Cetera Financial Group is going courting.
Company employees will head into the field next week to woo about 850 advisors from two broker-dealers that Cetera intends to acquire from insurer MetLife, says Cetera Financial Group CEO Valerie Brown.
We will be focused on introducing ourselves to [them], Brown tells Financial Planning. We recognize that these advisors have a choice where they put their business. [They] are independent and we have to earn their business every day.
Both MetLife firms -- Walnut Street Securities, with about 550 advisors, and Tower Square Securities, with another 300 -- will be merged into Cetera Advisor Networks, one of Ceteras four independent B-Ds. The deal stands to increase Ceteras size by about 25%, bringing the B-D network to $130 billion in AUM.
Brown says she hopes to secure regulatory approval for the deal within 90 to 100 days.
Although Brown declines to release the financial terms of the deal, she says Cetera is acquiring all the stock of both enterprises.
FINDING COMMON GROUND
Brown emphasizes the common ground shared by Cetera Advisor Networks and the MetLife B-Ds.
Each of Ceteras four B-Ds focuses on a specific space in the market -- from advisors with tax and accounting expertise to those with bank and institutional affiliations. Cetera Advisor Networks niche is advisors who operate within a regional structure that includes offices of supervisory jurisdiction. Thats one the MetLife advisors know well, Brown says.
The wonderful thing about this acquisition is we have the opportunity to provide these managing partners and their advisors with a B-D structure that they are used to, Brown said.
Also convenient, she said, is that both Cetera advisors and the MetLife advisors clear their trades through Pershing, which will facilitate a seamless transition and allow the MetLife clients to retain their current account numbers.
B-D CHALLENGES?
In recent years, increasing competition has prompted some to question the viability of the independent B-D business model. Many firms, including Edelman Financial, have sold off their B-D arms. In the wake of the Cetera deal, MetLife is retaining two other B-Ds: MetLife Securities and New England Securities.
Brown declines to comment on whether financial pressures contributed to MetLifes decision to sell. But she points to Cetera's focus on advisors as an advantage: We dont do anything but this business. We are focused on the independent advisor. both on the wealth management side and on the B-D side.
Additionally, she says, there is no corporate entity above Cetera Financial Group setting policy -- something she thinks should appeal to the MetLife advisors.
APPEAL TO ADVISORS
Cetera has invested millions of dollars in recent years to expand and improve its wealth management platform and other advisor-focused services -- and the sole focus of that investment, Brown says, has been helping its advisors to grow their practices.
We think that the current platform at Cetera Advisor Networks can add a lot of value to these advisors business practices, Brown said. We already have significant scale. Since their business look so much like ours, its additive to our organization. This [additional scale] just gives us more opportunity to invest in the business going forward.
Doug King, president and CEO of Cetera Advisor Networks, adds: We feel that the reps are going to be in for a very pleasant surprise when they see all the ways that we help them grow their business.
Craig Markham, the current president of both Tower Square and Walnut Street, says both B-Ds had contracted slightly last year.
Merger talks began last year between MetLife and Cetera, Markham says. We are excited about what the future holds for the former MetLife advisors, he says.
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