$7.5B RIA Launches Mass-Market Planning Service

After LPL jumped out, Mariner Wealth Advisors is jumping in.

Weeks after LPL Financial pulled the plug on its still-new mass market offering NestWise, Mariner is launching FirstPoint Financial, with no investment minimums for clients.

One of the largest independent wealth advisory firms nationwide, with $7.5 billion in assets under management, Mariner Wealth expects FirstPoint to compete with firms such as Betterment, Edelman Financial, LearnVest, Merrill Lynch’s Merrill Edge and other mass-market offerings.

Nestwise “was out for [just over] 12 months and they closed their shop,” says Brian Leitner, FirstPoint’s senior vice president of practice management. “The question is why did they do that?”

PRIVATE OWNERS

Leitner speculated that LPL, a public company, may not have had the patience to wait for NestWise to turn a profit, given that it answers to shareholders. According to LPL spokeswoman Betsy Weinberger the unit had not met growth expectations.

Mariner, on the hand, is better positioned to succeed in this space because, as a private company, it doesn’t contend with these pressures, he said.

“We have a vision as a management team of what we want this to be,” Leitner says.

“There’s an unbelievable opportunity in the marketplace today. The mass-affluent market is completely underserved. If I’m an individual with less than $1 million, most registered investment advisory firms won’t speak with me. The opportunity to deal with a fiduciary is almost non-existent.”

To serve this investor class, Leitner says, Mariner is assembling a team of advisors, each of whom will build relationships with individual clients.

Unlike Merrill Edge, clients will not dial into a call center where strangers pick up the phone, he says. Unlike some competitors, FirstPoint will not focus solely on investment allocation, but will advise clients on holistic planning needs, he added. It will refer them out to a national network of CPAs and lawyers and will advise on insurance issues, Leitner says.

Its clients will buy insurance products through Mariner’s own insurance division, or through any other providers of their choice, according to Leitner.

Clients will communicate with their FirstPoint advisors through phone calls and Webex meetings, he said.

$100 MILLION GOAL

FirstPoint anticipates its first clients will have investable assets in the $400,000 range, Leitner adds. He anticipates the venture will ramp up to $100 million in assets under management, but did not specify over what time frame.

To critics who charge that such a mass-market offering will not be profitable, Leitner says, “While everyone wants to have a profitable firm, what I will tell you is that our firm looks at this underserved market as if we have a responsibility [to serve it] to some degree. It’s part of our culture, frankly.”

While some smaller firms have put together their own mass-market offerings, Leitner says he doubts any will have the ability to compete with Mariner’s services thanks to its size.

GAP MODEL

Mariner’s scale as one of the fastest-growing RIAs in the country will help it offer different levels of service to different sizes of customers, he added, likening the strategy to Gap Inc.’s three main stores: Gap for mid-tier customers, Banana Republic for the high-end and Old Navy for bargain hunters.

FirstPoint will rely on some of Mariner’s experts on the high-net-worth side, including Mariner Wealth Advisor’s Chief Investment Officer Bill Greiner.

“I am personally leveraging Bill and his 25-person team,” Leitner says, “so clients are now getting some of the resources that the ultra-high-net-worth has been accustomed to.”

Although FirstPoint will sell some products, the bulk of the work will be fee-based, with clients paying between 1% and 1.25% of AUM, he said. However, there will be some flexibility in the pricing model.

“If someone comes with more money and not a complex situation, it’s less expensive,” he said, “but someone with $100,000, but a complex situation, it’s more. So it’s not black and white.”

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