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Focus on Credit Unions, Banks Helps Cetera Post Record Assets in '18

The Genstar Capital-backed company also achieved record revenue in the fourth quarter, CEO Robert Moore said.

Banks and credit unions helped Cetera Financial Group recruit more than 800 financial advisors to the company in 2018, and more than $5.3 billion in assets under administration, the firm said.

Barring a large merger or acquisition, to have that many new advisors affiliate with a firm in one year is impressive, said Jon Henschen, owner of Henschen & Associates, a recruiting firm that works with independent broker/dealers. Still, the new assets divided among the new 800 advisors suggest a heavy number of smaller advisors—on average, each overseeing $6.625 million in assets, making for a much lower level of productivity than most independent brokers, and well below that of wirehouse brokers, Henschen said.

But lower productivity is not necessarily a fair indicator of quality. About half of the more than 800 advisors who affiliated with the group last year did so through Cetera Financial Institutions (CFI), the business that supports bank and credit union-based advisors, a spokesperson for the company said. Many of those advisors were also added in the later half of 2018 after Cetera completed its capital structure review, so there hasn't been much time for them to accrue assets. 

Cetera has said it sees opportunity to grow its CFI channel, but there was a lull in partnerships last year relative to 2017. In 2017, Hawaii-based American Savings Bank moved its wealth management business to CFI. In September, Cathay Bank, which had previously left Cetera Financial Group for LPL Financial while Cetera was restructuring after parting ways with its former owner, returned to CFI. Flushing Bank left Infinex Financial Group in October to join CFI. 

“[Bank and credit union-based brokers] are a really good channel because they are typically in smaller markets and they are partnering with smaller community banks that don't have a wealth management unit, so they are able to add value to the institution," said Louis Diamond, executive vice president of recruiting firm Diamond Consultants. "And from the advisors' standpoint, it’s a really good way to grow your business because you get a lot of referrals or leads from the bank.”

Banks and wealth managers have long had relationships, but clients appear to be eager for them to get closer and offer a one-stop-shop of financial services. The integration of Bank of America and Merrill Lynch is a key component of growth for the bank, and its wealth management business and other banks are taking notice. In November of last year, Citizens Financial Group agreed to purchase Clarfeld Financial Advisors, a wealth manager and multifamily office with $6.6 billion in assets, to help scale its wealth management business and elevate its services offered to the wealthiest clients.

The other 400 advisors Cetera added in 2018 affiliated with other channels, bringing the group's total to about 8,000, near a record high, Cetera CEO Robert Moore said.

The company also posted record revenue and assets in the fourth quarter, Moore said. Cetera, a private company, declined to share specific details about the firm's revenue, assets and profitability. Private equity Genstar Capital acquired a majority stake in Cetera Financial Group in July.

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