Cetera to Shutter Another Broker Amid Broad Revamp
Cetera Financial Group is winding down VSR Financial Services, another of the small “independent” broker-dealers that real estate investment trust mogul Nicholas Schorsch scooped up in an acquisition spree two years ago as part of a selling network for his company’s products.
Cetera, whose parent company RCS Capital’s bankruptcy was earlier this month, will fold VSR, known for its sales of alternative investments, into its Summit Brokerage Services unit, several sources in and out of the companies said.
The move would leave the Cetera holding company with nine broker-dealers. However, several additional firms, including Investors Capital Corp, are expected to be closed or consolidated in coming months as Cetera Chief Executive Larry Roth seeks to cut costs and escape from the shadow of RCS Capital’s reputation, multiple sources said.
The roughly 250 brokers who contract with VSR for brokerage services were notified of the plans on Tuesday, and told that Cetera plans to shutter the firm by August 30.
While most advisers will be encouraged to join Summit, home-office and operations staff at VSR will be let go, said James Blosser, VSR’s vice president of recruiting. He characterized the shutdown as an “unfortunate” end to the brokerage firm that he helped build over the past 20 years.
“Summit is different than us, Cetera is different than us,” he said in a phone interview, noting that he was not offered a transfer and plans to retire after three decades in the brokerage industry. “Brokers came to work for VSR because of who VSR was.”
Summit, which has around 450 brokers, will make personal calls to brokers it hopes to keep over the next few weeks. Cetera officials assured the brokers that the consolidation will be eased by the fact that VSR and Summit both clear through Wells Fargo’s First Clearing and Pershing, sources said.
Recruiters and insiders said the move will nevertheless add to the strain on back-office staff at Summit.
“I don’t think you can consolidate 10 firms in a way you don’t think you need 10 chief compliance officers and 10 presidents and 10 everything,” Blosser said.
Jon Stanfield, the president of Overland Park, Kansas-based VSR, referred a call for comment to Cetera officials. A Cetera spokesman did not immediately respond to a request for comment and Summit Chief Executive Marshall Leed did return a message seeking comment.
VSR is not the first casualty of the Cetera revamp. Cetera closed J.P. Turner & Co. last summer amid the collapse of Schorsch’s Reit empire and a spate of regulatory rebukes of Turner’s compliance policies. Some of Turner’s approximately 300 brokers at the time were invited to move their practices to Summit.
Schorsch and RCS, which bought J.P. Turner and Summit for its Cetera family of brokerages in 2014, had initially promised each of the firms acquired in the acquisition tear that would operate autonomously under the Cetera umbrella. use the Cetera name.
Amid the chaos of the bankruptcy filings by RCS and some Cetera entities, Roth rolled out retention deals for brokers in March ’s retention deal. The offering received generally lukewarm responses. The deals for the VSR brokers who are largely based in the Midwest are contingent on them moving to Summit, which is headquartered in Boca Raton, Fla., according to the sources.
Brokers at Investors Capital Corp., which has around 500 brokers, expect to be rolled into another Cetera unit by yearend, but confusion reigns, sources said.
“You don’t know what to believe,” said a broker at Investors Capital. “The things that you think are definite turn out not to be.”