Mentioned In This Article
Regional wealth management firms are accelerating their efforts to expand nationally next year. 
Leawood, Kansas-based Mariner Wealth Advisors exemplified the trend among well-capitalized RIAs, bringing on 20-year Fidelity veteran Brian O’Regan last month to lead its ambitious national growth strategy. Other regional RIA powerhouses including Aspiriant, Presidio Financial Partners, U.S. Capital Advisors and Tiedemann Wealth Management all have plans to add offices in new markets next year.
Traditional RIAs will also face direct competition from a not-so-new kid on the block next year. In January, Charles Schwab & Co. will launch its own RIA, Schwab Private Client Investment Advisory, for high-net-worth-clients with at least $500,000 in investable assets.
Schwab is downplaying the move. A Schwab spokesperson says the firm is merely transferring Schwab Private Client’s existing non-discretionary financial advice service to a new affiliated investment adviser as of January 1 “to comply with a new Department of Labor exemptive rule concerning investment advice to retirement accounts.”
But some industry observers believe that explanation is disingenuous, pointing out that Schwab’s private client division is not limited to retirement advice and the DOL regs have not even gone through yet. Schwab Private Client “is a retail offering that provides advice and guidance to retail investors on both cash accounts as well as retirement accounts. So, their explanation is really not a valid one,” said consultant Tim Welsh, president of Nexus Strategy in Larkspur, Calif. “I would call this ‘window dressing’ to distract advisors from the real issue that Schwab is continuing to build and evolve their advice offerings.”
Indeed, Schwab Private Client will be a nationally-branded RIA that is well-resourced and well-known,” Welsh said. “That’s never existed before.”
The Holy Grail
Meanwhile, regional RIAs are scrambling to stake out a national presence of their own. Assuming Schwab doesn’t beat them to the punch, becoming a national RIA remains the Holy Grail for regional firms, according to Welsh. “If you can scale assets and have multiple distribution points, you can turbo-charge profits,” he said.
Mariner, which bought CBIZ Wealth Management in January, now has eight offices in Kansas, California, New York, Pennsylvania, and Maryland, Colorado and Missouri and approximately $2 billion in assets under management.
The firm would like to double that amount in three years and reach $20 billion in assets by 2016,
said O’Regan, Mariner’s senior vice president of growth and development. Mariner is currently looking at opening offices in Chicago, Omaha, Tulsa, north Texas and Phoenix, and O’Regan said he is “actively engaged” in talking with more than two dozen advisors around the country.
“Geography is definitely secondary,” said O’Regan, who was formerly senior vice president for sales and relationship management for Fidelity’s investment advisor business in the south central region. “We’re looking a cultural match first, with advisors who lead with planning, and have a fiduciary obligation for their clients.”
Founded five years ago by former A.G. Edwards executive in Marty Bicknell, who also owns money management firm Montage Investments, which has approximately $8 million in assets, Mariner is closely-held and self-capitalized, O’Regan said. Advisors are either recruited to join as employees or firms are acquired outright, he added.
New offices will have the Mariner name, but O’Regan doesn’t anticipate a national marketing campaign. “Good marketing is what the advisor does for the client, not necessarily the name or the logo on the door,” he said. “This is still a very fragmented business and what really matters takes place at a very granular level with the client.”
California Firms Look Eastward
Two California wealth management firms Aspiriant and Presidio are both eyeing eastward expansion next year. Presidio, which has an office in Dallas in addition to Los Angeles and San Francisco and manages close to $4 billion, hopes to open a Chicago office in the spring and is also looking at opportunities in New York, according to managing director and chief executive Brodie Cobb. The firm is also considering firms around the country with between $300 million and $1.5 billion in assets as acquisition targets, Cobb said.
Since acquiring Deloitte Investment Advisors last October, Aspiriant has new offices in Boston, New York, Cincinnati, Detroit, Milwaukee and Minneapolis, nearly 800 clients and $7.5 billion in assets under management.
The firm has structured its ownership on an exchange of stock between the firm and its partners, with value designed to grow through performance, but without a public offering as an exit strategy, according to chief executive said Rob Francais. Preliminary negotiations have begun to find the firm’s next major “partner,” Francais said, a process he expects to be completed in 12 to 18 months.
New York-based Tiedemann and Houston-based U.S. Capital also plan to flex their growth muscles in 2012. Tiedemann, which has nearly $5 billion under management and offices in New York, Palm Beach, Florida, Delaware and Santa Monica, is looking at San Francisco, Chicago, Texas and Nashville as fertile territory for new offices, preferably through organic growth rather than acquisitions, said senior managing director Michael Tiedemann.
U.S. Capital, which opened its doors in Houston just 15 months ago, already has about $2.2 billion in assets and hopes to open new offices in Chicago, Austin and San Antonio, in addition to expanding its current offices in Houston and Dallas, said Patrick Mendenhall, the firms’ founder and chief executive. “Based on demand, we’re accelerating our business plan,” Mendenhall said.
