What You Have to Know
- The acquisition highlights a deeper give attention to tax-aware planning, Anton Honikman says.
- The advisor know-how professional says the deal reveals the consolidation of the RIA business 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, could not have been the most important deal of the previous few years within the wealth administration enterprise, however in line with MyVest CEO Anton Honikman, it is among the extra telling with respect to the long-term trajectory of the RIA business.
Because the CEO of MyVest, a TIAA subsidiary targeted on constructing and supporting enterprise wealth administration know-how in a tax-aware and personalised method, Honikman spends a lot of his time enthusiastic about M&A developments and what they are saying concerning the technical facet of the wealth administration business.
As he lately advised ThinkAdvisor, the Avantax acquisition demonstrates two key themes which might be quickly reshaping the area: consolidation and tax-aware planning.
“Those that observe the business 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 massive persevering with to get larger — and Cetera is already one of many huge 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. “Massive companies are on the lookout for smart, additive acquisition targets, and Avantax is one in every of them. Past mere consolidation, nevertheless, I feel this deal additionally indicators 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 unique 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 element of our progress technique, it rapidly grew to become clear that Avantax was a 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 previously, disrupting the market with increasing capabilities means extra flexibility for advisors and creating adjoining capabilities and channels to develop a agency’s addressable market. That is seen as a key development shifting ahead, they defined, given the potential for payment compression and the business’s overreliance on market returns to gasoline income progress.
In the end, Honikman says, the Cetera-Avantax deal indicators the truth that shopper service expectations are rising rapidly, and that features a new demand for tax-aware investing. What comes subsequent is Cetera’s process of totally integrating and profiting from the Avantax method, a process that’s shared by different companies which have engaged in comparable acquisitions.
Amongst this group is Hightower, which 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.
Underneath the deal, GMS Surgent will develop into a “wholly owned tax subsidiary” of Hightower, in line with a press launch revealed by the companies.
