The firm is positioning some of its subsidiaries as succession-planning destinations and getting more traction and interest from RIAs seeking supported independence models, according to CEO Mike Durbin.
Cetera Financial Group sees growth opportunities in providing succession-planning options for retiring advisors and being a destination for registered investment advisors retreating from total independence, according to Mike Durbin, chief executive officer of parent company Cetera Holdings.
"That's one trend we're seizing on is a succession solution," Durbin, a former Fidelity Investments executive who took the helm at Cetera last year, told FA-IQ in an interview.
Cetera is positioning The Retirement Planning Group and Avantax as succession-planning hubs for its existing 1099 practices with principals who are approaching retirement. For example, Cetera can take a minority interest in an advisor's practice and when the principal advisor retires, Cetera will transition that practice to being a W-2 model registered investment advisor. Cetera last year acquired The Retirement Planning Group, which serves as its employee-based RIA, and Avantax, which, along with Cetera Financial Specialists, comprises the firm's tax channel.
Cetera is also "getting some surprise upside" from a growing trend of existing RIAs looking to offload some of the business-management functions they've accumulated over the years, according to Durbin. The principals of these RIAs, which tend to be "on the smaller side," are "increasingly capitulating, shedding their own firm and bringing their book of business to The Retirement Planning Group and becoming a W-2 employee" to escape the burden of managing necessities such as vendor contracts, employee 401(k) plans and health insurance, and real estate leases, according to Durbin.
"They want to go back to being an advisor," he said.
Cetera aims to "make the big feel small" with its affiliation channels and the communities it is cultivating within those channels, according to Durbin.
"We bring a scale effect to the advisors that we affiliate with. We allow them to operate in a smaller unit which absolutely is resonating," he said.
Cetera has four "mature" channels and a fifth "emerging" one, according to Durbin. The four established channels are the 1099 advisor channel; a channel for large enterprises such as offices of supervisory jurisdiction; the channel for tax-focused practices; and a channel for financial institutions such as banks and credit unions that outsource their brokerage and wealth capabilities to Cetera, according to Durbin. The fifth channel is the W-2 model for RIAs.
Cetera also has "one or more dedicated communities" within each channel, according to Durbin. There are three such communities in the advisor channel, including Summit Financial Networks; two in the enterprise channel; two in the tax and accounting channel, including Avantax; and two in the institutions channel, according to information provided by a Cetera spokesperson. The RIA channel, meanwhile, has one: The Retirement Planning Group.
Organic growth is Cetera's "clear priority," according to Durbin. That entails empowering its more than 12,000 advisors to grow their practices as well as recruiting advisors, he said, adding that "we want the 12,000 to grow judiciously over time."
As for mergers and acquisitions, Cetera is looking for "deals that work for our long-term strategy," Durbin said. Those include ones that "come with a scale effect," such as Securian Financial Group, which Cetera announced it would acquire in January 2023, and Avantax.
Cetera will also look at deals that bring an additional capability, such as The Retirement Planning Group, which had marked the first time the firm bought a fee-only RIA, according to Durbin. That deal has enabled Cetera "to bring our succession solution value proposition to life" and provided "a live-fire test kitchen for being in the RIA business more substantively over time," he said.
The Securian deal also added a nationally chartered trust company, now known as the Cetera Trust Co., and the firm is "making the trust company available to the entire Cetera enterprise, where it was years before only available to the Securian advisors," Durbin noted.