Cetera Financial’s head of business development, Michael Murray, who left LPL last May to help implement Cetera’s next growth initiative, has been lifted out of Chief Marketing Officer Michael Zuna’s group and is now reporting directly to President Adam Antoniades; observers say the move is a sign of the firm's heightened focus on recruiting advisors to the platforms after a year that saw a net loss of advisors, according to sources close to the company. The move gives Antoniades a direct line of sight into the recruiting efforts.
“The organic growth area and the new recruit area are must-win areas for us,” said Antoniades, in an interview with WealthManagement.com. “How do we believe that? Both of them report in to the president of the firm; that’s me.”
Antoniades said Zuna was tasked with building out the firm’s recruiting business, and he’s accomplished that. Zuna is now turning his attention toward a new lead generation program, which would drive client leads to Cetera’s advisors. He’s been running a pilot of that program for the past six months and is working to commercialize it across the entire platform. “That takes a lot of energy and a lot of dollars, frankly,” Antoniades said.
When he was brought on, Murray was charged with implementing what the firm called its “transforming” business development strategy, which would include expanding the business development team and hiring new professional recruiters. Murray was also tasked with leading the firm’s “data-driven” recruitment strategy, which would leverage existing data to help the firm “prescreen” potential advisors who would be most amenable to Cetera’s planning-focused platform.
Murray originally reported to Zuna, a former CMO at Aflac and Petco, as part of a broader strategy to integrate marketing strategy, brand development, digital social media marketing and public relations with business development.
Having Murray report directly to Antoniades, the number two executive at Cetera after interim CEO Ben Brigeman, is "an inherent admission that this attempt at building this completely transformative approach to recruiting did not work, nor was it ever going to work because of the unique dynamics of the independent financial advice industry,” said a source close to the company, who declined to be named.
Murray is in charge of recruiting for the entire network, with the exception of Cetera Financial Institutions, where many of the overall firm’s new recruits are affiliated. While the firm’s focus on banks and credit unions helped it recruit more than 800 advisors last year, many of those are smaller producers in the banking and credit union channels, a strategic focus of Cetera.
Antoniades said the firm had a net loss of 300 reps from 2017 to 2018, but that many of them were “new entrants that have not been successful in the profession.” Revenue was up 8% over 2017, he said, despite a year when equity markets were down overall. In 2019, the firm has more than replaced the number of reps that were lost last year, recruiting $7.5 billion in new assets in the first quarter, representing close to $50 million in gross domestic concessions.
“We have a fair amount of new advisors that come on each year,” Antoniades said. “With new entrants comes high turnover. [2018] was also a year of change for us.”
Last year the firm announced that private equity firm Genstar would acquire a majority stake in the brokerage. Earlier this year, CEO Robert Moore stepped down from the top spot, citing a health-related condition.
“When you go through a change of control, your recruiting capabilities really sort of diminish significantly, largely because advisors are waiting to see what happens with the firm,” Antoniades added.
Sources close to the company said that Antoniades is under a considerable amount of pressure to accelerate recruiting. Sources also said Murray’s move is the start of Brigeman’s effort to put people "in the hot seat," with clear lines of ownership and accountability for what should be core, traditional pathways that drive growth for a firm. Brigeman, a strategic advisor to Cetera's private equity owner, Genstar, took the role of interim CEO at Cetera until a successor to Moore is found.
The focus on growth was underscored this week when Cetera announced plans to acquire the assets of Foresters Financial’s brokerage and advisory business, adding 500 advisors to its self-clearing platform.
WealthManagement.com reported earlier this year that some advisors had grown frustrated that their expectations of Cetera in the wake of the Genstar acquisition were not being met. They said Cetera had been slow to roll out several technology initiatives promised in recent years. Advisors also said they were frustrated that after sticking with the firm through its troubled recent history under previous owner Nicholas Schorsch, which ended in bankruptcy, they did not share in the proceeds from the Genstar acquisition.