Banyan Partners is thinking big.
The $4.3 billion Palm Beach Gardens, Fla.-based RIA wants to hit $10 billion in assets in the next three years, establish a national brand and secure significant wallet share in both the high-net-worth and multifamily office markets.
I disagree that an RIA cant have an effective national presence, says Banyan founder and chief executive Peter Raimondi. Were talking about brand recognition within the narrow space of high-net-worth and ultrahigh-net-worth clients.
Raimondi says Banyans dedicated in-house marketing division can support the firms business development and brands very effectively. The firm is spending its "significant" marketing budget -- Raimondi won't disclose the amount -- not on advertising, but on client events, centers of influence and working with custodians to identify prospects, he says.
LOOKING FOR ACQUISITIONS
Banyan is targeting clients with between $2 million and $10 million in investable assets and families with $25 million or more for its multifamily office division, which is building out from Banyan's acquisition of Boston-based Silver bridge Advisors earlier this year. Growth will be driven mostly by acquisitions and fold-ins of breakaway teams, Raimondi says: You cant build from scratch.
One key to growth, Raimondi hopes, will be Scott DellOrfano, the well-connected former head of sales for Fidelity who signed on as Banyans chief strategic officer last year. Target markets include Washington, D.C. and the surrounding mid-Atlantic region, Florida, Boston, southern California and the San Francisco Bay Area.
Banyan is offering firms cash, equity or a combination of the two. Key executives are always offered equity, Raimondi says.
Raimondi launched Banyan in 2006, after selling his stake in The Colony Group, a Boston-based advisory firm -- now part of Focus Financial -- that he founded around 20 years ago. His first acquisition was a $250 million New York money manager, Oaktree Asset Management; since then, Banyan has gone on to absorb six more firms, including Silver Bridge as well as Dallas-based Rushmore Investment Advisors and Holt-Smith Advisors in Madison, Wis., this summer.
Banyan currently has 27 shareholders, including Canadian private investment firm Temperance Partners, which owns more than 25% of the firm.
OPTIONS FOCUS
Long fascinated with trading options -- he wrote a thesis on the options market while in law school -- Raimondi touts his market expertise as a differentiator for Banyan, helping to make it unlike any RIA in the country. Options and open architecture are among the cornerstones of the firms investment philosophy, he says, adding that Banyans value proposition starts with being able to execute on a vision and client experience that stems from one centralized investment thesis.
He defends the strategy against the options market's risky reputation. Options trading doesnt have to be risky," Raimondi says. "Its often used defensively ... and can be used an overlay that generates income and as a downside mitigation tool.
In fact, he says, most of Banyans clients dont come to us for outperformance but are more interested in preservation of capital and diversification, along with a dash of creativity.
WARNING SIGNS
Industry observers give Banyan high marks for an impressive start, but warn that growth by acquisition can be perilous.
Every new acquisition adds new complexity, new personalities and inefficiencies, and creates more leadership challenges, says industry consultant Michael Kostoff, a partner at Rockville, Md.-based WISE Gateway. And I dont know how much they are paying for their acquisitions -- so I dont know whether they are paying too much.
Multifamily office veteran Brian Hughes, principal of Hughes Growth Strategies -- a consulting firm specializing in business development strategies in the ultrahigh-net-worth space -- recalls having been part of two major acquisitions with two very different firms over my career. You can plan on many things going wrong, especially the length of time to integrate. If you think it will take 24 months, think more like 36 or even longer.
"Rarely, if at all, do two firms come together quickly," he concludes -- "even if on paper they look like a good cultural fit.
Some firms have thrived with an acquisition strategy, Hughes notes -- citing Aspiriant, which recently acquired Deloittes wealth management practice across the U.S. But the strategy has not panned out as well for rivals like GenSpring, which went on a buying binge but has lost assets and key executives, he adds.
That leaves a key question, he says: Will Banyan follow in the footsteps of GenSpring, now seemingly in decline, or Aspiriant, which appears to be on the rise?
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