National Financial Partners, the independent financial services company headed by Jessica Bibliowicz, is known on the Street for its roll-up model, acquiring the best independent financial advisory firms it can to achieve an economy of scale. What does Fusion Advisor Network, recently acquired by NFP, have to do with this roll-up model? Fusion may have been a “feeder group” of potential buyout partners with NFP, said Jonathan Henschen, a recruiter with Henschen & Associates.
“These guys were kind of seed corn for future clients for the buyout partnership,” Henschen said.
According to Henschen, NFP buyout partnership program involves buying $1 million producing reps with around $100 million in assets, primarily fee-based. The reps get 125 percent of trailing revenue up front, a 50 percent payout ongoing, and a capital infusion from NFP to run their business.
Fusion, meanwhile, would take $300,000 producers and help them grow to the $1 million range, Henschen said. When they got to this level, it made sense to do a buyout partnership with NFP. And the possibility of a future buyout partnership with NFP provided Fusion with a good sales pitch and recruiting tool for new reps.
The move was a smart one for Fusion, Henschen said, because the firm had pretty thin margins. Founder Stuart Silverman also had to deal with higher overhead, as he added industry veterans Philip Palaveev and Abby Salameh.
“They’ll have probably 100 percent retention of the reps they have, and the overhead will be covered by NFP now,” Henschen said. “They can afford it versus a producer group.”