Deals & People July 24, 2023

Advisory M&A

Sequoia Financial adds $387M wealth manager; Pathstone adds Veritable to further focus on ultra-high-net-worth clients; and Savant Wealth buys combined accounting firm and wealth manager.

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Sequoia Financial to add Cirrus Wealth Management

Sequoia Financial Group LLC has entered into an agreement to acquire Cirrus Wealth Management, a registered wealth management firm. The firms did not disclose financial terms for the deal expected to close on July 31.

Akron, Ohio-based Sequoia Financial will bring on Cirrus Wealth and its $387 million in assets under management comprised of individual, families and small businesses. Cleveland-based Cirrus was founded in 2015 by Joe Heider and has 12 employees, including advisory and support teams, according to an announcement.

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Heider’s son, Ryan, will join Sequoia as vice president and wealth adviser and will continue to support Cirrus clients and take on additional responsibilities.

“As part of our growth plans, we want to provide a way for firms like Cirrus to secure their legacies and help pass the torch from one generation to the next,” Tom Haught, founder and CEO of Sequoia, said in a statement. “We look forward to making Cirrus part of the Sequoia family and assisting Joe in executing the firm’s succession plan.”

Sequioa has more than 200 employees and more than $16 billion in AUM.

Pathstone to Acquire Veritable LP

Pathstone, a registered investment advisory focused on ultra-high-net-worth investors, will add Veritable LLP to its Englewood, New Jersey-based advisory, adding more than $17 billion in assets across 200 clients.

Pathstone is acquiring Veritable from its management partners and Affiliated Managers Group Inc., which partners with independent investment management firms. Upon completion of the deal, Pathstone’s assets under advisement and administration will exceed $100 billion, according to an announcement.

“Veritable changed everything in the UHNW advisory business—they have a rich history of creating what today we call a multi-family office, and they understand what it means to deliver differentiating advice to UHNW families,” Matthew Fleissig, co-founder and CEO of Pathstone, said in a statement.

Veritable was founded in 1986 by Michael Stolper, who will become co-chairman of Pathstone, which has 87 employees based in Newtown Square, Pennsylvania.

Savant Wealth Buys Tax Consultancy and Wealth Manager

Registered investment adviser Savant Wealth Management has acquired Dover, Delaware-based tax and accounting advisory Raymond F. Book & Associates PA and its affiliated fee-only RIA, Wealth Management Group LLC.

The acquisition builds Savant Wealth’s combined tax and accounting team to nearly 100 tax and accounting professionals. The deal, which closed July 19, also brought on Wealth Management Group’s $376.3 million in AUM.

Of the 26 employees joining Savant, seven will become member-owners, bringing Savant’s total number of employee owners to 136 and overall employees to 464, according to the announcement. Savant, headquartered in Rockford, Illinois, expects to make additional acquisitions this year.

“Unlike many acquirers in our arena, Savant is unique because we are interested in partnering with more than just the wealth side of the business,” said Brent Brodeski, CEO of Savant Wealth Management. “Our partnership with these two sister firms further solidifies Savant’s commitment to being the leading integrated wealth management, tax and accounting firm. This is the third combo RIA/CPA firm we have acquired and the fourth accounting firm.”

Data & Research July 24, 2023

Schwab: Financial Advisers Using Behavioral Finance Gain More in New Assets

Advisers also turned to personalized options such as direct indexing to stand out for clients. 

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Registered investment advisers who leverage behavioral finance tactics when working with clients saw more new assets from existing clients in 2022 than those who did not incorporate the method, according to Charles Schwab Corp.’s 2023 RIA Benchmarking Study.

In data drawn from 1,300 adviser firms, the financial services company found that advisers implementing behavioral finance—the psychological factors that go into investment decisions—saw 3.3 times more new assets from existing clients. About half of the firms surveyed responded that they use behavioral finance in their practice and implement it with more than half of their client base.

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“Behavioral finance can help advisors deliver more impactful client experiences by increasing client satisfaction,” the Schwab report stated.

Schwab Asset Management offers advisers use of behavioral finance techniques through a program called Biagnostics, Greg Laurence, head of RIA distribution, said via email. The program, developed by Schwab Asset Management CEO and CIO Omar Aguilar, has been available for five years. 

“Client communications and portfolio construction are two of the key avenues for advisers to implement behavioral finance into their practices,” Laurence said. “Proactively reaching out to clients when markets become volatile to remind them of their long-term goals is an example of incorporating behavioral finance into client communications.”

Amid the market volatility of 2022, financial advisers also turned to personalizing investment options for clients, according to Schwab. RIAs looked to differentiate themselves by offering options such as direct indexing, in which indexes are designed for the investor with customized options; value-based investing; and the use of separately managed accounts.

“As more investors choose RIAs, firms can manage growth by using scalable processes to create capacity for personalization strategies,” Lisa Salvi, managing director of business consulting and education for Charles Schwab Advisor Services, said in a statement. “Personalization allows advisors to differentiate their offerings—in how they interact with clients, the services they provide, and their investment approach. Deepening the relationship in this way will help create enduring enterprises and lasting success.”

Advisers saw either a decline or flat rate of growth for assets under management due to 2022’s market volatility, according to Schwab. But year-over-year organic growth was stronger, coming in at a 6.2% increase for firms with less than $250 million AUM, 4.1% for firms with more than $250 million in AUM and 10.8% for those that rank in the top 20% of Schwab’s analysis of firm performance.

“Organic growth was a bright spot in 2022 as firms’ value propositions continued to attract investors,” the report stated.

The annual benchmarking report also found that RIAs are leaning on digital tools and workflows to maximize client services. The top-performing firms reported 20% less time per client spent on operations and administration (13 hours) and 10% more time per client spent on client service (31 hours), as compared with the rest of the respondent pool.

That need for technology unavailable to smaller, independent advisories could be part of the continued drive for RIA mergers that provide scale and access to resources. According to Schwab’s study, half of all firms are looking to acquire another RIA.

Meanwhile, recruiting talent in a tight labor market continues to be a key focus for RIAs, ranking as the No. 2 strategic priority behind acquiring new clients through referrals. Of firms that responded, 77% reported hiring in 2022, and 75% plan to hire in 2023. Meanwhile, this year’s data included the highest percent (37%) of firms recruiting from colleges and universities since Schwab began the study.

“Firms continue to prioritize attracting new talent as well as developing their existing teams to ensure they deliver the services and experiences through the lens of their ideal client,” Salvi said.

Correction: Headline corrected to note advisers using behavioral finance tactics gain more new assets than peers who do not.

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