Another independent firm is shutting down its broker/dealer business to join a larger firm to shed regulatory and operational burdens.
This time, it’s HBW Partners, a 26-year-old b/d with 55 advisors across the country supporting $820 million in assets. They are joining Cetera Advisor Networks, the b/d arm of Cetera Financial Group. HBW’s advisors and home office staff will become one of Cetera’s “regional director-led firms” and will continue offering fee- and commission-based financial guidance based around financial plans.
HBW expects to complete the wind-down of its IBD by the third quarter.
The move follows a trend of consolidation in the independent space as small and mid-sized firms become weighed down by rising costs, the need for new technology, regulatory burdens and increased pressure from regulators.
HBW Chief Executive Officer Barney Hellenbrand acknowledged this in a statement about the Cetera transition, saying it “enables us to keep the most-beloved features of our firm while eliminating the surging regulatory burdens associated with being a broker/dealer.” He added that the additional resources a large firm like Cetera can provide will help HBW’s advisors continue to grow their business.
An analysis by Fishbowl Strategies found 64 b/d's withdrew their FINRA registration in the first two months of 2017, and the trend is showing no signs of slowing down. In May, Kovack Securities acquired a smaller b/d in Santa Barbara, Calif., and Security Bank of Kansas City shut down its IBD to join INVEST Financial Corporation a week later.
With the Department of Labor’s fiduciary rule officially going into effect earlier this month, the rate of consolidation could accelerate.
“HBW’s decision to join forces with Cetera Advisor Networks underscores how smaller and mid-sized independent firms are increasingly discovering the advantages of shedding the regulatory and operational burdens of being a broker/dealer,” while keeping other parts of the business intact, Cetera Advisor Networks President Tom Taylor said. He added that success in this new era of wealth management will be driven by an advice-centered experience, and that the consolidation trend validates Cetera’s focus on supporting independent teams.
