$1B RIA returns to Dynasty as record metrics bring added complexity

With RIAs reaching new milestones each year, one billion-dollar practice returned to an old friend that helped it launch when both firms were getting off the ground a decade ago.

Financial advisors Brad Kowalczyk, Mark Moshier and Scott McCartney of Ascent Wealth Partners, an RIA with three offices in Upstate New York and $1.06 billion in assets under management, came back to the Dynasty Financial Partners network about seven years after departing Dynasty, the firms said May 9. Ascent will use the outsourced compliance, accounting, marketing and community offered by Dynasty, which is poised to go public in an IPO.

The impending IPO for it and RIA consolidator CI Financial’s U.S. wealth business this year mark only the most recent signals of the increasingly competitive race among wealth managers to serve as many practices as possible and among investors to tap into the industry. A record 900 new SEC-registered RIAs opened in 2021, pushing up the total to a new high of 14,800, according to the regulator. Similarly, the number of representatives registered only with RIAs jumped 11% to an all-time high of 77,468 in 2021, FINRA’s annual snapshot shows.

Ascent, which is based in New Hartford, Saratoga, and Elmira, has been RIA-only since 2017 and had “parted on very fine terms” with Dynasty when the firm’s executives made the decision to manage their own administrative and operational tasks, Kowalczyk said in an interview. Amid the ramping up of capital and firms eager to work with RIAs in any capacity in recent years, the partners had kept in touch with Dynasty and made the decision to come back to its network.

“It’s a first-world problem. It's a product of our success,” Kowalczyk said. “We've grown a lot. We started at zero 10 years ago. We're north of a billion now. Complexity has increased.”

The options available to practices like Ascent have ramped up to a level that may not have seemed possible when it and Dynasty launched in 2011. At least 20 to 25 RIA platforms like Dynasty or consolidators like Savant Wealth Management are pitching themselves as the means to build practices’ capacities by taking tasks off their plates and enabling them to focus on attracting and retaining clients and advisors, according to Savant CEO Brent Brodeski. Savant is eyeing more growth as well after adding its second capital partner last year.

Brodeski’s team plans to purchase between four to six new RIAs each year in an effort to grow three to five times its current size by 2027, he said in an interview. To do so, the Rockford, Illinois-based company is relying on financing from new minority investor Kelso & Co. and an existing one in Cynosure. Savant has only made a dozen acquisitions to date, but it has topped 100 employees and plans to spend more than $10 million on technology as it expands from its current footprint of 20 offices and $14 billion in AUM, according to Brodeski. The industry’s record dealmaking has extended beyond practices simply seeking succession plans, he said.

“You've got founders and controlling shareholders that might be in their 40s, but they're realizing that they can't make the kind of investments that Savant could make,” Brodeski said. “If the pie is a lot bigger, then our clients, our team, our community and our owners, they all get a big piece of pie.”

Few firms embody the bigger RIA pie of recent years as much as Dynasty, which was working with 295 advisors managing more than $68 billion in assets under administration at the end of 2021 after starting with a network spanning only $3 billion a decade ago, according to its most recent S-1 filing with the SEC in April. Dynasty’s net income soared by 233% in 2021 to $16 million as the firm targets independent advisors that are surging in number as the count with wirehouses and across wealth management as a whole are ticking down, the filing states.

“We maintain an active effort to identify and onboard advisors who are contemplating separating from their broker-dealer affiliates, as well as RIAs who are considering changing service providers,” the document states. “Our business will depend in part on our ability to continue to attract new advisors and advisory firms to our platform and to drive higher usage of our platform by financial advisory firms and their client bases.”

Industry News

Mergers & Moves: Mercer grabs $1.2B firm, Morgan Stanley, LPL and others taps execs, and Ameriprise’s reverse breakaway and more

May 8, 2022 6:03 AM

Dynasty relocated its headquarters to St. Petersburg, Florida, in 2019 from New York, but founder Shirl Penney and Ascent owner Mark Moshier each have residences upstate in Saratoga, Kowalczyk noted. The fee-only firm had broken away from another RIA to launch in 2011, and its SEC Form ADV now lists a dozen employees. Ascent “entered into a business transaction” of undisclosed size with Dynasty on April 1, according to its Form ADV brochure.

The transaction and “a contractual relationship” with Dynasty give Ascent access to “preferred pricing on trading technology, reporting, custody, brokerage, compliance and other related services,” according to the brochure.  “Dynasty charges a fee, which is paid for by the [RIA] from the clients’ annual investment management fee charged to clients.”

Kowalczyk predicts that independence — on a standalone basis or through support from firms like Dynasty — will continue attracting advisors nationwide as practices exit traditional brokerages.

“I appreciate that the buck stops with us,” he said. “We're responsible for all of the decisions that are made that affect our clients, whether it's the vendors that we choose or the counsel that we provide our clients.”