5 moves and deals showing the speed of wealth management change

July 14, 2022 4:57 PM

Enjoy complimentary access to top ideas and insights — selected by our editors.

Talent and capital changes accelerated in the weeks after the Fourth of July holiday, reflecting a lot of churn alongside the growth of registered investment advisors and other wealth managers.

Five separate moves and deals outlined below seemingly have little to do with one another. But under the surface, a theme emerges: there is an increasing speed to the flux among independent wealth managers and those working with them.

The sheer numbers of RIAs and assets under management help explain why the number of deals and moves aren’t slowing from their record pace amid inflation and stock volatility. In 2021, the number of SEC-registered advisory firms surged by 7%, or 926 new RIAs, to reach a new high of 14,806, according to an annual study released last month by the Investment Adviser Association and ComplySci’s NRS. And their AUM jumped by 17% to $128.4 trillion — another record. A different research survey predicted that giant wirehouses like Merrill Lynch and Morgan Stanley will soon manage fewer assets than independent RIAs and brokerages.

A need for a “more customized and bespoke client experience” led 20-year Merrill veteran executive Jim Dickson to leave the wirehouse to start Sanctuary Wealth, he said in an interview. Breakaway recruiting moves and M&A deals have spread the firm’s footprint to 79 practices with $25 billion in assets under advisement only five years later.

“What I saw was that the business was changing, and that really the future was the independent model, when you look across all the breadth and depth of services,” Dickson said. “Clients are voting with their feet, which has sped up advisors. I dont think they're going to slow down.”

Industry News

When will other wealth managers surpass the wirehouses? Soon.

December 22, 2021 10:30 AM

For a look at the five recent moves and deals, scroll down our slideshow. To see a forecast of where client assets are going in wealth management over the next several years, click here.

David Canter out at Fidelity

David Canter is a well-known figure among RIAs as the head executive for a custodian spanning 3,600 advisory firms and 7.8 million client accounts. He’s exiting Fidelity, where he was head of Fidelity Institutional’s RIA Segment, at the end of the month, spokeswoman Anjelica Sena said in an email statement. Fidelity Institutional’s head of client growth, Rohit Mahna, is replacing the 13-year veteran of the firm on an interim basis as the firm evaluates potential successors, Sena said.

“This is a natural next step in David’s career, and Fidelity is fully supportive of his decision to make this move,” she said. “David leaves behind a strong RIA and family office business with an exceptional team of leaders and associates who all remain committed to strengthening relationships with these clients, as well as delivering the best solutions and services to meet their needs.”

Citywire RIA first reported Canter’s departure. A couple of days later, the RIA M&A arm of Kestra Holdings, Bluespring Wealth Partners, announced that Canter will join the firm as its president after his departure from Fidelity.

“Working in an entrepreneurial environment that prizes the individuality and independence of RIAs and wealth management firms in a supportive environment is energizing,” he said in a statement.

Second capital partner for Sanctuary

After Italian asset manager Azimut Group acquired a 55% stake in Sanctuary Wealth with a $50 million investment last year, the wealth manager secured an additional infusion of $175 million in the form of a loan as a convertible note from the managed funds of private credit firm Kennedy Lewis Investment Management. Sanctuary, which added 20 new advisor teams last year, didn’t exchange any equity in the latest transaction. Dickson noted that the debt instrument can convert to equity in the future. The new capital will enable the firm to boost the volume of M&A deals to a more even mix with breakaway recruits as part of its expansion, he said.

“The first round went really well. We created tremendous demand, and we had the opportunity to attract more capital and continue to grow, so we took advantage of that,” Dickson said, noting the looming succession challenge facing many practices led by advisors getting closer to retirement. “We just think it's a great time to buy some of those practices and bring them into our network.”

New family office arm of Integrated Partners

At roughly $12 billion in client assets and 160 financial advisors, Integrated Partners represents one of the largest hybrid RIAs and supervisory networks working with LPL Financial. Alongside the firm’s CPA Alliance for referrals from tax professionals and its Business Owner Solutions for serving clients who are entrepreneurs, the firm launched the Integrated Family Office to help its advisors work with high net worth clients at a greater scale through services like family and business law, private lending and recordkeeping. It also appointed Stephen Kolano, a 19-year veteran of BNY Mellon, who was previously the chief investment officer for BNY Mellon Investor Solutions, to lead the new unit.

The firm’s new division aims to help its advisors attract prospects and retain clients with between $20 million and $100 million of investable assets, Kolano said in an interview. With relationship managers assigned no more than seven clients, the unit will be equipped to help them at any hour of the day and assist advisors guiding them through “a life-changing event” such as a decision to sell a business, so the practices can outsource many of the tasks, he said.

“He or she as that quarterback is saying, ‘We can now leverage all of these resources in one platform,’” Kolano said. “That's where a lot of family wealth transfers start to break down, so we've brought in a lot of experts who specialize in that area.”

In a statement, BNY spokesman Ben Tanner confirmed Kolano left the firm at the end of May and said that Global Head of Investor Solutions Sinead Colton Grant has taken over his previous post for the interim term during the firm’s search for a replacement.

Private Advisor Group’s largest team leaves to start its own RIA

Bleakley Financial Group has growing steadily through recruiting since going independent with LPL Financial as its brokerage and LPL’s largest hybrid RIA and supervisory network, Private Advisor Group, as its advisory firm. Between its 2015 move and the end of 2022, the firm’s advisor ranks will have doubled to 60, its client assets will have tripled to $9 billion and its number of offices will have expanded by a factor of eight to 16, Principal Andy Schwartz said. Leaving Private Advisor Group — where Bleakley had become the largest team — to open its own RIA simply represents the next stage in the firm’s evolution, Schwartz said in an interview.

“It was never our intention to stay forever,” he said. “I would have done it the same way if we had to do it over again. Like with anything, sometimes you just outgrow your vendor, and I think we just outgrew our vendor.”

LPL will remain Bleakley’s brokerage and one of its several custodians after the transition out of Private Advisor, which has about 700 advisors and $30 billion in client assets.

“We are excited for the principals and advisors at Bleakley Financial Group,” Private Advisor CEO Robert “RJ” Moore said in a statement. “Much has been accomplished during our partnership, and we look forward to continuing in supporting each other's successes and the progression of firms in our profession.”

Kingswood Acquisition to take Wentworth Public

A special-purpose acquisition company called Kingswood Acquisition that is the U.S. arm of a British wealth manager reached a deal to acquire Wentworth Management and take it public in an offering after the expected close of the merger in the fourth quarter. Wentworth owns midsize wealth managers Purshe Kaplan Sterling Investments, World Equity Group and Cabot Lodge Securities, as well as an insurance brokerage named the Independent Planners Group. Upon the roll-up into Kingswood, the combined firm will change its name to Binah Capital Group, which will have 1,900 advisors and $25 billion in AUM. The parties seek to raise $30 million in cash proceeds and an additional $15 million in capital, with valuations of the firm at $165 million in equity or $208 million at the combined enterprise level.

“The creation of Binah marks another milestone for the company and supports our vision of serving as the wealth management industry's best-in-class broker-dealer platform for financial advisors,” Craig Gould, the president of Wentworth Management and expected incoming president of Binah, said in a statement. The merger will give Wentworth “access to the public equity markets, which we anticipate will provide capital to fund future growth initiatives and operational enhancements,” he added.