$2.7B team folds into Mariner after exiting Cambridge recruiting deal

One of the largest teams to leave an independent broker-dealer in 2021 is moving to Mariner Wealth Advisors from Cambridge Investment Research after only a year.

Mariner made its sixth M&A deal of 2021 when it purchased FCG Advisors, a Cambridge-affiliated practice based in Chatham, New Jersey, with four advisors managing $2.7 billion in client assets under advisement, the firms said on Sept. 23. The deal of an undisclosed amount closed Sept. 10. The 27-year-old practice, founded by financial advisor John Combias, is the sixth largest to change IBDs this year, according to Financial Planning’s tracking of company recruiting announcements.

The move doesn’t involve FCG’s 15 other advisors and other licensed employees, who joined Cambridge last year after FCG shuttered its own BD under an asset purchase agreement. With a structure similar to a forgivable loan, the deal entitled Cambridge to a portion of FCG’s revenue in exchange for operational and regulatory services. Combias paid back 100% of the deal proceeds, and both firms signed an exit agreement before the separate Mariner transaction, he said in an email.

FCG is just the latest advisor team in its weight class to change hands this year, a trend that’s reaching new heights. RIA M&A is on pace for a record in 2021 in terms of the number of sellers with at least $1 billion in client assets, according to investment bank and consulting firm Echelon Partners. Mariner has made two other deals this year that it has yet to announce, with an expected four to six more to close out 2021 and a “massive” pipeline for next year, Marty Bicknell, CEO of the Overland Park, Kansas-based firm, said in an interview.

“An extremely overused term in our industry is ‘holistic advice,’” Bicknell said. “We are strong believers that, to offer holistic advice, the resources and the talent have to be in-house so that you can really do it seamlessly and have more control over the deliverables.”

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Bicknell’s firm has a team of 50 employees whose sole job is to identify prospective clients and drive them towards the firm’s practice, in addition to being part of Fidelity and Charles Schwab’s referral programs. The firm also has a centralized staff for compliance, technology, operations and human resources. Private equity firm Leonard Green & Partners acquired a minority stake in Mariner in June; the following month, Mariner unveiled its acquisition of AdvicePeriod, the largest deal in the firm’s history. The firm has more than 400 advisors in 54 offices with $46 billion in AUA.

As M&A sweeps the wealth-management landscape, acquirers are using a variety of types of financing, buying different percentages of equity, and switching the advisor's RIA or BD.

For example, financial services-focused operating company Merchant Investment Management has stakes in more than 30 advisory firms after making at least eight new or increased minority investments in the past 12 months. At the midway point of the year, the average AUM involved in wealth management M&A topped $2 billion, with a projected 110 transactions of at least $1 billion by the end of 2021, Echelon says.

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High valuations and concerns about rising tax rates on capital gains will “for sure” lead to even larger volumes of deals in coming months, Merchant Managing Partner Matt Brinker said in an interview.

“You're going to see a mad dash toward the end of this year for advisors, for founders to execute transactions,” Brinker said. “The confluence of the perfect storm is in the making.”

In FCG’s case, Combias has affiliated with Mariner’s RIA and its BD, an 11-year-old firm called MSEC. Only Combias’ book of business went to Mariner, out of nearly $4 billion in total client assets that the team brought to Cambridge when it moved last year.

Mariner gave the team “access to the white-glove service we want to provide to our clients, and I felt they were best suited to support both our advisory and institutional business,” he said in an email.

“After 30+ years running day-to-day business operations, I wanted to be able to focus solely on my clients and help mentor the young advisors on my team,” Combias said. “It was time to allow someone else to run the day-to-day and I was attracted to the support, infrastructure, people, services and processes Mariner Wealth Advisors offered.”

Representatives for Cambridge didn’t respond to requests for comment.