With Dynasty backing, new RIA pitches M&A with 'true ownership'

A registered investment advisory firm with former United Capital and Goldman Sachs financial advisors launched their own M&A arm with the help of Dynasty Financial Partners.

Chevy Chase, Maryland-based TritonPoint Partners, an affiliate under common ownership with an RIA that has $1.8 billion in assets under management, TritonPoint Wealth, opened last month with strategic assistance from Dynasty Investment Bank and a minority investment by Dynasty, according to the firms' announcement and a regulatory filing by the new RIA. The existing one launched in 2023 after Goldman agreed to sell the remnants of United Capital in Goldman Sachs Personal Financial Management to Creative Planning at a steep discount.

In that move to launch an independent RIA with Dynasty's services roughly a year and a half ago as Goldman and Creative completed the deal amid advisor exits and subsequent legal wrangling, the team's "eyes were opened to what true ownership could really be," said Harold Hughes, a veteran of more than three decades in the industry who is the CEO of TritonPoint Partners. "Like most people who have been burned by something, you get motivated to build something better."

READ MORE: Dynasty brings over $6.4B RIA from Raymond James

Dynasty's competitive position

Alongside Hughes and the non-controlling minority stake held by Dynasty, the ownership of the new RIA consists of TritonPoint Wealth Chief Growth Officer Greg Blake, CEO Andrew Schiff, Chief Operating Officer Deatra Vailes and Chief Investment Officer Will Sterling. The setup displays a degree of flexibility combined with financing from Dynasty, which has reached 57 RIAs with 500 advisors managing more than $105 billion in assets under administration as it competes with a wide array of competitors across all channels of wealth management. With Dynasty dropping its earlier plans to go public in 2022 through deals selling its own minority stakes to private equity firm Abry Partners and Charles Schwab, the firm's backing of TritonPoint signals the growing complexity and competition in recruiting fights for independent advisors.

More independent advisory teams these days see the appeal of joining a larger enterprise offering to take charge of operational, client service, compliance and technology needs in exchange for a mix of cash and equity in the buyer, according to Mike Byrnes of Byrnes Consulting, a firm that aids advisors in their growth efforts. 

Many "realize they're going to have to do something different" if they can't depend on the "tailwind of the market going up year after year," Byrnes said.

"If they can make the case study that equity grows much faster than the individual advisor will grow, it's an easier sell," he said, citing research showing that advisors are spread thin amid client demand for more types of services than their past focus solely on investment portfolios. "They're now doing way more than they used to do 20 years ago," Byrnes added. "They have all kinds of things under wealth management that they didn't do before, and, also if they're independent, they have every responsibility of a CEO."

READ MORE: Dynasty makes its case to RIAs with a look under the hood

TritonPoint's big aspirations

Those types of advisory teams are inquiring about TritonPoint's new RIA. It has been speaking with at least 15 recruiting prospect teams, with one already in the process of folding into the new RIA, which has an aspirational target of getting to $200 million in revenue per year someday, according to Hughes. The company will bid on potential incoming firms with cash for 20% of the recruits' ownership — or as little as about 10% or as much as roughly 30%. TritonPoint's new RIA will pay the rest of the purchase price in its equity. 

Notably, the firm's offers will omit common so-called antidilution provisions that ensure the original owners retain a certain level of equity in the new RIA, but they'll include additional ownership incentives tied to advisors' increases in business, Hughes noted. The arrangement "eliminates the opaque revenue pooling, distributions and 'partnership' equity, providing clear, quantified ownership," to the incoming teams, in the words of the company's announcement. 

"As we grow in this industry, as our multiple goes up, as we acquire more practices, that accrues much more wealth to everyone in Triton Point Partners," Hughes said, citing the estate planning, CIO services, alternative investments and relationship management of its sister firm TritonPoint Wealth while using an acronym for its name. "We are this startup firm that has all of the advantages of the Dynasty platform plus TPW," he added.

Besides those aspects of the ownership structure and compensation, TritonPoint pledged to work with multiple custodians such as Raymond James, Charles Schwab and Fidelity Investments, as well as others on a case-by-case basis. Advisors who wish to maintain brokerage business could also do so through another outside firm, Hughes noted. The incoming teams will adopt the TritonPoint Partners brand or possibly use their own spin on it, as in advisory practices that use their own names with "of TritonPoint Partners." 

With some exceptions available to teams that want to keep their 1099 independent contractor status, TritonPoint will use the same direct W-2 employment structure as other RIA aggregators.

READ MORE: Independence? It depends

A new structure in the mix?

Sometimes there is "a bit of a misconception about independence" with a fixation on 1099 status as the main determining factor as to whether an advisor is truly independent, even though that is "just a tax structure," Hughes said. TritonPoint Partners' founders "approached this from the standpoint that we are owners" with "all the trends" in mind about advisors leaving wirehouses, opening RIAs, folding into aggregators or embarking on other setups, he noted.

"You also have these fits and starts over time," Hughes said. "Perhaps we can design something, a business model that is actually going to make good on the promise of true independence and business ownership. And that's why we did it."