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Small FAs Are Now Big Targets for Hungry Acquirers

July 27, 2017

The demands for technology and advisor training are likely to continue driving the types of acquisitions that United Capital announced earlier this week, the Wall Street Journal writes.

United Capital has bought Asset One LLC, Compass Wealth Advisors and Jensen Wealth Advisors, which collectively manage $758 million, the paper writes. Following the deal, the terms of which weren’t disclosed, United Capital will have $19.3 billion in assets, according to the Journal.

Matt Brinker, head of business development at the firm, tells the paper United Capital plans to add a further $1.5 billion in the second half of the year.

Smaller firms will likely continue getting acquired by larger players in the advice space, Denise Valentine, a senior analyst at research firm Aite Group, tells the paper. “It’s tough to go it alone out there,” she says.

Brinker, meanwhile, tells the paper smaller firms don’t have the resources to adequately invest in technology and training. And Thomas Baumler, chief executive of Asset One, tells the paper he was attracted to what United Capital offered his firm in terms of those resources. And as Baumler and other advisors at his practice approach retirement age, going with United Capital is a way to ensure the practice has a succession plan, he tells the Journal.

The Department of Labor’s fiduciary rule, which purports to require retirement account advisors to put clients’ interests first and went into partial effect in June, will also likely contribute to the consolidation trend, according to the paper. Even for those already acting as fiduciaries, the additional compliance requirements are “pretty daunting for a small firm,” Baumler tells the Journal.

HighTower, meanwhile, which has had its strongest year of acquisitions already, is expanding its startup capital program for new advice practices, the firm says in a press release. The startup cash is available to advice teams launching on the HighTower platform, the firm says. HighTower made 21 acquisitions in the first half of the year, bringing its total assets under management close to $50 billion, according to HighTower’s press release.

In other news, a Wells Fargo team of advisors has gone independent, joining the Dynasty Network of advice firms, Dynasty Financial Partners says in a press release. Towerpoint Wealth was launched by former Wells Fargo advisor Joseph Eschleman, who brings with him Lori McKinney and Nathan Billigmeier, according to the press release.

Towerpoint is partnering with Schwab Advisor Services as well as Dynasty Financial Partners, which it’ll use for analytics and operations support, Dynasty says in the press release.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.