What Cetera’s $1B Avantax Deal Means for the Way forward for Recommendation: MyVest CEO


What You Have to Know

  • The acquisition highlights a deeper give attention to tax-aware planning, Anton Honikman says.
  • The advisor expertise knowledgeable says the deal exhibits the consolidation of the RIA trade will not decelerate anytime quickly.
  • Honikman says advisors ought to count on to see an arms race within the years forward, each on scale and tax-planning capabilities.

Cetera Monetary Group’s mid-September acquisition of Avantax, previously Blucora, might not have been the most important deal of the previous couple of years within the wealth administration enterprise, however in keeping with MyVest CEO Anton Honikman, it is without doubt one of the extra telling with respect to the long-term trajectory of the RIA trade.

Because the CEO of MyVest, a TIAA subsidiary centered on constructing and supporting enterprise wealth administration expertise in a tax-aware and customized method, Honikman spends a lot of his time serious about M&A traits and what they are saying in regards to the technical aspect of the wealth administration trade.

As he just lately advised ThinkAdvisor, the Avantax acquisition demonstrates two key themes which are quickly reshaping the house: consolidation and tax-aware planning.

“Those that observe the trade in all probability weren’t stunned by the information,” Honikman mentioned. “On one stage, that is persevering with the story of [industry] consolidation … It’s the large persevering with to get larger — and Cetera is already one of many massive ones.”

The second key theme, Honikman says, is the “elevation of all issues tax” all through the monetary planning and funding course of.

“I feel [Cetera Holdings CEO] Mike Durbin is aware of precisely what he’s doing,” Honikman continues. “Giant companies are searching for smart, additive acquisition targets, and Avantax is one in all them. Past mere consolidation, nevertheless, I feel this deal additionally alerts the significance of tax and elevating the idea of tax planning and tax issues in wealth administration.”

The Tax Play

As Honikman notes, Durbin himself has outlined this imaginative and prescient, together with within the authentic announcement of the Avantax acquisition, and leaders throughout the RIA and broker-dealer industries are searching for better experience and technical capabilities on this space.

“As we explored increasing Cetera’s capabilities into wealth administration and tax experience as a core part of our progress technique, it rapidly grew to become clear that Avantax was a really perfect goal and a strong match for our enterprise,” Durbin mentioned. “Avantax will considerably construct out Cetera’s capabilities in tax and wealth administration.”

As each Durbin and Honikman have noticed up to now, disrupting the market with increasing capabilities means extra flexibility for advisors and creating adjoining capabilities and channels to increase a agency’s addressable market. That is seen as a key pattern shifting ahead, they defined, given the potential for payment compression and the trade’s overreliance on market returns to gasoline income progress.

Finally, Honikman says, the Cetera-Avantax deal alerts the truth that consumer service expectations are rising rapidly, and that features a new demand for tax-aware investing. What comes subsequent is Cetera’s job of absolutely integrating and profiting from the Avantax method, a job that’s shared by different companies which have engaged in related acquisitions.

Amongst this group is Hightower, which just lately made a strategic funding in GMS Surgent, a suburban Philadelphia-based tax and advisory agency that gives high-net-worth and enterprise shoppers with tax recommendation and advisory providers.

Beneath the deal, GMS Surgent will turn out to be a “wholly owned tax subsidiary” of Hightower, in keeping with a press launch printed by the companies.


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