Be Careful of Leveraged B-Ds Like Cetera, Advisor Group: Recruiters
April 7, 2020 By Mrinalini Krishna, Financial Advisor IQ Moody’s has sounded the alarm about the impact of the coronavirus pandemic on the financial health of certain broker-dealers, such as Advisor Group and Cetera Financial. Recruiters are cautioning FAs about these leveraged firms because their spending ability to support the growth of advisors may be limited. Both Cetera’s 2018 acquisition by PE firm Genstar Capital and Advisor Group’s 2019 buyout by PE firm Reverence Capital were financed through junk bonds. According to a Moody’s report in June 2019, as a part of the Reverence Capital deal, Advisor Group planned to raise $1.6 billion in debt through a series of debt offerings that were rated below investment grade. Similarly in August 2018 Moody’s noted that for the Genstar deal, Aretec planned to raise $1.015 billion...
