Another Day, Another Cetera B/D Readies Itself for Sale
With the wind-down of two of Cetera Financial Group’s ten broker/dealers well underway, a third member of the distressed independent brokerage empire is now preparing for a sale.
Cetera may announce disposition of the Legend Group within the next few weeks, according to current and former Legend advisors and recruiters. The firm has around 400 independent contractors who focus on 403(b) retirement plans for public employees.
Lincoln Investment Planning, an independent broker-dealer in Fort Washington, PA, with around 800 advisors, is the most likely acquirer, according to the heads of two large Legend teams. However, negotiations are also continuing with an insurance company, the sources said, declining to be more specific.
An official at Lincoln Investment Planning said an acquisition of Legend was “not out of the question” but declined to elaborate.
Executives at Cetera, whose parent’s Chapter 11 bankruptcy reorganization filing was approved in federal court last week, are working hard to keep Legend teams in place while negotiations continue. They hope to nail down a deal in time for Legend’s annual conference in June, one source said.
In mid-February, Legend’s Williams & Co. agency in Grandville, Michigan, lost patience and joined Plan Member Financial Corp, a Carpinteria, Calif., firm with about 500 brokers. The group of about 40 advisors led by Rich Williams was believed to be Legend’s biggest team.
If the chemistry with an acquirer is wrong, several advisors expect other teams to bolt out of fears that Legend’s unhappy rendezvous at Cetera could be repeated.
Legend was purchased from Waddell & Reed by First Allied Holdings in 2012. First Allied was itself sold by its management and private equity firm Lovell Minnick Partners to Cetera and its parent RCAP Holdings one year later.
Cetera spun Legend out from First Allied, but Legend advisors said their niche in the 403(b) business was never embraced by RCAP executives, who real estate investment trust mogul Nicholas Schorsch had hired to distribute products of his REIT companies. In November, several Legend managers called for sale of their group to a more supportive parent.
A sale would bring Cetera Group’s broker-dealer count down to seven once it consolidates VSR Financial and Investors Capital into other units.
Separately, Cetera Financial continues to distance itself from its past relationship with Schorsch’s disintegrating empire.
Robert Moore, the former president at LPL Financial who last year joined asset management company Legal & General Investment Management as chief executive, will become chairman of Cetera’s board, according to a report broken Wednesday by Investment News.
RCS is putting in place its new board of directors and declined to comment until the process is completed, David Orlofsky, the chief restructuring officer for RCS Capital, said in a prepared statement.
RCS in January announced a restructuring and recapitalization of Cetera aimed at running it as an independent organization.