Focus Financial Partners, a New York wealth-management roll-up, continued its spectacular growth by adding two more firms to its collection.
Last week, the firm announced its acquisition of HoyleCohen of San Diego, and Resnick Investment Advisors of Westport, Conn., bringing the total number of Focus firms to six. The new additions increase the firm’s assets under management to $4.5 billion, after debuting earlier this year with start-up capital of just $35 million. Focus now ranks among the top 10 independent wealth-management firms in the nation, according to Bloomberg.
The firm’s model, similar to National Financial Partners, links firms together by providing them with a variety of services, including marketing and public-relations services, support for business development and acquisition, recruiting and technology investments. The firms operate autonomously, while Focus owns generally anywhere from 40 percent to 60 percent of the firm.
Focus founder and CEO Rudy Adolf says the ideal acquisition will have at least $350 million in assets. Unlike NFP, whose focus has been on firms with a heavy hand in insurance, all potential partners of Focus must be fee-based and operate under the RIA model. But like NFP, Adolf is offering a financial entrepreneur an exit strategy he thinks many of them need.
“The average RIA is 55 years old and looking for a place to transition his business when retiring,” says Adolf. “If you’re 55 and you look around and don’t see your successor—you’re in trouble.”
The usual choices are selling to employees or a bank, but Adolf says they may not work for many RIAs. “When you sell to a bank, you’re selling to someone you tried not to be for so many years,” he says. With the second option, the price is usually too expensive for employees to pay at once, so the amount is usually deferred over a number of years, Adolf adds.
Joseph Cohen, founding partner of HoyleCohen, says, “For four years [my partner and I] were asking ourselves, ‘Where do we go to get to the next level?’ We eventually knew we had to move forward because we are not getting any younger, and we needed to develop a team of people to provide continuity to our clients.”
Marty Resnick, 60, partner and managing member of Resnick Investment Advisors, says he has found the optimum fit for his business: “With Focus, you are affiliated with an entity, not so much to run your business but to create a network of people where we’ll have more interaction with the partners than Focus itself.”
Adolf has no plans to slow his appetite for acquisition. The goal, he says, is to make 30 to 50 new deals in the next three to five years. Says Adolf: “We want Focus Financial Partners to be a national player.”