As more wealth management arms of banks and credit unions partner with outside brokerages and RIAs, a $5 billion enterprise is seeking greater scale by folding into a larger firm.
Fieldpoint Private, a Greenwich, Connecticut-based bank with about 25 financial advisors who manage $5.1 billion in wealth management client assets, sold its wealth management business to Summit Financial Holdings and its minority owner, private financial services operating company Merchant Investment Management. The parties announced the deal of an undisclosed amount on Jan. 10 but didn’t clarify the exact close date. Fieldpoint's transition to Summit will occur during the first half of the year.
The wealth management programs of banks and credit unions have emerged as some of the biggest recruiting targets and prizes over the past several years. LPL Financial has all but locked up the largest recruiting move of any independent wealth manager in 2022, with CUNA Brokerage set to bring $36 billion in client assets
Banks and credit unions are often choosing to affiliate with large wealth managers rather than maintaining their own existing brokerages and RIAs in an effort to outsource administrative and compliance duties while tapping into the firms’ resources for growth, according to experts.
“We see wealth management firms continuing to trade up and cash out, as the costs of doing business escalates, and the scale to have competitive technology and sufficient compliance infrastructure grows beyond the grasp of many banks, insurance company broker-dealers, and RIAs,” Kenneth Kehrer, a partner with Kehrer Bielan Research & Consulting, said in an email. “The lure is that a firm can access the larger firm’s platform, and receive the fees to fund the transition and perhaps monetize some of the value of the firm, while continuing to run the part of the business that is more rewarding — providing financial advice to clients.”
The wave of large moves and deals are also coming as a result of succession planning with an aging force of advisors, the massive growth and development of advisory services over the past decade at RIAs and the ability to pair that business with a bank or credit union, according to FinLit Tech founder Mac Gardner, who has worked in the channel during his 20-year career.
“That's really changing a lot for the industry and for potential synergies,” Gardner said. “If you're a bank and if you're an RIA and you have revenue models that are pretty easy to forecast and streamline, now you're looking at a lot of synergies.”
Upon completion of Fieldpoint’s move, Summit will expand to more than $12 billion in assets across a half dozen companies including a planning company, an asset manager, a technology firm, an advisor services arm and an insurer. Since Merchant’s non-controlling, minority investment in Parsippany, New Jersey-based Summit in 2019, the firm’s client assets have tripled in size. An external broker-dealer, Purshe Kaplan Sterling Investments, services Summit’s brokerage business through a referral arrangement with the firm’s limited purpose brokerage, LS Securities,
The ability to offer Summit’s existing high net worth clients personalized private banking services through the incoming firm while leveraging its own wealth management expertise and services for Fieldpoint’s investment program attracted the two sides to the deal, CEO Stan Gregor said in an interview.
“It's challenging to find a great offering on both sides. If you want to be great at something, then stay in that lane,” Gregor said. “You bring those two worlds together. Both organizations specialize in their wheelhouse on both sides.”
Fieldpoint Private operates its wealth management business through a brokerage and RIA called Fieldpoint Private Securities, which launched as a BD called Nutmeg Securities in 1986. Following the deal, Fieldpoint “will be fully absorbed into Summit and will use all of the current pipes/platform components that Summit operates on, both for the fee-based and transactional sides of the business,” Summit and Merchant spokesman Mark Grandstaff said in an email. That means it will use PKS as one of its BDs, though brokerage services make up less than 5% of Fieldpoint’s revenue, according to Grandstaff.
“After the close, Fieldpoint will no longer lead a securities business but will serve as a boutique, independent private personal and commercial banking resources for the independent advisor community,” Fieldpoint spokesman Michael White said in an email.
Fieldpoint’s bank, which received
The deal with Summit will more than double Fieldpoint’s potential base of clients, according to statements from Tim Tully, Fieldpoint’s executive chairman, and Chris DeLaura, who has led its wealth management business since 2016 and is keeping the same role after the merger.
“Independence has been in our genes since our founding, and this alliance is the next logical step in bringing our bank, our capabilities and our belief system to a great many more advisors, families and businesses,” Tully said in a statement.
