What You Have to Know
- The acquisition highlights a deeper give attention to tax-aware planning, Anton Honikman says.
- The advisor know-how knowledgeable says the deal exhibits the consolidation of the RIA trade will not decelerate anytime quickly.
- Honikman says advisors ought to anticipate 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 few years within the wealth administration enterprise, however based on 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 know-how in a tax-aware and customized method, Honikman spends a lot of his time fascinated by M&A traits and what they are saying in regards to the technical aspect of the wealth administration trade.
As he not too long ago advised ThinkAdvisor, the Avantax acquisition demonstrates two key themes which are quickly reshaping the area: consolidation and tax-aware planning.
“Those that comply with the trade most likely weren’t stunned by the information,” Honikman stated. “On one degree, that is persevering with the story of [industry] consolidation … It’s the massive persevering with to get greater — 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 believe [Cetera Holdings CEO] Mike Durbin is aware of precisely what he’s doing,” Honikman continues. “Massive companies are searching for smart, additive acquisition targets, and Avantax is considered one of them. Past mere consolidation, nevertheless, I believe 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 turned clear that Avantax was a super goal and a strong match for our enterprise,” Durbin stated. “Avantax will considerably construct out Cetera’s capabilities in tax and wealth administration.”
As each Durbin and Honikman have noticed prior to now, disrupting the market with increasing capabilities means extra flexibility for advisors and growing adjoining capabilities and channels to broaden a agency’s addressable market. That is seen as a key development transferring ahead, they defined, given the potential for payment compression and the trade’s overreliance on market returns to gas 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 process of absolutely integrating and benefiting from the Avantax strategy, a process that’s shared by different companies which have engaged in comparable acquisitions.
Amongst this group is Hightower, which not too long ago made a strategic funding in GMS Surgent, a suburban Philadelphia-based tax and advisory agency that gives high-net-worth and enterprise purchasers with tax recommendation and advisory providers.
Underneath the deal, GMS Surgent will turn into a “wholly owned tax subsidiary” of Hightower, based on a press launch revealed by the companies.
