In the wake of an unusual HR event, Cetera is seeking its new Barnaby Grist

It was intriguing turn of events when Cetera Financial Group, announced 2010 that it had brought over Barnaby Grist, a man strongly associated with the success and panache of Schwab Advisor Services to serve as executive vice president of wealth management.

Now Grist, 41, is stepping down from Cetera — perhaps permanently.

“My decision is to focus on family for the next year of my life and I think that most advisors face this issue for themselves as do most of their clients,” he says. “Financial advice and planning for the unexpected can help families prepare — and because of that preparation, I am fortunate to be in a financial situation where I can afford to focus on my top priority. At the end of the day that is what advisors do — help clients have the flexibility to meet their key life goals.”

Revamp artist

Cetera hired Barnaby Grist as a make-over engineer and tone-setter for the roll-up to be of insurance broker-dealers — a collection of three independent brokerages that had recently been acquired by Lightyear Capital LLC, a New York-based private-equity firm, with a mission to stay relevant in a world heading toward more of an RIA model.

Cetera was created by Donald Marron, the former Paine Webber CEO, who had cash to invest and a desire to be part of a new age of financial advice. See: Barnaby Grist is leaving Schwab and Jon Beatty is stepping up.

Legacy issues

In an interview, Grist says he’s stepping down because of family members’ health issues on both his side of the family and his wife’s side of the family. He says he will be leaving the industry for at least a year.

“I do hope to come back to this industry and even to Cetera if the timing is right,” he says.

Grist’s departure leaves open the question of whether he was able to imprint his eclectic mix of Oxford scholar, Schwab-cultured business expert and RIA maven to Cetera — and whether that vision can be pressed forward without him.

Last September, the Los Angeles aggregator of independent broker-dealers announced that it had rebranded its four broker-dealer divisions — Genworth Financial Investment Services Inc., Financial Network Investment Corp., PrimeVest Financial Services Inc. and Multi-Financial Securities Corp. — with the Cetera name in an effort to better market itself.

At the time, chief executive Valerie Brown said the move was made in part at the request of Cetera’s advisors. But at least one RIA in Cetera’s stable wasn’t convinced. RMR Wealth Builders Inc., a Teaneck, N.J.-based wealth management firm that has $1 billion in assets and generates $7 million in revenue, announced it was leaving Cetera because of concerns about its long-term commitment to growth. See: Cetera rebrands divisions in its own name, but $1-billion advisor defects to a rival startup.

Good growth numbers

Certainly Cetera has come a ways during Grist’s tenure with the unenviable task of finding a niche among big IBDs like LPL and Raymond James on the one hand and RIA custodians like Schwab, Fidelity and TD Ameritrade on the other.

Since Cetera officially became a new company in February 2010 — the same time Grist joined — its fee-based assets have grown from $12.6 billion to $22.6 billion — nearly 80% growth. But that does include an acquisition of Genworth Financial Investment Services (renamed Cetera Financial Specialists) and a robust stock market. Without the acquisition of the Genworth IBD, the company’s assets grew about 60% in those three years.

The company’s total assets are more than $111 billion, an increase of 46% since the company was founded in 2010.

Schwab-ification of Cetera

Grist was brought to Cetera tasked with building up a fee-based business and copying the most successful aspects of the nation’s largest RIA custodian.

Ryan Shanks, CEO of Finetooth Consulting, thinks Grist has thrown in some Schwab-ification at Cetera.

Ryan Shanks: He’s simplified the pricing
structure [and] applied the Schwab fee
structure to the investment advisor side.

“I think you could certainly claim his mark on a revamp of a firm making it more appealing to RIAs with the investment advisory pricing,” Shanks says. “He’s simplified the pricing structure a lot [as at Schwab] and he’s applied the Schwab fee structure to the investment advisor side. The whole investment advisory side has been growing.” See: Cetera’s big fee move with a game-changing twist.

In fact, Grist was only one of many Schwabies hired in part to gain access to Schwab model blueprints — and with some success. Charles Goldman, who headed the custody unit at Schwab, for instance, brought elements of the Schwab pixie dust when he moved over to Fidelity Institutional Wealth Services.

Sales star Bob Oros, who built his reputation by succeeding in building up Schwab’s RIA business on the East Coast, brought elements of the style to Trust Company of America, as did ex-Schwab executive Frank Maiorano. See: How Bob Oros landed at Trust Company of America. Schwab alumni Derek Bruton and Esther Stearns did the same at LPL as did Brian Davis at Scotttrade. See: Adding to the list of RIA custodians headed by execs with Schwab schooling, Scotttrade promotes Brian Davis.

But there’s still more work to be done, Shanks points out.

“That’s the thing about this business, it’s never good enough,” Shanks says. “[Grist] left an impression on folks in terms of putting his thumb in the RIA-side of the business and developing more of a hybrid for advisors. But as an IBD you have got to constantly evolve. They can’t stop and you can’t ever put your car in park.”

Winning every account

One of the strategies Grist brought over from Schwab was an aggressive sales approach. “Advisors have a choice where they put their business and we strive to earn every account,” he says.

It was important to stress this attitude to instill pride among the staff, Grist says. “When associates feel engaged and empowered in their roles it creates a sense of pride and desire to succeed. This will have a positive effect for any company. I was lucky enough to bring together a star team of smart, motivated professionals that embody this philosophy.” See: Cetera finds talent again at Schwab to fill national sales director position.

He adds: “As a new company we wanted to create raving fans and so we introduced the metric of net promoter score. [Net promoter scores are compiled by a combination of scores from approving and disapproving clients] We talk about that a lot and model it a lot and we have also embedded that into the compensation of our associates. We know that the way we really win is by creating raving fans of existing advisors. “

Analytical stripes

Goldman feels Grist did take a page from Schwab’s book in trying to give advisors more choices.

“Barnaby brought a strong advisor focus and combined that focus with executional capabilities. Barnaby is a great asset to any firm that he works for. His legacy at Cetera will be the capabilities, products and services he built to serve advisors. Barnaby brought a unique set of skills to the business. He is analytical at his core yet also able to build long and enduring relationships. At Cetera, Barnaby applied analytical rigor with insights from advisor relationships to be a great innovator.”

Charles Goldman: He is analytical at
his core yet also able to
build long and enduring relationships.

Charles “Chip” Roame, managing partner of Tiburon Strategic Advisors, says Grist took these tattered IBDs and made them more of a destination for hybrids.

“Barnaby added stature to Cetera. The firm has continued to grow its team since then so I’d assume they can handle this turnover; they have added staff under and around him.”

Life changing

It’s common for executives— and boxers, basketball coaches and politicians — to say they’re stepping down to spend time with family. A month ago, LPL’s Bill Dwyer announced he was leaving and used that familiar phrase about his family. See: LPL’s Bill Dwyer decides to call it quits and Robert Moore is taking over his duties.

Around the same time, in a rare executive move, Groupon CEO Andrew Mason stunned all of corporate America by blasting out an e-mail candidly saying he is fired. His move has been described as quite honest and charming.

In Grist’s case, it’s hard to tell exactly what is happening because Cetera has been growing and hasn’t been public about slashing costs in any way. Some industry leaders appear to feel that he is genuinely facing family issues and is leaving of his own accord.

Grist and his family are leaving their California home and will be relocating to an as-yet undetermined location. Grist, who is a U.S. Citizen, wants to spend time with his family in England and with his in-laws who live in Arlington, Va. He says that this was a very personal and very difficult decision for him and that the issues he’s grappling with his relatives certainly helps him to understand the experiences that advisors deal with personally and with their clients.

“This isn’t really about help — we are lucky enough to have professionals and other family members to help. This is about being able to spend more time with people that are very important to us.”

“I admire someone who says that family comes first,” Shanks says. “I think the industry will respect his decision and there will be a seat at the table when he comes back.”

Goldman echoes those sentiments. “I was sorry to hear that he is dealing with important family issues,” he says. “I know that he is making the right decision and I know we will see him back in the industry as soon as he is able to do so.”