Cetera Financial Group, the brokerage and registered investment advisor giant, is clearly making inroads with financial advisors looking for a new firm after introducing a highly competitive recruiting bonus, reeling in at least nine teams with close to $4.8 billion in client assets under administration over the summer and into the fall, based on a tally of public reports by the company over the past three months.
Two of those groups of advisors, Gigi Schneppat, with $60 million in assets under administration and King Financial Network with $1.1 billion in assets under administration, hail from Commonwealth Financial Network, which was acquired over the summer by industry behemoth LPL Financial Holdings Inc. for $2.7 billion in cash.
And Cetera is leaning on Summit Financial, which closed as a separate broker-dealer in 2019 and operates as a regional office, and its veteran leader Marshall Leeds, to reel in those advisers.
"Marshall Leeds runs Summit, and he’s a legend,” said John Pierce, former head of business development, or recruiting, at Cetera. ”Marshall and his team are the best in the business. His reps love him and he’s the best recruiter Cetera has.”
It’s been an industry-wide scrum for Commonwealth Financial Network’s close to 3,000 advisors since LPL announced the deal at the end of March and then closed it in August. The acquisition has kicked some firms, including Cetera, into an all-hands-on-deck way of operating their advisor recruiting efforts.
Raymond James Financial Inc., for example, from the start of August to the beginning of October, recruited 18 teams of Commonwealth financial advisors with close to 4.5 billion in client assets.
Cetera has close to 12,000 financial advisors across its platform and $590 billion in client assets.
Other firms are also successfully recruiting Commonwealth teams, according to industry executives, but have declined to make public statements about those advisors joining.
But Cetera’s new recruiting bonus has clearly gained attention in the marketplace. InvestmentNews reported yesterday that Cetera is offering to pay some advisors as much as 150 basis points, or 1.5%, based on their assets if 60% or more are in advisory accounts, according to industry executives.
That means if an advisor manages $1 billion in client assets, the Cetera recruiting bonus would total $15 million and be worked off over nine to 10 years as a forgivable loan.
Recruiting bonuses are typically called "forgivable loans" in the brokerage industry; while they are structured as loans, the advisors do not pay the firm back out of pocket.
Rather, they work the loan off over time by meeting certain productivity goals and in exchange, the firm "forgives" the loan over a multi-year period.
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