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Boston-Area Wealth Firm Joins List of Would-Be M&A Players

By Thomas Coyle December 11, 2017

Winthrop Wealth Management, an established firm with young leaders, says its new structure will help it acquire practices eager to join its technology-fueled push into the next generation.

But one industry veteran warns a plan like that is easier to articulate than pull off.

Under brothers Max Winthrop, age 29, and Lucas Winthrop, age 27, Boston-based Winthrop Wealth Management has recently gone from being an independent brokerage affiliate of LPL Financial to running its own RIA — while keeping the securities arrangement with LPL. Prior to that change, the brothers led efforts to meld Winthrop Wealth Management’s two legacy practices, run by their father Earl Winthrop and their uncle Mark Winthrop, into one operation.

“Doing that, we realized a lot of efficiencies,” says Max Winthrop, CEO of Winthrop Wealth Management, a firm begun 33 years ago by the senior Winthrops, who remain as senior members of the firm that manages more than $1.3 billion.

In fact, success in streamlining operations led Winthrop Wealth Management to launch Empower Advisor as a vehicle for acquiring independent financial advice firms. As a platform for practice integration, Empower Advisor uses Winthrop Wealth Management’s in-house relationship management system, which links behavioral finance techniques to operational technologies designed to help advisors get a deeper understanding of clients and prospects.

Running its own RIA and rolling out the practice acquisition platform supports Winthrop Wealth Management’s growth strategy and its “commitment to delivering unparalleled client service,” according to Max Winthrop.

The CEO considers heightened client service a necessity at the dawn of a “new fiduciary era” for wealth advisors, a phase in which success depends on the ability to use technology, data and analytics “to develop a superior understanding of each client’s unique needs, resulting in deepened personal engagement with clients.”

In this context, Empower Advisors is supposed to help advisors “rediscover the passion and love that brought them into this business when they first started,” Max Winthrop adds.

Empower Advisors can also be an exit strategy. In addition to using Winthrop Wealth Management’s platform, practices that use the platform can become acquisition targets for Winthrop Wealth Management.

In this sense, Empower Advisors lets the outside FAs that use it and its sponsor see if a closer relationship makes sense.

“We’re not going to rush in” to acquire any practice, says COO Lucas Winthrop. “The process of onboarding a business to the platform allows us to share a lot of information but we’re not just looking at the numbers. We’re also looking to see if we can genuinely add value.”

Max Winthrop

However outside firms choose to associate with Winthrop Wealth Management, the essential value is the same, according to the Winthrops.

“It really points back to the challenges advisors face as compliance and technology take up more and more of their time,” says Max Winthrop. “Advisors used to spend 90% of their time with clients; now it’s 60% with clients and the rest of the time they’re working on the other stuff. We can help with that.”

But investment banker Elizabeth Nesvold thinks Winthrop Wealth Management could face challenges in its bid to become an acquirer of choice for smaller practices.

“It’s a highly competitive marketplace right now for firms looking for tuck-ins and merger combinations,” says Nesvold, who runs New York-based Silver Lane Advisors, an M&A investment bank to financial firms.

Not only is a firm like Winthrop Wealth Management pitting itself against a large and varied array of established advice-firm buyers — outfits like Focus Financial, Dynasty, United Capital, Mariner, Beacon Pointe, Kestra and Mercer Advisors — principals of an acquiring wealth firm have to devote time and energy to efforts that may not amount to much more than a small sideline.

“You really need to have a unique offering and have the financial resources if you hope to have anything compelling,” adds Nesvold.

Winthrop Wealth Management has yet to make an acquisition or get a firm on its brand-new Empower Advisors platform.