Mr. Fay, the recruiter.
“My company has made several placements to one of the RCAP acquired firms, Summit Brokerage Services,” said Mr. Fay. “We stay in touch with those placements and have not heard any complaints regarding changes or service issues. I'm doing business with the same people at Summit that I did pre-acquisition. With the backdrop of the issues at America Realty Capital Properties late last year, I believe the executives at RCAP and Cetera Financial Group have done a great job moving forward."
In an email to
InvestmentNews, Mr. Roth said the firm does not comment about current or former employees. As the firm executes on its business plan to "deliver value to our financial advisers and investors, we will see changes within the organization. Nonetheless, all of the changes will not have any impact on our ability to support our financial advisers and to strategically position our company for growth.”
Mr. Roth has a history of executing reorganizations among large networks of separate broker-dealers. In 2007, he became CEO of a large network of broker-dealers, the
AIG Advisor Group. He consolidated recruiting and other business development areas under one firm and money management and advisory platforms at another.
At least one former RCAP executive, Mr. McAfee of J.P. Turner, is taking his departure and retirement in good humor. According to his profile on LinkedIn, Mr. McAfee's current position is “retired, director of relaxation.”
