Securian and Cetera generated $2.93 billion in combined annual revenue in 2021

15:45 03 February in In the News by rafferty

February 1, 2023

The largest acquisition so far this year in wealth management comes with offers of retention payments to 1,000 Securian financial advisors, who are debating whether or not to join their buyer, Cetera.

In an interview with Financial Planning one week after Cetera Financial Group’s Jan. 25 agreement to acquire the retail wealth business of Securian Financial Group, Cetera CEO Adam Antoniades confirmed that private equity-backed Cetera will provide financial incentives for “transition assistance” to advisors whose brokerage will change when the deal closes later this year. The parties didn’t disclose the financial terms of the deal.

Antoniades declined to say how much financial assistance Cetera will extend for the incoming practices. He compared the deal to Cetera’s 2021 acquisition of certain assets of Voya Financial Advisors. Cetera is pledging to offer continued roles for Securian’s management and eligible employees working with advisors as well.

“We can keep them in their own community, just like we did with Voya. We can keep the relationships together that are so important to how they interact with each other,” Antoniades said. “We retain that through our transition, and we get to overlay all of our capabilities on top of it. The secret to acquisitions is to do no harm to begin with, and then to bring your capabilities to bear that add value.”

The deal between Los Angeles-based Cetera, a network of four brokerages with 8,000 advisors, and St. Paul, Minnesota-based Securian — whose wealth arm spans 31 independent offices with $47.4B in assets under administration — will move Securian’s brokerage, registered investment advisory firm, insurance agency and trust company into Cetera’s fold. The two wealth management firms generate nearly $3 billion a year in combined annual revenue.

Representatives for Securian said no one was available for an interview about the deal. Upon completion, the firm’s financial advisors will switch their branding to Cetera Wealth Management Group and their brokerage to Cetera Advisor Networks.

In a statement last week for the press release announcing the deal, Securion CEO Chris Hilger cited another aspect of the deal that launches a strategic partnership for the giant insurance firm to sell its individual life and annuity products through its former brokerage and across Cetera.

“This transaction allows Securian Financial to increase our strategic focus and accelerate growth in our priority markets, while at the same time continue our commitment to the retail wealth business through our strategic partnership with Cetera,” he said. “Cetera delivers on all important aspects of our acquisition partner selection criteria, including community focus, differentiating scale, and industry-leading technology choice and product platforms.”

Over the past three years, Securian lost as many as 10 or more of its independent offices, which are similar to branches at employee brokerages and are led by advisors that the company calls “managing partners.” With $24.8 billion in advisory assets under management as of the end of 2022 and nearly half a billion dollars in annual revenue, the insurer’s wealth management arm represents the latest example of a giant firm spinning off its investment advisory holdings.

Other recent examples include John Hancock’s sale of Signator Investors to Advisor Group in 2018 and MassMutual’s acquisition of MetLife’s retail wealth arm in 2016 for $165 million, said recruiter Jon Henschen, who predicted Cetera will go public someday.

Securian and other “captive insurance” brokerages often frustrate advisors who are focused on planning services because the firms “claim that they’re wealth management-driven” but often view advisory practices as distribution channels for their own insurance products, he said.

“At this point in time, its assets and bodies,” Henschen said of Cetera. “A lot of the lower fruit has been picked, so to speak, so they’re having to settle for something that may not be ideal but it gets their asset levels up there as they prepare to go public, whenever that might not be.”

Since 2018, Cetera has received the capital backing of private equity firm Genstar Capital, which has enabled the firm to make acquisitions like Voya and the U.S. wealth business of Foresters Financial. The firm has also invested in some of its largest independent branches.