News, Vision & Voice for the Advisory Community


Cetera Financial shores up its technology as it prepares to take on LPL for big hybrid RIAs

The face-lift of the old ING broker-dealers is starting with a big investment in Advent Software

Wednesday, June 23, 2010 – 5:54 AM by Brooke Southall
no description available
Barnaby Grist: If you fit into the LPL box, that’s a great place to be, but if you like to do things your own way, you probably want to go to an environment that’s more customized to your needs.

Brooke’s note: In preparing this article, I tried to understand the context in which Cetera is making such aggressive moves for RIA business in the often sleepy world of IBDs. Chip Roame of Tiburon Strategic Advisors said this: “The IBD market appears to be bifurcating, with the strong getting stronger and the weak falling away — note that 4-5 IBDs have failed in the past couple of months.” This article shows clearly that Celera is working to put itself in the winning camp.

In just its fourth month of owning a collection of old ING broker-dealers, Cetera Financial Group has taken another step forward in its quest to position itself as a place that can win the business of high-end hybrid breakaways.

The Los Angeles-based umbrella for Financial Network Investment Corp., Multi Financial Securities Corp., and PrimeVest Financial Services, Inc. is now making Advent Portfolio Exchange available to advisors at Financial Network and Multi FinanciaI. It allows them to generate reports faster and better than they could with Advent Axys, which was previously in use.

It’s one of the early signs of how the company plans to use new talent, new investment and a niche approach to breathe life into ING’s traditional IBD and position it to take business from industry leaders – including LPL Financial.

The company hired Barnaby Grist to guide its recruiting effort right out of the gate in February and later that month hired another Schwab veteran, Jay Quinn. See: Jay Quinn joins Cetera subsidiary to help Barnaby Grist pave way for more hybrid RIAs. These executives have made it clear that they believe they can create a haven for breakaway hybrids where technology is truly integrated and where there is a nurturing environment for building a practice.

Cetera faces much the same challenge as a number of other broker-dealers that are substantial in size but have fallen way behind the industry leader — LPL Financial of San Diego and Boston, which is preparing for its initial public offering.

LPL has distanced itself in size in a crowded field over recent years,” says Charles “Chip” Roame, managing principal of Tiburon Strategic Advisors. “Traditional competitors like Raymond James, AIG’s broker/dealers, ING’s former broker/dealers (now Cetera), Pac Life’s former broker/dealers (now part of LPL), Securities America, Commonwealth, and others have had their priorities elsewhere.”

LPL’s ability to put itself ahead of the field is based on a broad strategy, he adds.

Broadest success

“LPL’s streamlined model, like is true in other markets, has led to the broadest success and in this case, it has led to LPL’s substantial size and an IPO,” he says.

Yet Grist believes that his company will offer a good alternative for hybrid RIAs that are looking for a broker-dealer that handles advisors on a more personal basis.

“We think LPL is a great firm, but we think the market is big enough” for multiple players, says Barnaby Grist, Cetera’s executive vice president of wealth management. “If you fit into the LPL box, that’s a great place to be, but if you like to do things your own way, you probably want to go to an environment that’s more customized to your needs.” LPL declined to respond to a request for comment for this article.

Cetera’s renewed will to compete with LPL and other rivals got a lift in November when Lightyear Fund II, part of private equity investment firm Lightyear, reached a deal to purchase the ING IBDs. It collectively renamed them as “Cetera.”

The combined IBDs serve about 4,800 advisors and over 800 financial institutions throughout the United States. Cetera had about $75 billion of assets under administration as of Dec. 31, 2009, according to the Lightyear website.

Financial Network serves both independent advisors and financial institutions from El Segundo, Calif. Multi-Financial of Denver, Colo., serves independents exclusively and PrimeVest of St. Cloud, Minn., is dedicated to financial institution.

Hiring Grist away from Schwab Advisor Services back in early February was an early sign that Cetera would be going aggressively after big breakaway brokers. In his years at the San Francisco-based Schwab, Grist was the face of that effort for it. See: Barnaby Grist is leaving Schwab and Jon Beatty is stepping up.

Grist has his work cut out for him to make Cetera look significantly different from competitors, according to Bob Ellis, principal of FastTrack Advisors LLC, a wealth management industry consultancy.

Poorly defined value propositions

“(This is) a major issue with wealth management across the board – poorly defined value propositions,” he says. “Clients don’t understand the differences between advisors, let alone custodians.

“This problem is compounded by wirehouses, RIAs and others all chasing the high-net-worth — $2 million to $10 million — space. If you are going after a fairly limited client pool of a couple of million households with an undifferentiated offering, how do you plan to succeed? That is why wirehouses, and RIAs, to a lesser extent, spend so much of their resources on recruiting producers with a substantial book. They know that new producers, a weak brand and an undifferentiated offering are unlikely to bring in much new businesses.”

Grist’s strategic thinking in making APX available to Cetera reps is to differentiate his company’s offering to prospective breakaways at wirehouses. Making APX part of the Cetera platforms solves multiple issues for them. They get the reports that they were accustomed to at their former employers without having to go through a complex decision-making process, an expensive set-up or extensive learning.

“The people it really resonates with are the wirehouse guys who are used to getting some reporting,” says Grist. “This is a better tool and they don’t have to decide on a tool and learn it. There are a lot of decisions, and they don’t feel qualified to [make them].”

The other group of advisors that Cetera is appealing to are the ones at smaller IBDs that haven’t invested in top technology.


Fidelity Investment also invested heavily in integrating APX with its advisory platform, WealthCentral, according to the company. Cetera’s implementation of was on a similar scale of complexity to what other companies have done, according to Advent.

Advent: Cetera on 'upper end’ of complexity

“Cetera’s implementation was certainly on the upper end of our complex projects,” said Mike Madigan, Director Product Management, Advent Software.

The cost to advisors will be in the “low single basis points”, he adds. The pricing is particularly helpful to smaller advisors. Cetera declined to say whether advisors currently using Axys will have to pay more to use APX.

“The sweet spot is with the small to medium-sized advisors – up to $200 million,” Grist says. Of the approximately 4,000 advisors with Multi Financial and Financial Network, there are about 1,200 hybrid RIAs with $50 million to $200 million who are best suited for this offer.

“As for what works well for hybrid RIA’s: the flexibility of the system, combined with the integrated CRM, flexible reporting, robust security, and audit trails certainly make APX a good fit for Hybrid RIAs,” Madigan says.

The industry’s largest IBD, LPL Financial, created a big hybrid RIA platform in 2008 that took off in 2009 and now has about $9 billion of assets.

Competitors say that the $600 million or so that it could raise would be offset by the more than $1 billion of debt it has on its balance sheet.

Capital aside, Grist believes that his smaller company has an edge over LPL when it comes to winning elite hybrid RIAs.

“Our DNA is about choice [for hybrid RIAs],” he says. “We allow people to choose their own custodian – unlike many of our competitors that want to close that down and consolidate assets on their corporate RIA. We embrace outside RIAs and outside custodians.”

Related Moves

Walt Bettinger sheds 'president' title and Bernie Clark gets new boss as Schwab appoints Rick Wurster as president and No. 2 in charge

The Schwab CEO gets 2016 'Windhaven' hire to share burden of governance from enormity of $8-trillion post-TDA, post-USAA, post-Motif growth.

December 20, 2021 – 11:59 PM

How a white senior vice president at an LPL OSJ came to hire a former black minister as recruiter despite the latter's pledge to make it 'uncomfortable' at times

Rob Sandrew hit it off with Keith L. Frasier, willing to speak up on racial and racial justice issues, who also checks all the boxes for attracting talent and assets at a firm that recruited $2 billion last year

August 19, 2020 – 2:18 AM

Oleg Tishkevich builds instant McKinsey-killer in RIA consulting by offering gigs and equity to six solo stars, but good luck managing egos and economics, says someone who's been there

The restless Invent.us founder names (thus far) Tim Welsh, Suzanne Siracuse, Gavin Spitzner, Mark Hollingsworth and Brian Bleasdell as owners in exchange for being on call to tackle big gigs as a superteam

September 10, 2019 – 10:52 PM

After recruitment of minorities and women gets CEO-level attention at Raymond James, a program gets a dynamic leader

With ratios stuck in the teens, CEO Paul Reilly gives chief marketing officer at subsidiary Carillon Tower Advisers, Renee Baker, her shot at mission impossible -- getting Advisor Inclusion Networks to live up to its Orwellian name

August 24, 2019 – 4:25 AM

See more related moves

Mentioned in this article:

LPL Financial
Asset Custodian
Top Executive: Dan Arnold

Tiburon Strategic Advisors
Consulting Firm
Top Executive: Charles Roame

Raymond James Financial Inc.
Asset Custodian
Top Executive: Bill Van Law

Jeff Spears

Jeff Spears

June 23, 2010 — 12:58 PM

Many large RIAs are considering switching from Advent. The reason is embedded in this article. It takes too many support people to implement and maintain Advent.

Frederick Van Den Abbeel

Frederick Van Den Abbeel

June 23, 2010 — 7:59 PM

Mr. Grist is a very resourceful fellow. I worked with him when he was with Schwab Institutional. I believe any Hybrid Platform that allows a single-signon and consolidated statements (without sacrificing advanced RIA Trading Capabilities) will win. I believe some of the custodians platforms supporting RIA firms still cannot handle commission-based trades on one system. Efficiency in integrating both might be key. The integration is a trait I’m often asked when speaking with a Hybrid Advisor interested in TradePMR.

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo