|By Jerry Gleeson|
The emergence of a new national RIA with
It’s not a merger, since no one exchanged payment for the other’s assets, but it’s not a marriage of equals either. Savant
Savant and Monitor became acquainted through their membership in the
While Savant has a stronger brand, Monitor has expertise in tax and estate planning.
“Granted, given enough time and money we could have each developed those things ourselves, but it becomes a pretty big burden to do that,” Muldowney, 59, said.
“We didn’t have to change a cotton-picking thing if we just wanted to cruise,” Kautt, 64, said.
Muldowney and Kautt, who will be vice chair at the new firm, are interested in bringing on other RIAs in the future “as opportunities present themselves,” Muldowney said.
The two executives said their business model provides advisors with the opportunity to retire in a less complicated fashion than is afforded under other models, such as aggregation, in which a larger firm buys a smaller firm or takes an equity stake in it. Those deals often tie advisors to the business longer than they want to stay, Muldowney said.
“We don’t want to find ourselves being pulled together by aggregators,” he said. “The aggregator always supplies capital, but after they supply capital, they have daunting demands on the company that may not necessarily meet the best needs of the clients or the employees or the other equity owners.”
RIA mergers and acquisitions picked up speed in the first quarter, according to Schwab Advisor Services, with 17 deals reported with total AUM of
Advisors to the new
“The size is great, but I wouldn’t say it’s unprecedented in size. It’s certainly significant,” said Philip Palaveev, president of Fusion Advisor Network in
The concern that some RIAs have with joining aggregators is real, Palaveev said, since the buyers have their own ideas about how to run the businesses they acquire.
“If you’re going to buy something but not change it, how would that create value for your shareholders?” he said.
Savant-Monitor is “another indication of the growing sophistication of RIAs in mergers and acquisitions,” said merger consultant
Advisors who want to work with a larger firm in order to solve practice continuity issues may find that a combined practice model will fit their needs, he said.
“Scale does matter in valuations. You start to move into an area where you command higher multiples of value,” DeVoe said.
But if advisors are considering a combination practice as a means of exiting their own when retirement time rolls around, they need to plan carefully, he said. The same advice that advisors give their clients about investing—“You want to think strategically and not try to time the market”—also applies to the sale of their own practices, DeVoe said.
“It’s not necessarily a silver bullet,” he said. “You need to be thinking two steps ahead.”
Advisors at Savant and Monitor are discussing the combination with their clients to persuade them to join the new firm, an undertaking that should take about two months, Kautt said. He expects nearly all will come aboard.
“We don’t see a lot of people running for the hills,” he said.
Both sides share similar tech systems, with portfolio management and financial planning systems “essentially identical,” Kautt said.
In addition to Muldowney and Kautt, Savant CEO and principal
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|Source:||Penton Business Media|