LPL Financial has lost an elite team managing over $600 million in client assets to RIA aggregator Focus Financial Partners.
Advisers Brett Bernstein and Robert Kantor, founders of Rockville, Maryland-based XML Financial Group, partnered with Focus to launch their own independent firm after 12 years with the nation’s largest independent broker-dealer.
Ranked by LPL as one of its largest firms by production, XML is the seventh RIA to join Focus this year. The 10-year-old aggregator now boasts 42 partner firms in total and almost $400 million in revenue, according to the latest company report.
"We outgrew LPL." - Brett Bernstein, co-founder, XML Financial Group.
In August, Financial Planning and The Wall Street Journal reported that Focus confidentially filed for a long-awaited IPO with the Securities and Exchange Commission, one that could value the firm for as much as $1 billion. If finalized, it will be the first RIA aggregator to go public.
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Focus partner firms managed $31 billion and advised on another $10 billion, according to their recent ADV filings -- considerably less than the $70 billion in "total client assets" the firm had previously publicized.
January 26
The potential to participate in Focus’ trailblazing IPO had “none whatsoever” to do with XML’s decision to join, says Bernstein. Instead, he and Kantor were enticed by the aggregator’s M&A expertise and abundant capital, which will help “turbo boost” their growth.
“When Rob and I decided to form the partnership we knew there was only one clear path for us and that was Focus. LPL is a great firm, but what they don’t do is what Focus does do. We outgrew them.”
Focus does have a compelling track record of helping their partner firms expand by financing their sub-acquisitions. The St. Louis-based Buckingham Asset Management, which joined the platform in 2007, bought three firms in 2016 alone that added nearly $700 million to its AUM base.
XML is planning to do the same along the East Coast, with a particular focus on the greater Washington and Baltimore regions. Their clientele is primarily made up of high-net-worth individuals, families, non-profit organizations and community 401(k) plans.
We expect this momentum to continue and potentially accelerate over the next five to seven years, says investment banker David DeVoe.
“Brett and Rob have always served their clients’ best interest while also challenging themselves to break new ground in business development,” commented Justin Ferri, managing director of Focus, on the new partnership.
Bernstein and Kantor both started their financial services careers at Merrill Lynch in the 1990s, FINRA BrokerCheck records show. They met later on while serving as advisers under Merill Lynch Pierce Fenner & Smith. The pair left the wirehouse in 2004 to form XML Financial with LPL.
In addition to the two managing partners, XML has 15 team members and two offices – one in Rockville and another in Vienna, Virginia.
LPL did not respond to requests for comment.
