Blucora’s proxy battle continues


An investment advisory firm has fought a public proxy battle with executives from Blucora, the parent company of tax-focused broker / dealer Avantax Wealth Management. Ancora, which owns approximately 3.4% of the shares in Blucora, is aiming for four seats on Blucora’s board of directors in what activists say will bolster the company’s advisory business.

In the final volleys of battle this week, Ancora sent out a Q&A with its four nominees to shareholders detailing their experiences in the wealth and tax industries. Days later, Blucora sent his own letter to shareholders announcing the experiences of his existing board members and criticizing the Ancora nominees.

The letter from Blucora states that under the current board of directors, the company has implemented its tax strategy and that its share price has outperformed the S&P 500 by 72% over the past six months.

A spokeswoman for Ancora could not be reached for comment at the time of going to press.

Ancora has appointed its CEO Fred DiSanto to the board. Cindy Schulze Flynn, Marketing and Communications Director, Union Home Mortgage; Robert D. MacKinlay, CFO of Gardiner Service Company; and Kimberly Smith Spacek, partner at Owl Creek Asset Management. In previous letters, DiSanto has claimed that Blucora’s business decisions alienate advisors and send many on the run to other independent brokers / dealers.

Blucora argued that DiSanto was the only one of the four proposed candidates with experience in public companies and that he would likely be “conflicted and too busy” to serve effectively. DiSanto operates its own investment advisory firm, which, according to Blucora, competes with Avantax’s financial advisors.

Blucora also argues that the four candidates were chosen on the basis of personal relationships, as they all live in the same neighborhood outside of Cleveland and “none appear to have any technology or personal experience in tax preparation.”

“We believe that Blucora and its shareholders deserve a board that is based on merit, experience and talent rather than geographic or historical relationships,” said Blucora in the letter.

However, Ancora’s letter indicates that MacKinlay was, for example, a senior accountant at KPMG and a national managing partner at Cohen & Company, an accounting and consulting firm. Flynn said she has held executive-level communications and marketing roles at companies offering wealth and tax advisory services, including New York Community Bancorp and Citizens Financial Group.

Blucora’s letter also criticizes the Ancora nominees for their lack of experience on corporate public boards. And while DiSanto has experience on the public board, Blucora condemned the performance of these companies. For example, Blucora said the total return of shareholders of Alithya Group, a management consultancy, lagged 84% behind the S&P 500 during DiSanto’s tenure.

“All four publicly traded companies that Mr. DiSanto served as a director have significantly underperformed the market during his tenure,” said Blucora.

Still, six of the ten current Blucora directors had no experience on the public board prior to their appointment at Blucora.

This board consists of the chairman Georganne Proctor, former CFO at TIAA-CREF; Christopher Walters, President and CEO of Blucora; Steven Aldrich, former chief product officer at GoDaddy and former vice president of strategy and innovation at Inuit; Mary Zappone, CEO of the Brace Industrial Group; John Macilwaine, CEO of Bay1 and former Vice President at Braintree; and E. Carol Hayles, former CFO of the CIT Group.

Over the past year, Blucora has added four new directors including Mark Ernst, former chairman, president and CEO of H&R Block; Jana Schreuder, former Executive Vice President and COO at Northern Trust; Karthik Rao, Chief Operating Officer at Nielsen; and Tina Perry, President of the Oprah Winfrey Network.

In an open letter to Avantax’s 3,770 consultants last week, Ancora argued that Blucora’s current management team did not have any promised synergies between Avantax, the strategic roll-up of tax-focused broker / traders, including HD Vest and 1st Global, and its legacy -Expert finds tax software business that pushes the stock price down. The mismanagement also alienates Avantax’s advisors, Ancora said, sending many on the run to other brokers / traders.

“It makes no sense to have the enormous corporate effort that you have to run the two companies,” DiSanto said in an interview with “I think the shareholder would be in a better position to sell the TaxAct business at the right time. [Chris Walters] made comments saying, “Sell it right now.” We say at the right time. Today is not the best time, but maybe six to nine months.

“Take this proceeds, you can pay off your debt, and if you have any cash that we think you will, you can either use it to make good solid acquisitions that could help Avantax, or you can.” to pump more money back into the company’s business in terms of technology, service and ideas for the consultants to help them grow their business, ”said DiSanto.

Upon his election to the board of directors, DiSanto said his first step would be to immediately cease and desist the $ 60 annual fee that mutual fund advisors are billed directly to brokerage accounts by mutual fund advisors.

He said Avantax is charging employees $ 7.50 per account to go paperless. DiSanto said he would estimate that total cost to the company and give the consultants 18 months to make that transition.

He would also dive deeper into the way the company measures service to the advisor. He will also look at reducing Blucora’s overhead costs, which is $ 30 million.

“I think it’s an exorbitant amount of money,” he said.

DiSanto also plans to look into the process the board went through to appoint Walters as CEO last January. The shareholders will vote on the nominations of the Board of Directors at a general meeting on April 21.


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