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Kestra’s debt is soaring. How will that affect its advisor recruiting?

16:01 17 March in In the News by rafferty

March 16, 2023 By Tobias Salinger, Financial Planning   Kestra Holdings nearly doubled its debt and interest payments on those liabilities after adding a new private equity investor last year, a new ratings agency report found. The company’s debt load jumped 87% over 14 months to around $850 million, and the service payments alone will soar by the same percentage in 2023 — compared to the 12 months that ended in the third quarter — to $84 million, according to a March 8 “credit opinion” report by Moody’s Investors Service. At the end of last September, the Austin, Texas-based independent wealth management company received a minority investment of undisclosed size from private equity firm Oak Hill Capital buying Stone Point Capital’s stake and joining majority Kestra owner Warburg Pincus. As part of a December issuance of debt notes, Kestra...

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Independent Cetera team fighting Avantax ‘trade secret’ lawsuit

14:42 06 March in In the News by rafferty

March 2, 2023 By Tobias Salinger, Financial Planning   A simmering legal feud between two of the largest tax-focused wealth management firms underscores the shifting challenges for independent financial advisors who switch brokerages  — and the industry’s scrutiny of LinkedIn posts. A previously-unreported lawsuit filed by the parent firm of Avantax Wealth Management cited a LinkedIn post by Brian Stern, the co-founder of Farpointe Wealth Partners, a branch that moved from Avantax to Cetera, as evidence of a “conspiracy” to recruit Avantax advisors to follow Stern to rival brokerage Cetera Financial Specialists. The complaint, filed in December 2021, alleges that Stern, three other Farpointe executives and Cetera wrongfully used “confidential/trade secret” information as part of the effort. Court papers in the case cite a photo on Stern’s LinkedIn page depicting about 20 former Avantax advisors at Farpointe’s conference in San...

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Advisor Group branch manager prevails in messy recruiting dispute

15:01 10 February in In the News by rafferty

February 8, 2023 By Tobias Salinger, Financial Planning   A FINRA arbitration case showing the tensions between independent branches about recruiting moves and M&A deals ended in a victory for one of the largest enterprises at Advisor Group.   In a Jan. 23 ruling by an Oklahoma City-based panel, arbitrators rejected Cambridge Investment Research financial advisor Alan P. Niemann’s demand for $1.2 million in compensatory damages for unjust enrichment and violations of company recruiting rules by Royal Alliance Associates branch manager Brian B. Heapps. The dispute involved Niemann’s claim that Heapps owed him compensation for three advisors who went to Heapps’ branch, Innovative Financial Group.   Nieman and Heaps both headed offices of supervisory jurisdiction for Royal Alliance when Niemann decided to join Cambridge in 2020. Upon his exit, Niemann had hoped that advisors who retained his...