Shakeup Among B-Ds

Terry Flanagan

With the difficult macroeconomic environment presenting a slew of challenges for broker-dealers, some have taken the opportunity as an avenue for growth.

One of the largest holding companies for independent broker-dealers, Cetera Financial Group, has been snatching up smaller competitors in recent months, including those that have been closing up shop.

Cetera is acquiring Genworth Financial Investment Services, which is the broker-dealer subsidiary of Genworth Financial, an insurance provider. The deal was valued at $78.5 million and is expected to close by April.

“This transaction offers us an opportunity to expand our family of broker-dealers, and cements our commitment to support the multiple faces of independence,” said Valerie Brown, Cetera chief executive officer via email.

Included in the acquisition is the addition of about 2,000 financial professionals, which substantially boosts the company’s existing professional base of 3,400.

Cetera unit Multi-Financial Securities recently entered an agreement with Pacific West Financial Group to bring over a group of advisors from Pacific West, to effectuate a “seamless transition for clients. Pacific West had announced that it was discontinuing its operations as a result of declining margins in the independent broker-dealer space.

Earlier in the month, COR Securities, a private equity firm, announced that it would acquire Legent Clearing, an independent clearing firm. COR has also made an offer for National Holdings, which controls two separate broker-dealers. Another PE firm, Lovell Minnick Partners, last year agreed to acquire full service broker-dealer First Allied Securities from Advanced Equities Financial.

The closure of Pacific West is the latest in a period that has been difficult for independent broker-dealers. MF Global was perhaps one of the more high-profile examples in recent memory, in a process that has been ongoing over the past several years. According to Finra, the amount of total registered broker-dealers has dropped about 10 percent in the past five years, from 5,029 in 2006 to 4,456 as of the end of 2011. A majority of the downed brokers have been a result of the overall decline in equity trading volume, leading to tighter profit margins for many.

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