With the launch of Cetera Planning Partners, Cetera Financial Group’s W-2 channel nestled within its broader RIA business, CEO Mike Durbin said the firm is already seeing momentum in its succession planning solution track for Cetera firms (and increasingly for those outside the business as well).
In a wide-ranging discussion at Wealth Management’s New York offices, Durbin discussed the development of the large broker/dealer’s RIA channels since their launch last year, as well as private equity and the value of newly established partnerships with banks and credit unions.
With the addition of Cetera Planning Partners, operating at the broker/dealer’s RIA W-2 homebase, the firm’s RIA & Branches Channel also includes Cetera Investors (offering independent bank support) and Cetera Blueprint (a supported RIA option).
Cetera also created a national employee RIA by combining two of its internal firms: The Retirement Planning Group, which it acquired in 2023, and Avantax Planning Partners, a wholly owned RIA acquired in the larger Avantax deal.
As part of the firm’s greater reorganization, Durbin highlighted advisor succession opportunities as a notable growth area. The IBD works with existing 1099 practices to craft succession plans to keep firms within Cetera.
The firm has a variety of options, including “legacy builder” agreements to buy firms in the event of a principal’s death, and a matchmaking process with other practices inside Cetera (or, outright buying the practice). Durbin said he’d been “pleasantly surprised” by the rate at which practices are taking up the path, as it limits the chance Cetera will lose them to other firms.
“Like buying a practice into the W-2 channel, we should be able to pay a good market rate because there’s no friction,” he said. “No one’s transitioning anywhere. It’s staying within Cetera.”
Though the succession solutions have primarily been aimed at practices already inside Cetera’s tent, Durbin said he was also encouraged by the outside business the firm’s been able to do, finding that these kinds of relationships tend to start as a kind of recruiting interaction that evolves into a succession conversation (and potential plan) once they’re likely to come in-house.
As of now, Durbin said Cetera is happy remaining private, calling it an “opportunity-rich” market and speculating that publicly traded companies are still recovering from the “sort of shockwave” earlier this year when Altruist rolled out its AI-assisted tax planning tool Hazel that was cited in market downturns for some of the industry’s largest firms.
While Cetera has been majority-owned by Genstar Capital since 2018, Durbin said it is in a different space from other private equity-backed industry peers, as Cetera is still early in Genstar’s investment cycle. (The PE firm reinvested capital in Cetera from two of its funds in 2023.)
“We’re not even three years into the cycle,” Durbin said. “People always like to ask, ‘When are you selling? When are you IPOing? When are you recapping?’ I mean, we could do any of those things at any time, because they are fiduciaries to the LPs they run money for, but we have no pressure to transact because it’s early and it’s working.”
Cetera’s brokerage business is also making further inroads in the bank and credit union space, announcing that First National Bank Wealth Management is joining the firm from LPL Financial, with brokerage support set for five locations in northwest Alabama (with hopes to further expansion).
Durbin said Cetera works with over 400 banks and credit unions nationwide; the partnership can be a plus for banks seeking diversified revenue streams, but will often run into problems because it’s not easy to stand up a hybrid wealth or brokerage business, even with an existing bank consumer base.
Durbin said Cetera can be an attractive option for those banks and credit unions booking for “wealth management in a box.”
“We don’t win a piece of business like that because we’re a low-ball bidder on cost. It’s because of the overall value prop, which includes organic growth programming, recruiting, brand building and cross-selling across the financial institution, which can be hard in a bank to get the individual commercial banker to talk to the private banker, to talk to the trust banker, to talk to the wealth manager,” he said.
Cetera’s brand in those partnerships is secondary to the bank’s. Still, Durbin acknowledged Cetera was bullish on the firm’s bank channel, calling it a sub-market that Cetera would have difficulty forging on its own.
“We get the economic result, but we’re penetrating a market without having to build our own brand at a consumer level,” he said. “So, there’s a good symbiosis there.”
