Cetera Financial Group is ready for a fresh start after a major accounting scandal at its parent company rocked Cetera businesses and depleted employee morale.
Now that the parent has emerged from bankruptcy, renaming itself Aretec—Cetera spelled backward—the company has dusted itself off and is moving on, says Catherine Bonneau, CEO of Cetera Financial Institutions, the division of Cetera that works with banks and credit unions to help them grow their investment services programs.
As part of the new beginning, Bonneau is throwing herself into efforts to prepare institutions and their advisers for the implementation of the Department of Labor's fiduciary rule. She's leading a team of some 30 professionals who are "building out a process pipe" for how to serve clients in the new regulatory environment.
"Being part of that is incredibly exciting as we transform our business," Bonneau says.
Bonneau recently assumed expanded responsibilities, joining the executive team of Cetera Financial Group, the umbrella organization for all Cetera entities or "networks." She now helps make strategic decisions not just for Cetera Financial Institutions but for the entire family of businesses as a whole.
Gearing up companywide
"All of Cetera is working on gearing our firms, services and capabilities to make sure that every one of our programs, advisers and their investors are well served as we prepare for prepare for the regulatory change, which is truly transformative," she says.
Business will become more process- rather than transaction-oriented, as it had been historically, according to Bonneau. The new process orientation will help advisers identify the best way forward with clients, and it won't always necessarily be fee-based.
"Through that process we will sort out whether or not a fee-based approach is the best approach, or a digital approach is the best approach, or a commission-based product is the best approach," Bonneau says.
Although it would be easy to move everyone into a fee-based account, it's not in the best interest of all clients to do so, she says. A one-size-fits-all approach to the fiduciary rule is, therefore, not possible.
"We will absolutely support our advisers in all the ways they need to serve their clients to the full extent we possibly can," she says.
The firm is modifying its tools, trading, systems and supervision in an effort to make sure that firms and partner institutions will be compliant with the new rule. Specifically, it is changing its methodology for communicating with clients so that conversations focus on the totality of a client's needs, rather than one-off transactions.
The firm is also weighing whether anything is too complex relative to the firm's ability to support it in a sustainable way. "We don't want to put things out there and then have to pull them back because they're not economically viable," Bonneau says.
To prepare for the changes ahead, Bonneau relinquished her role as president of Cetera Financial Institutions to assume her more prominent role at Cetera Financial Group. Company veteran LeAnn Rummel took over Bonneau's position as president, overseeing operations and growth initiatives for Cetera Financial Institutions.
Division of labor
"It was critical at this juncture that we divide the labor between LeAnn and I. She focuses exclusively on the institutions and the programs, which then frees me up to do more of the strategy and the aligning of resources to make sure that we have everything in order to be ready for the Department of Labor," Bonneau says.
Rummel is now responsible for a broader array of services that the firm delivers to financial institutions, empowering her to continue to "fuel the growth of the programs," Bonneau says.
In addition to adding advisers, Rummel will look to provide support for the trust departments of partner banks and credit unions and the RIAs they own.
Banks and credit unions increasingly are looking to offer a "unified client experience," whether it's accessed through the institution's investment services program, its trust services department or its RIA, Bonneau says. Clients, for example, should receive similar-looking statements.
Rummel will also pitch Cetera's clearing and custodial services to bank-owned RIAs, relieving them from having to build that capability themselves.
"It's very exciting for her and it couldn't happen at a better time," Bonneau says of Rummel's broader role.