Charles Schwab Corp. announced Monday that it has agreed to buy Windward Investment Management Inc., a Boston investment advisory firm.
San Francisco-based Schwab said it will play $150 million in stock and cash when the deal closes during the fourth quarter.
Windward, which had $3.9 billion in assets under management as of July 31, manages three investment portfolios comprised primarily of exchange-traded fund securities. Its clients include investment advisors, non-profit organizations, endowments, retirement plans, and individuals.
Through a combination of strong organic growth and strong investment performance, Windward has had 56% compound annual growth over the past five years.
“Among independent advisors and retail investors there is a growing interest in the kind of value Windward can provide – portfolio construction which puts risk management at its core – an ideal approach for today’s world,” said Walt Bettinger, Schwab president and chief executive officer. “A number of Schwab Advisor Services clients currently rely on Windward for cost-effective and highly diversified core portfolio holdings for their clients, and we think that upon closing streamlined access and improved pricing from Schwab will further fuel Windward’s growth and enable us to add significant client value for advisors. Windward’s straightforward, scalable strategies are also a natural and consistent fit with Schwab’s existing approach to portfolio management for our traditional retail clients.”
At current asset levels, Schwab said in a press release that it expects the deal would be modestly accretive to earnings per share in the first 12 months after it closes.
When the deal closes, Stephen J. Cucchiaro, Windward’s founder, president and chief investment officer, and his investment team would remain at Schwab. Windward’s products will be made available to independent registered investment advisors through the Schwab Advisor Services platform and to retail clients through Schwab’s managed portfolios strategy.
According to Cerulli, assets in separately managed account programs grew nearly 30% in the past year, and investment advisors are one of Windward’s fastest growing client segments. At closing, Schwab will begin waiving transaction commission costs for Windward managed accounts custodied on Schwab’s Advisor Services platform.
