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Avantax Wealth Management

Amidst Proxy Battle, Avantax Adds to Executive Team

Avantax hires a CMO and elevates practice management leaders, even as an outside investor seeks to shake up the broker/dealer's parent company.

While an activist investor wages a public proxy battle with its corporate parent, Avantax Wealth Management, the tax-centric broker/dealer created from the acquisitions of HD Vest and 1st Global, said Thursday it has added to its senior leadership team.

Mike Holmes, a former marketing executive at USAA, joins the firm as chief marketing officer, with responsibility for growing and supporting the IBD’s 3,700 advisors and building the Avantax brand.

Mike Kobs, who most recently ran an Avantax practice, MRK Financial Solutions, has been named vice president of enterprise relationships and business consulting. Kobs recently completed his succession plan at MRK. He’ll be leading a new ambassador program at Avantax, providing consulting, planning and high-level relationship management to the firm’s top 100 practices.

Jamila Ramnanan has been named a vice president of human resources for Avantax. She joined Blucora, Avantax’s parent, when it acquired H.D. Vest, where she served in practice management roles, in 2015. She’ll be responsible for human resources for Avantax and Avantax Planning Partners, the recently rebranded HK Financial Services business. She’ll also lead diversity and inclusion initiatives at Avantax and Blucora.

Avantax declined to comment further on the leadership changes. 

An executive team with little industry experience in wealth management was one of the charges recently made by an investor seeking to force turnover on Blucora's board of directors. Ancora, an $8.7 billion AUM investment advisory firm that owns about 3.4% of Blucora’s shares, filed a proxy solicitation to shareholders seeking votes for four seats on Blucora’s board of directors, arguing the current management team has failed to find promised synergies between Avantax and Blucora's legacy professional tax software business, depressing the stock price. 

The mismanagement is also alienating Avantax's advisors, Ancora says, sending many fleeing for other broker/dealers.

In an open letter from Ancora’s four board nominees to Avantax's 3,770 advisors sent on Wednesday, Ancora's chief executive, Fred DiSanto, pointed out Avantax suffered a net loss of 100 advisors over the previous year and cited a lack of industry experience among the management team. 

Among its list of grievances, the letter cites pushing advisors away from their traditional direct-to-fund model and toward Avantax's separately managed accounts, raising fees on advisors and generally failing to understand their business.

On Monday, the Blucora board issued a letter, urging shareholders to vote for the incumbent board members, claiming DiSanto started "demanding" board seats at the firm shortly after his firm started buying shares last November. That letter also criticized Ancora’s nominees.

Jonathan Henschen, president of the recruiting firm Henschen & Associates in Marine on St. Croix, said Avantax has had service and communication issues over the last couple years, and the recent leadership changes don’t address those.

“Those things don’t address the problems as far as decline of service, decline of communication with the advisors and doing things that are a conflict for the advisors, such as raising expenses,” he said.

Specifically, he said the firm imposed a $60 annual fee last year on advisors for mutual funds held directly at the fund companies versus in brokerage accounts.

“I don’t blame the shareholder,” Henschen said. “Their hope is for an increase in the stock price, and then they see the broker/dealer doing things to cause reps to flee. From the shareholder’s perspective, he wants a wakeup call for management to reverse this trend, because it’s detrimental to the profitability of the firm going forward.”

Avantax management, he says, has also lost touch with the reps.

“With HD Vest reps, they had a great relationship with Herb Vest; they enjoyed the culture; everything was great. Their perception of Blucora is, ‘it’s very corporate, management does what management does, and they really don’t care about us.’ There isn’t the connection with management that they had at HD Vest, and the same thing with 1st Global,” he said. “Avantax has this ivory tower management that is out of touch with the advisors on many levels.”

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