Focus Financial Partners, a network of independent wealth management firms, announced last week that two affiliate firms, The Colony Group and XML Financial Group, are set to acquire an RIA and a wealth management practice, respectively, in the third quarter of 2021. Focus also announced that Sonora Investment Management, an RIA, will join as a partner firm at the same time.
David DeVoe, founder and CEO of DeVoe and Company, says Focus is demonstrating the power of having its affiliated firms buy other groups.
“Their affiliates are capitalizing on Focus’ M&A acumen and capital to themselves grow through acquisition. This sub-acquisition trend is likely to accelerate as we project a surge of small sellers over the next year,” DeVoe says.
The Colony Group plans to acquire New Providence Asset Management, an RIA based in New York City, in the third quarter of 2021.
“New Providence's capabilities will further enhance Colony's institutional investment team,” Focus says in the statement. “Colony will provide New Providence's institutional clients with additional services and support, and its ultra-high net worth clients with a full suite of family office and wealth management services.”
The Colony Group has $12.8 billion regulatory assets under management, according to its
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A top priority of the firm since 2018, advisors will financially be able to paperlessly open new accounts in June.
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The Dallas-based hybrid RIA has more than 100 reps, and, if they follow the chief’s exit, it would be the the No. 1 IBD’s largest loss since 2019.
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The private equity-backed wealth and 401(k) manager drew away an ex-Hightower team as part of its surging growth in the past year.
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New Providence managed about $2.8 billion in assets, according to its
The New Providence acquisition marks Focus’ second Outsourced Chief Investment Officer (OCIO) transaction of 2021, the firm said. OCIOs offer all the functions of an internal investment office “together with investing capabilities, to college endowments, foundations,” and more, a Focus spokesperson said.
In an email to Financial Planning, Andrew Vogelstein, president of institutional advisor services at The Colony Group, says that he has seen OCIO go from an unknown acronym to vernacular.
“What we’ve seen since has been a proliferation of OCIO firms, cultures and solutions resulting in a highly fragmented and competitive industry. So, when Focus approached us at the beginning of 2020, we listened,” he says.
For Colony, the merger expands its ability to serve ultra high net worth clients and institutions, Rudy Adolf, founder, CEO and chair of Focus, says in a statement.
”[W]e continue to increase our presence in this market, and it also expands our footprint in the ultra-high net worth sector,” says Adolf.
Focus has announced 15 merger and acquisition transactions so far this year: Six are partner firms and nine are mergers on behalf of partner firms.
Focus is conducting mergers at record levels, CFO Jim Shanahan said last week in a separate
"Our M&A pipeline is at record levels and we believe that this pace of activity will increase further in the second half of 2021,” Shanahan said. “We expect to deploy capital this year significantly in excess of our historical levels as we accelerate the expansion of our partnership globally.”
Separately, Focus announced that partner firm XML Financial Group is set to acquire Collins Investment Group (CIG) in the third quarter of this year. Collins has more than $1 billion assets under management as of April 2021, according to the Maryland-based target firm’s
Robert Collins founded Collins Investment Group in 2008 and has been named to several best-of lists of advisors in the years since, according to a statement from the firm.
“This transaction will enable the CIG team to leverage XML's operational resources to support CIG's continued growth,” Focus says in a separate statement. “CIG will also gain access to XML's expanded services and investment capabilities to enhance their clients' experiences.”
XML Financial Group, based in Maryland, manages $1.2 billion in client assets and custodies with Fidelity, according to its most recent
One of the reasons Collins joined XML was because it uses First Clearing as one of its custodians, advisor Brett Bernstein, CEO and co-founder of XML Financial Group, says in an email to Financial Planning.
“As a result of the highly collaborative approach between FiNet and First Clearing, Collins’ clients will be able to make a more seamless transition than the traditional ACAT while keeping their assets custodied within the Wells Fargo Network,” he says. “This is something we all felt was key in allowing our two firms to come together and in providing continuity to our clients, which we view as critical to delivering outstanding service to them through this transition.”
The acquisition of Collins will “deepen” its presence in the Washington, D.C. market and further position the firm for growth in the Mid-Atlantic region, Focus says in its statement.
The transaction reinforces Focus' “scale, network, and highly differentiated M&A expertise to our partners,” Adolf says in the statement. “The business expansion our partner firms achieve via mergers is a powerful catalyst to the overall growth of our partnership."
In another deal, Arizona-based Sonora Investment Management is set to join the Focus partnership in the third quarter of 2021.
Sonora specializes in customized portfolio construction, proprietary fundamental research and security selection, with expertise in active fixed income and equity management, according to a statement from Focus.
"We chose Focus because they truly understand the importance of maintaining our entrepreneurial independence," says Brad Toland, co-founder and partner at Sonora. "We also deeply value their [merger and acquisition] expertise and long track record of helping their partner firms enhance their organic growth. We are excited to embark on this next chapter of our evolution in partnership with Focus."
