Former Morgan Stanley Exec Ketterer Goes Indie as New CEO of Cadaret Grant
After a 27-year career at Morgan Stanley, Doug Ketterer is betting his future on small independent broker-dealers.
Atria Wealth Solutions, which Ketterer co-founded in 2016 after serving as head of strategy and client management at the wirehouse, said Thursday that it will buy Cadaret Grant & Co., a 33-year-old firm in Syracuse, NY that sells stocks, bonds and advice through about 900 independent contractors in 475 offices across the U.S.
The companies did not disclose terms of the deal, which they expect to close this quarter or early next quarter. Cadaret Grant has more than $23 billion of assets under administration.
“The independent advisor channel is where things are going right now in terms of the growth and momentum for many reasons,” Ketterer said in an interview. “At the wirehouses, not only is it a zero-sum game in terms of trading advisors, but that channel has been shrinking.”
Ketterer, who at various times led Morgan Stanley Dean Witter’s U.S. brokerage force and its upper-net-worth private wealth business, left the firm in February 2015 after a reorganization. He founded Atria the following year along with Eugene Elias, former head of Morgan Stanley’s advisor workstation technology group, and Kevin Beard, who oversaw strategic acquisitions at independent broker-dealer AIG Advisor Group.
Atria, which is backed by private equity firm Lee Equity Partners, last November purchased San Diego-based Cuso Financial Services and Sorrento Pacific Financial, sister broker-dealers operating through banks and credit unions.
Arthur Grant, Cadaret’s 75-year-old chief executive and majority owner, will assume an advisory role at the firm. Ketterer will lead the company day-to-day from New York City.
“Doug will be the CEO, and I will offer all the advice and support that I can,” Grant said.
Ketterer’s pivot to an independent wealth firm business model mirrors that of other former wirehouse bigwigs.
Greg Fleming, the former president of Morgan Stanley Wealth Management, took the reins in October of Rockefeller Capital Management a multi-family office and registered investment advisor that has been recapitalized by private equity firm Viking Global Investors.
Former Smith Barney executives Todd Thomson and Shirl Penney founded RIA service provider Dynasty Financial Partners in 2010. And Jamie Price, the former head of UBS Wealth Management Americas, now oversees the four former independent AIG-owned broker-dealer that has been rebranded as Advisor Group.
Brokers who affiliate with broker-dealers such as Cadaret, Grant and Advisor Group keep a much larger part of the fees and commissions paid by customers than do employee-brokers of wirehouses but are responsible for paying most of their overhead.
The deal also highlights the growing appeal of the independent channel to cash-rich private equity firms. Lee Equity Partners, for example, also has an ownership stake in Fairfax, Va.-based Edelman Financial Group, while Thomas H. Lee Partners (founded after its eponymous owner divested his stake in Lee Equity) this year recapitalized RIA consolidator HighTower.