Savant emerges as regional RIA power
Savant Capital Management has taken a giant step towards its long-term goal of reaching $10 billion in AUM within five years.
The $6 billion Rockford, Illinois-based advisory firm is acquiring Huber Financial Advisors, a suburban Chicago-based firm with around $1.2 billion in AUM, according to its latest SEC Form ADV.
The deal will give the newly combined firm nine offices in the greater Chicagoland metropolitan area and approximately $4 billion in AUM in the market.
“It solidifies our presence in Chicago and gives us density and added coverage,” says Savant CEO Brent Brodeski.
Brodeski hopes to break into the top tier of Chicago-area advisory firms, currently dominated by RIAs including HighTower Advisors, Mesirow Financial Investment Management and Segall Bryant & Hamill. Savant's total AUM, now approaching $8 billion, puts the firm as the seventh-largest in the region, according to a recent ranking by smartasset.com.
“The goal for any firm is to be regarded as one of the top three firms in a market, either by geography or by demographics or client type,” says Mark Tibergien, CEO for BNY Mellon’s Pershing Advisor Solutions. “The top three firms get twice as many opportunities to do business as the fourth-next firm.”
Brodeski’s decision to expand his Chicago footprint is a wise one, Tibergien says.
“I like the idea that he is taking a region and local approach first,” he says. “This will help to solidify the brand and position Savant well for a move into a contiguous market. Brent has always been a forward thinker and continues to demonstrate prowess in growing his firm.”
Savant’s geographic focus on Chicago and the neighboring suburbs is “strongly aligned with what we recommend to our clients that are looking to maximize their synergies in deal making,” notes Echelon Partners CEO Dan Seivert. “Savant’s last six deals were within 60 miles of their Rockford headquarters.”
We wanted to maintain our Midwestern roots.
Savant’s deal comes amid a flurry of RIA M&A deals in the first week of 2020, including Fiduciary Trust International’s purchase of $5.8 billion wealth management firm Athena Capital Advisors and MAI Capital Management’s acquisition of $640 million New York City RIA, J.M. Hartwell.
The deal activity shouldn’t be surprising, says Karl Heckenberg, CEO of RIA aggregator Fiduciary Network.
“After last year’s United [Capital]-Goldman [Sachs] deal, many firms are looking to sell while the market is hot," Heckenberg says.
But Brodeski (who is also a Financial Planning columnist) and David Huber, founder of Huber Financial, say their cash and equity deal was driven more by synergy and shared values than market timing.
“In most of our deals, firms are not looking to sell and Huber was a case study in how to do this,” Brodeski says. “The firms we buy want to be part of something bigger where we can be better together. The ones who want to sell to the highest bidder and go to the beach we don’t want anyway.”
Savant pays a dividend in the high single digits which is also an attractive feature of their deal.
Huber says that he’s been talking to the industry’s major players for around five years, but despite entreaties by financial consolidators, he didn’t want to be “on our own with a money partner.”
Huber also says he turned down opportunities to join large RIAs based far away from Chicago. “We wanted to maintain our Midwestern roots and didn’t want to deal with headquarters on the East Coast or West Coast,” he says.
By contrast, Huber had known Brodeski and Savant for years as a friendly competitor from nearby Rockford, just west of Chicago.
The two firms have “identical values,” says Rob Morrison, a senior Huber advisor who will join Savant’s executive team along with Huber, who will also sit on the board of directors. Huber Financial will take on Savant’s brand.
Huber was also impressed with the way Savant has built out its family office, tax and trust and estate service offerings, Morrison says..
“We wanted to build out those services ourselves,” he says. “Merging was a unique opportunity for our clients and advisors to hit the fast-forward button on our to-do list.”
What’s more, the equity-heavy structure of the deal “signals the seller is happy to jump on board with Savant’s growth initiatives as they took the majority of their deal consideration in stock, deferring the true liquidity event down the road,” Seivert says.
“This is an important move as the reinvestment risk of finding some public market investment that will grow as fast is key for many wealth management sellers,” he points out. “Savant pays a dividend in the high single digits which is also an attractive feature of their deal. They continue to be the poster child of patient capital backing with a long term strategy and Midwest congeniality.”