Cetera to Buy Voya Brokerage Unit with 900 Reps

Continuing a trend of consolidation among independent broker-dealers, Cetera Financial Group has agreed to acquire Voya Financial’s retail brokerage business serving around $40 billion in client assets, the firms said on Monday.

The transaction is expected to close in the second or third quarter of 2021, the companies said. Terms of the deal were not disclosed, but Des Moines, Iowa-based Voya said it expects to receive more than $300 million in “deployable proceeds” at closing.

“Cetera’s commitment to the independent model is the right fit for our business owners, giving them increased flexibility and scale,” Voya Financial Advisors president Tom Halloran said in a prepared statement.

Halloran will remain president of the Voya independent brokerage unit, which will be a “distinct business” at Cetera Advisor Networks, according to Cetera’s announcement.

Voya said it decided to sell the independent brokerage unit as it focuses on its core business serving retirement plans and working with institutional clients. The legal entity Voya Financial Advisors and about 600 Voya field and phone-based financial professionals, who provide guidance and advice to Voya Retirement’s plan sponsor clients and plan participants, will remain with Voya.

Voya Financial Advisors had about $657 billion in combined assets under management and administration at the end of the third quarter of 2020.

Cetera Financial, which is backed by private equity firm Genstar Capital and has around 8,000 independent brokers, said the deal would bring its total number of retail customers to 3.1 million and assets served to $300 billion.

The announcement continues a trend of consolidation and deal-making among independent brokers under pressure from rising costs and looking to compete on scale, said Mark Bruno, managing director at M&A advisory firm Echelon Partners.

It comes after Cetera rival LPL Financial, the largest independent broker-dealer by its 17,200 brokers, said in December it was buying Waddell & Reed Financial’s wealth division with around 900 independent brokers.

“In the independent broker-dealer channel, scale is the name of the game,” said Bruno, whose firm was not involved in the Cetera deal. “For the largest firms, like Cetera and LPL, acquisitions will play a big role in their future growth as we have seen in recent months.”

Predecessors to Cetera were owned by ING Group, which was also Voya’s former parent company.

Netherlands-based ING in 2009 sold its three independent broker-dealers, Financial Network Investment Corporation, Multi-Financial Securities and PrimeVest Financial Services—which were rebranded in 2013 to Cetera Advisor Networks, Cetera Advisors and Cetera Financial Institutions—to private equity firm Lightyear Capital.

Genstar took a majority stake in Cetera in 2018 after an ill-fated spree of broker-dealer acquisitions orchestrated by real estate investment trust magnate Nicholas Schorsch, who bought the business from Lightyear for $1.5 billion in 2015.

Separately, ING in 2013 sold off its U.S. financial services arm, which then went public and was rebranded to Voya in 2014. The broker-dealer, ING Financial, became Voya Financial Advisors as a result of the rebranding.