Cetera Holdings has announced the successful completion of its acquisition of Avantax, following approval from the shareholders of the tax-focused wealth manager. This strategic move will not only increase the number of advisors and assets under Cetera's management but also expand its offering in tax-focused wealth management for investors.
The acquisition was supported by an overwhelming majority of Avantax shareholders, with more than 80% of outstanding shares voting in favor of the sale. These shareholders also approved compensation for Avantax executives in relation to the acquisition. In light of the deal, Avantax CEO Christopher Walters has announced his plans to step down at the end of the year, while Avantax CFO Marc Mehlman and Chief Legal Officer Tabitha Bailey will not be staying with the company post-sale.
Cetera, known for its network of broker-dealers, will operate Avantax as a stand-alone business unit. This acquisition will bring in over 3,100 financial professionals and a substantial increase of over $82 billion in assets under Cetera's administration. Cetera also plans to retain Avantax's legal entities, brand, core technology, product offerings, and existing clearing and custody relationships.
As of September 25, Cetera managed a network of more than 9,000 advisors and had approximately $374 billion in assets under administration, with $145 billion in assets under management.
In addition, Cetera highlighted that the inclusion of Avantax Planning Partners, an employee-based registered investment advisory firm with over $7.8 billion in assets under management, will enhance its overall succession solution for Cetera's advisors.
Mike Durbin, CEO of Cetera Holdings, expressed his excitement about the acquisition, stating that it "complements our established tax-centric Cetera Financial Specialist team" and gives financial professionals an additional avenue for affiliation with Cetera. With its expanded tax and wealth management capabilities, Cetera aims to continue providing comprehensive solutions for advisors and investors alike.
Cetera Expands Custodial Relationship and Advisor Force
In a significant development, Cetera Holdings has announced its acquisition of Avantax in a cash transaction worth approximately $1.2 billion. This deal marks Cetera's largest acquisition to date and significantly expands the company's advisor force. Avantax, formerly known as Blucora, will now function as a privately held company, with its common stock no longer trading on Nasdaq.
One of the key advantages of this deal is that it establishes a custodial relationship with Fidelity, as Avantax currently holds client assets at that firm. Cetera is actively evolving into a multi-custodial platform, a strategic move that will enhance the company's capabilities in delivering essential tools and resources to its advisors.
Mike Durbin, the CEO of Cetera Financial Group's holding company, joined the organization in May after having previously worked at Fidelity. Durbin believes that this acquisition positions Cetera to not only expand Avantax's offerings but also prepares advisors for substantial growth opportunities.
This recent transaction comes on the heels of Cetera's acquisition of the wealth management business of Securian, which added nearly 1,000 advisors and approximately $50 billion in client assets to Cetera's portfolio. These developments underscore Cetera's commitment to cementing its position as a major player in the independent broker-dealer sector.
The independent broker-dealer industry has undergone significant consolidation due to various challenges faced by small- and medium-sized brokerage firms, including mounting regulatory, compliance, and technology costs. Large wealth management companies have seized this opportunity and embarked on a wave of M&A deals to increase their scale and competitiveness.
LPL Financial, for example, recently expressed its intention to acquire Crown Capital Securities, a move that will bring an additional 260 advisors overseeing approximately $6.5 billion of advisory and brokerage assets under LPL's umbrella.
The acquisition of Avantax by Cetera not only strengthens the company's standing in the market but also reflects the ongoing trend of consolidation within the independent broker-dealer sector. This development is further testament to Cetera's commitment to providing its advisors with the resources and support they need to thrive in a dynamic and challenging industry.
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