Blucora, a publicly traded company with a market capitalization of just over $1 billion, has been ramping up its management team to become a major player in financial services. In 2016, it, hired John Clendening, a former Charles Schwab executive, as CEO. Then in 2017 it recruited Bob Oros, who ran Fidelity’s custodian business, as CEO of its H.D. Vest unit. Clendening also sits on the board of robo-advisor Betterment.
Prior to 2015, Blucora was a holding company with a collection of various internet-related entities, many of which had disappointing results. Its best asset was Tax Act, a challenger to Intuit’s Turbotax.
Intuit has several other major business lines besides TurboTax. But it also has a market capitalization of $43 billion, so it’s easy to see why Blucora’s owners would view any steps to strengthen Tax Act as something offering tantalizing potential market value. It also helps explain the price Blucora paid for HD Vest and why Cetera shareholders might hope for a windfall.
At the same time as Blucora purchased HD Vest, a Dallas-based broker-dealer serving CPAs, for an astonishing $580 million in late 2015, it also announced an extensive divestiture program. It simultaneously transitioned from a holding company model to a financial services concern specializing in taxes. Since then, Blucora divested most of its assets, except for Tax Act.
Recruiting sources said there were some fears among HD Vest reps that they could be used as a captive audience for Tax Act. However, the reps reportedly indicated they were encouraged but not forced to use the parent’s software.
One indication that Clendening and Oros may be getting serious is that they are considering moving their clearing business to Fidelity or Pershing. Last year HD Vest also jettisoned about 400 advisors, the majority of whom had negligible businesses.
“HD Vest has yet to articulate a compelling value proposition,” one experienced recruiter said. “The moves they have made so far are table stakes these days, especially cutting [HD Vest] advisors doing virtually zero business.”
But the recruiter added Clendening and Oros are “very smart” executives and may have plans they haven’t revealed.