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Cetera Will Be The Face of Schorsch's B/D Network

After months of uncertainty over how RCS Capital Corp. would structure its recently acquired independent broker/dealers, the firm said today its b/ds will operate under Cetera Financial Group, and many middle- and back-office functions will be centralized.

“From a branding standpoint, what we’ve decided to do is take advantage of the reputation and the fact that the market understands the brand Cetera Financial Group,” said Larry Roth, CEO of Cetera Financial Group.

Nicholas Schorsch, executive chairman of RCS Capital Corp. (RCAP), made his initial foray into the IBD space when he purchased First Allied and The Legend Group in June 2013. He’s been on an acquisition tear ever since. Last fall, he announced plans to buy Investors Capital Holding and Summit Financial Group. In mid-January, he bought Cetera Financial Group from private equity firm Lightyear Capital, and J.P. Turner. Last week, the firm announced a deal to buy VSR Financial.

Under the new structure, each firm would keep their current brands, senior management, and other advisor-facing employees.

“That allows the advisors to continue to affiliate with and be identified with the management team and brand that they’ve shared with their clients in some cases for a long, long time,” Roth said.

But back-office and middle-office functions will be centralized. This includes product diligence, research, legal, finance and risk management, comprised of compliance, supervision, and errors and omissions. There will also be one wealth management group, although that department will support more than one platform, including Cetera’s and First Allied’s fee platforms. Cetera’s technology system will also be shared across the network by the end of the year.

Roth doesn’t expect any staff reductions as a result.

“It’s possible there might be some staff adjustments, but this is not about G&A reduction at all,” he said.

The firm is not offering retention bonuses in the traditional sense, but advisors and employees can acquire stock in RCAP through a new stock warrant plan. For every three shares of Class A common stock purchased, they’ll receive a warrant for an additional share. The program does not constitute an offering to the general public. 

Other resources for advisors will be rolled out across the network, such as Cetera’s Connect2Clients, its client marketing and communication program. Advisors will also have access to internal and external consultants to work with one-on-one as well as Pentameter, a business consulting and practice management platform first launched by First Allied.

“We’re not going to do anything to put our org structure between our advisors and the management teams they love,” Roth said. “But we’re going to give them a lot of tools and capabilities that, frankly, they could never have at a small firm.”

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