Indie Advisors To Wealthy On The Rise

Wendy Connett Editor New York 8 December 2010

Indie Advisors To Wealthy On The Rise

The trend of advisors breaking away from big firms and going independent continues to gather steam especially among those catering to high net worth individuals and families.

The trend of advisors breaking away from big firms and going independent continues to gather steam especially among those catering to high net worth individuals and families. Established players who provide investment and back office platforms for independent advisors are growing rapidly while new players are entering the scene.

Rockville, Maryland-based Fortigent, which provides wealth management investment and reporting services for financial advisors and institutions targeting the high net worth, said that through October 31 of this year it has signed on 31 new clients. About a quarter of those are breakaway advisors, Scott Welch, senior managing director of investment research and strategy at Fortigent, told Family Wealth Report.

Its client roster now numbers 85 firms that collectively advise high net worth clients on more than $45 billion in assets.

 “Our advisors have an average end client size of roughly $5 million, and several of our newer clients target ultra-wealthy families of $25 million or more,” Andrew Putterman, chief executive office and president of Fortigent, said.

New Arrivals

Earlier this week Dynasty Financial Partners entered the scene. New York City-based Dynasty provides investment and technology platforms for independent  advisors to ultra high net worth individuals.

Michael Brown joined the start-up as partner and director of wealth management from US Trust. Brown's team managed $5.9 billion in assets, according to a Barron's 2009 survey.

Dynasty has several industry heavyweights backing it. Board members include Todd Thomson, former head of Citigroup's global wealth management unit, as chairman.

Harvey Golub, former chief executive of American Express and William Donaldson, former chief executive of Donaldson Lufkin & Jenrette and a former Securities and Exchange Commission chairman are also on the board. All three have invested in the firm.

Dynasty’s founder and chief executive Shirl Penney is a former Smith Barney executive.

Merion Wealth Partners is another recent entrant. It is an advisor owned, independent wealth management firm that debuted in October with offices in Farmington, Connecticut and Lehigh Valley and Berwyn, Pennsylvania.

Merion operates as a platform for independent registered investment advisors and breakaway wirehouse advisors. It is actively recruiting seasoned advisors who cater to affluent and high net worth families. 

It launched with more than $250 million under management and expects upcoming deals will boost that figure to $1 billion towards the end of the first quarter in 2011.

Other firms who provide platforms for independent advisors include San Francisco-based Sanctuary Wealth Services.

“Advisor pay is under pressure, mergers and cost-cutting are upending the stability of many institutions, and independent advisors are getting significant traction in the marketplace, particularly among high net worth clients,” wrote Jeff Spears co-founder and chief executive of Sanctuary in an article published by Family Wealth Report earlier this year. “At the same time, the industry has significantly reduced the cost and complexity of breaking away.”

Trends Driving Growth At Fortigent

Welch said there are several trends contributing to  Fortigent’s growth.

The biggest is that wealth managers are “coming out of their defensive crouch” as the market recovers and the economy begins to get on its feet.  As a result wealth managers are investing more in their practices.  

On the investment side investors who had been sitting on the sidelines in cash are now reallocating back into risk assets. This gives clients who had been thinking about changing advisors the impetus to do so, such as those who want to leave the big banks and wirehouses and look for more focused wealth advisors, Welch said.

Interest in alternative investments has also helped fuel growth. “As people come off the sidelines in terms of their portfolios, more are interested in alternative investments,” Welch said, adding this is an area Fortigent has expertise in.

The growth in access overlay or unified managed accounts, a tax efficient way of managing portfolios, also helped grow Fortigent’s business throughout the year as many thought the US was heading into a higher tax environment. 

The trend of multi family offices, to which Fortigent also provides services, outsourcing has also contributed to its growth. Welch said that three or four of its recent clients have come from this space. 


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