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Wealth firm takes a leap to the big(ger) leagues
Thomas Coyle
6 February 2007
Fledging advisory-firm aggregator has had an astonishing first year of life. Focus Financial Partners, a New York-based holding company for fee-only advisories, has acquired three more affiliates. That gives it a network of nine firms operating in 41 states and an emerging reputation as an aggressive and smart new force in the wealth-management industry -- all in the year or so since it opened its doors.
"We're really creating a new standard of wealth management by building a leading national firm that follows a strict fiduciary model," says Focus' founder and CEO Ruediger Adolf, a former general manager of American Express' brokerage and banking division and a former McKinsey partner.
Game plan
The holding company's latest acquisitions are St. Louis, Mo.-based Buckingham Family of Financial Services, Wakefield, Mass.-based Sentinel Benefits Group and Corte Madera, Calif.-based Quantum Capital Management.
Focus takes 40% to 60% stakes in high-growth firms with time-tested, high-touch fiduciary approaches to wealth management. From a day-to-day business perspective, Focus' partner firms remain wholly autonomous and their management teams stay put. Focus offers -- but doesn't foist -- support around referrals, marketing, intra-firm networking, technology and human resources (including help finding and grooming next-generation leadership for partner firms). Acquisition payments are a combination of cash and equity in the parent company, with additional earn-out incentives.
Candidates for acquisition by Focus are typically market-leading firms run by veteran advisors who want to maximize "the benefits of autonomy while benefiting from the resources, scale and best practices of a large national firm," according to Berkshire Capital, a New York based investment bank that specializes in wealth- and asset-management deals.
But to come in for consideration firms have to meet Focus' criteria in terms of business model, service standards and culture. And that's before they come in for what Adolf calls "rigorous due diligence to confirm that ."
The addition of Buckingham with its established turnkey investment program points to another hallmark of Focus acquisitions: it likes to buy firms that add to the holding company's overall capabilities. Though all of its partner firms are rooted in high-net-worth advisory, some have additional specialties. Geller Group, for instance, is a 401(k) consultant to small businesses. Founders Financial Network has the look and feel of a multifamily office. Capital Advisory Group advises private clients in addition to small and mid-size institutions. Strategic Point, whose principals host a radio show on personal finances, is a high-end financial planner.
"Clearly all highly differentiated service model," says Adolf, summing up Focus' first year in business. "We will have arrived when Focus is seen to represent the ultimate quality in wealth management." -FWR
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