A giant wealth manager seeking to tap into the opportunities in a rapidly consolidating channel of the industry secured a deal to make its largest acquisition in more than two years.
Advisor Group will purchase Infinex Financial Holdings, the parent company of a growing but still midsize wealth manager spanning roughly 750 financial advisors managing $30 billion in client assets out of 230 community bank and credit union-based investment programs, the firms
The larger flux in wealth management, however, has sent bank and credit union-based firms into the fold of the major players
Advisor Group has experience in the channel, having picked up Securities America’s business with bank and credit union wealth programs when
“This is an area where we wanted to build more scale,” he said, describing the Infinex deal as an effort to grow “more aggressively” through banks and credit union programs. “We're not actively looking to disrupt relationships that already are in other firms at Advisor Group. This is intended to be as little disruption as possible across Advisor Group.”
That includes the incoming Infinex registered representatives, whose clients will receive notification messages but won’t need to go through the so-called repapering process by switching from Infinex’s existing custodian, Pershing, or leaving its brokerage. As a result of the “minimal amount of disruption” and additional capabilities coming under Advisor Group, the firm won’t offer retention bonuses to Infinex advisors remaining through the transition, Cornick said.
“We are keeping it intact as Infinex,” he said. “What that means is the branding will stay the same at close. The firm will not have any sort of meaningful employee loss. The systems will still be intact.”
Meriden, Connecticut-based Infinex launched in 1993 with a handful of small banks in only that state, according to CEO Stephen Amarante. With a compound annual growth rate in gross dealer concessions of about 10% and client assets increasing by 17% in the last two years, Infinex is now one of the largest independent wealth managers serving banks and credit unions.
“We're going to be able to take the original concept of Infinex and take it to another level of scale and power with the Advisor Group team behind us,” Amarante said. “We've done that without ever having capital infused into the company.”
The private equity infusion in the wake of the deal will usher in a new era for the firm, although large transitions in recruiting and M&A deals often see at least a few advisors or enterprises exiting the ranks when competitors inevitably pitch themselves as a better home. For the long term, bank and credit union wealth programs get the technology, compliance services and operational resources of their new parent or third-party brokerage.
Outsourcing tasks like that to LPL will enable CUNA Brokerage to bulk up its training and development programs and boost its outreach to potential future advisors among groups such as military veterans, former teachers and students from Historically Black Colleges and Universities, according to CUNA Brokerage President Rob Comfort. Credit unions are “dramatically under-advisored” based on the amount of members who would benefit from wealth management services, Comfort said in an interview earlier this year.
“What we want to do is attract really talented people who have been shut out of our industry,” Comfort said. “We think this is really where the industry has to go if it's truly going to solve for this advisor shortage.”
