Parsippany, N.J.–based Summit Financial has partnered with Merchant Investment Management, which owns a minority stake in the company, to bring a new custom capital model to its advisors through the launch of Summit Growth Partners. So far, 12 advisors have already joined the partnership.
Advisors who meet Summit’s qualifications and join the partnership will have access to all the services the firm offers to help an advisor run their business at a discounted pricing model, so an advisor would have a higher payout and lower expenses than those outside of the partnership. The advisor would also get upfront cash monetization as well as an equity stake in Summit Growth Partners. Merchant provides the funding.
Meanwhile, Summit would take a minority stake in that advisor’s business. If they so choose, partners also have access to credit in the future, whether it’s to expand their practice or possibly acquire a retiring advisor’s practice.
“Summit Growth Partners is a very custom capital solution for advisors, and that capital could be used to grow their existing practices; it could be used to acquire other practices,” said Stan Gregor, CEO of Summit. “You get monetization from a cash perspective upfront, you also get equity in Summit Growth Partners, and then on the back-end, you have a chance, if you need more liquidity, we can provide additional liquidity and additional capital for you for your growth piece.”
Summit CEO Stan Gregor
“This is a smart marketing move,” said Carolyn Armitage, managing director at Echelon Partners. “They’re packaging the sell-side opportunity to make it easier on advisors. This is a terrific example of how buyers are needing to advance in order to compete and win deals.”
Summit Financial has built a turnkey platform for independent advisors, providing a range of services via five entities under the Summit umbrella. The firm’s RIA currently has over $5 billion in assets and 50 teams primarily on the East Coast. Advisors who join the partnership must come under Summit’s ADV, although they remain independent contractors.
In addition to getting the services of the RIA, advisors also have access to Summit’s financial planning company, with attorneys on staff who can do trusts, estates, legacy planning, business succession planning, tax planning, etc. The firm’s investment management arm will do everything needed to manage money for advisors’ clients, including research, analysis, stress testing, portfolio generation, rebalancing and trading. Summit also has an insurance general agency via MassMutual, so it offers full-service insurance support.
The firm provides a technology stack through SummitVantage, an advisor dashboard that’s fully integrated with single sign-on functionality and electronic signature capabilities, powered by Salesforce, eMoney Advisor and Addepar.
Advisors also have access to Summit’s human resources company, which takes all of their HR needs, from insurance and health benefits to staffing and 401(k) services.
“If you’re on your own today, you know as an owner of an RIA how expensive it is to have a financial planning arm, insurance arm, risk management arm, HR and technology,” Gregor said. “If you can basically have all of the economics going to you as an RIA owner and still have all those services and get monetized and have equity in this new entity, that’s the difference. Nobody else is doing it.”
