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Cetera FAs Grumble About Genstar Acquisition

February 12, 2019

Following last year’s acquisition of Cetera Financial by private equity firm Genstar, some of Cetera’s financial advisors say the firm isn’t delivering on its promises, according to news reports.

For one, the broker-dealer has apparently been too slow delivering on the technology initiatives it promised its advisors in recent years, according to WealthManagement.com, which spoke to several Cetera advisors, many of whom asked to remain anonymous.

In late 2016, for example, Cetera said it would be rolling out PIEtech’s myMoneyGuide and advisor planning software MoneyGuidePro, as well as a robo advisor, to its advisors, the web publication writes.

Facial recognition software was supposed to become available to all advisors at the end of 2018, but it’s still only being piloted with fewer than 100 advisors, according to WealthManagement.com.

Cetera CEO Robert Moore tells WealthManagement.com that integration and customization issues have delayed the robo rollout, but said Cetera plans to announce a partnership with a robo provider this week, according to the web publication.

Moore also tells WealthManagement.com that it’s already started rolling out AdviceWorks to replace SmartWorks as the new portal for both advisors and clients.

But advisors are also frustrated that they didn’t get any of the proceeds from the reported $1.7 billion acquisition by Genstar, particularly in light of staying with the firm under the ownership of Nicholas Schorsch, one of the founders of RCS Capital Corporation, the web publication writes.

RCS declared bankruptcy in 2016 and Cetera underwent restructuring, as reported.

While Genstar lets advisors purchase equity, many expected retention bonuses or equity grants, and those have not been offered, WealthManagement.com writes. This caused several practices to jump ship to rivals in the last half of 2018, according to the publication.

“I called right to the top,” E. Martin von Känel, founding member of $120 million Patriot Wealth Management in Torrance, Calif., tells WealthManagement.com. Känel went to LPL Financial in October.

“The comment to me was, ‘Be thankful, Martin, you’re not having to repaper,’” von Känel apparently said to the web publication.

Robert Moore

Känel says what added to the insult was his belief that several Cetera executives made off handsomely from the acquisition — and that money could have been passed on to advisors, he tells WealthManagement.com.

Sources tell the web publication that Moore received 10% to 12% of equity in the company as result of the deal, and that was distributed among senior executives. Moore, however, tells WealthManagement.com that he and other senior executives paid for their equity stakes.

By Alex Padalka
  • To read the Wealth Management article cited in this story, click here.