Cetera’s PE Owner Wants Cost-Cutting CEO to Replace Robert Moore
Following last week’s sudden announcement that Cetera Financial Group’s CEO is stepping down, the company’s private equity owner is looking for a cost-cutting outsider to fill the role, according to news reports.
Genstar Capital, which acquired Cetera in October, has contracted the search firm Heidrick & Struggles to help find Moore’s replacement. And it’s looking for an outsider “with strong operational and expense-control skills,” FA magazine writes.
Investment bankers close to Genstar tell the publication the firm believes the $1.75 billion it paid for Cetera may have been too much, and the firm may in fact be worth between $1.3 billion and $1.5 billion. That’s what LPL Financial and Lightyear considered paying for Cetera, which could explain why they pulled out, FA magazine writes.
Genstar has also reportedly taken issue with Cetera’s spending on technology for projects that have yet to come to fruition, according to the publication.
Cetera’s financial advisors have also grumbled about its yet-unfulfilled promises when it comes to its technology initiatives, WealthManagement.com wrote earlier this month.
Genstar now wants a CEO who will rein in expenses, consolidate operations and assess if any of Cetera’s technology initiatives need to be dropped, according to FA magazine. Genstar also wants the new CEO to be able to lure advisors with large books of business, the publication writes.
Last year Cetera added 800 advisors with $5.3 billion in assets under administration. But one recruiter tells FA magazine that rival LPL recruited fewer advisors who nonetheless brought around $24 billion in assets. That could be due to the fact that many of Cetera’s recruits have been coming from banks and credit unions, which the recruiter says “traditionally are low-producing, commission-heavy advisors,” according to the publication.