Cetera Holdings announced today that it has appointed Mike Durbin as CEO of the holding company of Cetera Financial Group, the large independent broker-dealer network. Durbin, who joins Cetera from Fidelity Investments where he served as head of Fidelity Institutional, the Boston-based giant's custodial operations, will also become a director of the parent. He is highly regarded in the financial services business for his ability to manage large organizations.
The ability of Genstar, the private equity firm that owns a controlling interest in Cetera, to recruit Durbin was seen as a coup. Private equity sources said that Genstar's ultimate goal probably is to take Cetera public in an IPO. Although the stock market window for IPOs has been mostly shut this year, recruiting an executive of Durbin's stature could ultimately position the IBD network for an IPO down the road.
Cetera also announced in a press release that Adam Antoniades will continue to serve as CEO of Cetera Financial Group and as a member of the board of directors. The move to place Durbin at the holding company level raises the possibility that Genstar could also seek to expand Cetera through acquisitions and other strategic initiatives.
Moody's Investor Service said last month it expects Cetera's profitability to rise signifcantly this year. Increased cash flow could give Cetera more flexibility to grow and pay down debt.
The press release hinted at a more aggressive strategy for Cetera going forward. "Durbin's appointment represents a deliberate next step in Cetera's evolution and positions Cetera for continued growth as a market leader and disruptor," the release said. "He is uniquely qualified to accelerate the organization's strategy, introducing adjacent capabilities and channels and expanding Cetera's addressable market."
Durbin's diverse experience in the RIA world could eventually enhance Cetera's ability to attract RIAs in what is seen as the fastest growing segment of the advisor universe. Charles Schwab's acquisition of TD Ameritrade in 2021 has sparked a growing interest among technology firms like Envestnet and independent broker-dealers like LPL Financial and Raymond James Financial Services to fill a perceived void and compete to service RIAs.
"Cetera is in a position of strength and poised to capitalize on today's opportunities, and Mike is well qualified to lead the organization to and through its next chapter of success," said Tony Salewski, managing partner at Genstar Capital, in the release. "We look forward to continued execution of our new five-year plan and achieving meaningful growth together with Mike, Adam and the entire Cetera team."
At Fidelity, Durbin managed the acquisition of eMoney Advisor and also ran its technology arm during his tenure there. At various junctures, he also oversaw third-party advisors and institutions with custody and clearing, third-party product and asset management services, Fidelity Asset Management product marketing and distribution, and Fidelity Capital Markets, the press release said. Before joining Fidelity, Durbin held various leadership positions at Morgan Stanley, including chief operating officer of the national sales division of its Global Wealth Management unit.
Cetera's parent company, Aretec, recently received a credit rating upgrade from Moody's Inverstor Service, which said it expects Cetera's profitability to improve significantly in 2023. However, Aretec bonds remain rated at below investment-grade levels.
Cetera was acquired by Genstar in July 2018 for $1.7 billion in a leveraged private equity transaction. The debt it assumed from that deal has limited the ability of Cetera, like other leveraged broker-dealers, to compete for acquistions of other IBDs in recent years.
The strong financial position of publicly-owned IBDs like LPL Financial and Raymond James has enabled them compete more aggressively than leveraged rivals in the recruiting space as well. This fact is not lost on the private equity executives who own many IBDs, including Advisor Group and Kestra Financial, to name a few. For example, Cetera attracted about $13 billion in new assets from recruits last year, just fractionaltly more than Commonwealth Financial, a much smaller firm known for being highly selective in the advisors it brings onto its network.
Genstar itself is intimately familiar with the independent advisor business. Over the last decade, it has owned major equity stakes in RIA aggregator Mercer Advisors, AssetMark and Ascensus.
"We are extremely excited to welcome Mike to the team and look forward to working together to achieve long-term success for Cetera and our advisors," Antoniades said. "Mike's deep expertise and background in the RIA, Retirement and custody and clearing space, as well as his proven track record of leadership and innovation, will help Cetera further solidify its position as the ultimate destination for financial advisors and institutions."
"I am honored to join a thriving industry leader at a pivotal time in the financial advice industry," Durbin said in the release. "Cetera is well positioned for exponential growth by continuing to deliver new and innovative capabilities to advisors through its Wealth Hub, and truly meet the changing needs of today's top advisors."