In a major management shakeup at Cetera Financial Group, CEO Valerie Brown has left the firm and been replaced by Larry Roth.
RCS Capital Corp. (RCAP), which has acquired Cetera, announced the changes today.
Roth will assume overall responsibility of RCAP’s recently acquired independent broker-dealers, including the four Cetera Financial Group firms, plus First Allied Securities, Investors Capital, Summit Brokerage Services and J.P. Turner & Co., the company said in a statement.
Roth, the former chief executive of AIG’s Advisor Group, joined RCAP last September. Intitally, RCAP said he would build out the company's alternative investment program and investment banking unit. But after RCAP kept acquiring B-D's at a rapid clip, some observers expected Roth to play an expanded role in its B-D operations. Indeed, Roth was on a conference call with RCAP investors several months ago to answer questions about the acquisitions. He will report to Michael Weil, the president of RCAP.
Brown “has chosen to leave the company,” Weil said in a statement.
“Over the years, Cetera has grown into the thriving business it is today, and Ms. Brown has expressed to me that she feels privileged to have played a role in its development,” Weil said. “With Cetera operating as a unit of RCAP, Ms. Brown believes now is the right time for her to transition from her role as CEO of Cetera into a consulting role with Cetera and on to other pursuits.”
Adam Antoniades, formerly chief executive at First Allied, is taking on a newly created position as president of Cetera Financial.
The announcement described Antoniades’ role as focusing “on building out a world-class retail investment advice platform.” At present, Antoniades lives in San Diego and Roth lives in New York City. Cetera is based in Los Angeles.
Earlier this month, Kevin Keefe joined First Allied as president from AIG’s Advisor Group. Roth and other RCAP executives are expected to conduct a thorough review of the operations of the nine seperate brokerage firms they have acquired in the last nine months. Observers noted that both Antoniades and Keefe were given the title of president, not CEO.
RCS Capital Corp., run by private REIT maven Nicholas Schorsch, agreed to buy Cetera in January for $1.15 billion in cash in January. The deal closed in April and made RCAP a major player in the independent broker-dealer world.
RCAP’s firms have more than 9,000 advisors who handle about $200 billion for clients.
The announcement was a surprise to some since Schorsch had made of point of mentioning Brown as one of his key managers going forward after acquiring Cetera. But Roth was intimately familiar with the Cetera firms, since he had served as the CEO of the ING broker-dealer network, which owned the firms before ING sold them to Donald Marron's Lightyear Capital in 2010. The firms were subsequently renamed Cetera and Lightyear spent a significant amount of money rebranding them.
“Part of doing these deals is assessing all the management talent you have and realigning it to pursue a new strategy,” said Dan Seivert, head of Echelon Partners, a buyout consultant.
It’s surprising how quickly the shakeup came, Seivert said, “but I would have been surprised if it didn’t happen” at some point.
Brown is well regarded and it will be a “great opportunity … for whomever picks her up,” Seivert added. As one of Marron's righthand people at Lightyear, Brown is believed to have benefited financially in a major way from the sale of Cetera. She is well-respected within the industry for her intelligence and judgment.
Roth’s rise is hardly surprising. His joining RCAP to run its wholesale product-distribution business last year didn’t make sense to some industry observers since Roth is a veteran executive of the independent broker-dealer business.
Some observers speculated Roth must have had a non-compete agreement with AIG, which presumably would have lasted at least one year. That would explain why he initally took the position in the wholesale distribution arm of RCAP. Whether or not RCAP would have had to buy out the possible non-compete from AIG was unclear. However, in recent months AIG has promoted a handful of executives at Advisor Group who are thought to be very close to Roth.