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The arrangement holds the possibility of a symbiotic advisor-vendor relationship between the wealth management platform and the big aggregator
October 18, 2011 — 2:15 PM UTC by Brooke Southall
Dynasty Financial Partners has netted the high-profile account of Lori Van Dusen’s firm, LVW Advisors – and sown the seeds for a possible symbiosis with Focus Financial Partners.
Dynasty Financial Partners, a wealth management platform launched 10 months ago by a team of former Smith Barney executives including its former CEO, Todd Thomson, announced that LVW, which manages about $4.9 billion of assets, will use its services to screen managers and potentially to use a wider swath of its services.
Focus Financial Partners, LLC, the big New York aggregator, announced that LVW of Rochester, N.Y. joined the fold after being part of Convergent Wealth Advisors of Washington D.C.
Van Dusen was recently ranked third on this year’s America’s Top 100 Women Financial Advisors Barron’s. She was also named the Nonprofit Consultant of the Year in 2010 by Institutional Investor’s Foundation & Endowment Money Management.
“Our partnership with Dynasty provides us with remarkable institutional research tools and investment implementation options for our clients, as well as estate planning, lending, and various other capabilities for our client families,” Van Dusen says in a release.
Dry run for Dynasty
There is some speculation regarding whether Van Dusen’s tandem choice of Dynasty and Focus Financial could be a blueprint for future breakaways who seek the scale and autonomy of Focus along with the close-wiring with vendors promised by Dynasty.
Rudy Adolf, chief executive of Focus, says his company is viewing the Van Dusen account as a dry run of sorts for Dynasty.
“We use many vendors and we’re giving Dynasty a test to see if they prove themselves. If not there are other vendors,” he says.
It seems likely that Dynasty Financial and Focus Financial should form a natural kinship, according to Timothy Welsh, president of Nexus Strategy LLC. See: What exactly is Dynasty Financial Partners and why is the Smith Barney execs’ startup gaining so much attention?.
“Focus is more of [an aggregator] and Dynasty is more of a platform so I’d think they’d absolutely complement each other. The whole game is partnership; why would you want to replicate what someone else does well. The reality: you guys should work together.”
Focus Financial has acquired major stakes now in 24 advisory firms that oversee and manage more than $45 billion in total. Focus has overlap in its mission with Dynasty’s — providing logistical support and operational expertise to RIAs.
Twenty years in the making
Van Dusen and her 10-member team began operating independently on Oct. 10. The team originally came together as part Citigroup’s Smith Barney in the late 1990s. “We helped build her company from the ground up,” Adolf says.
Van Dusen said in an interview with Reuters that she’s been waiting for the right moment to turn fully independent.
“It’s been a business model that’s been in my head for 20 years. The industry just wasn’t there before. I couldn’t have put together the pieces the way I did,” she says.
Dynasty also reported last week that it had won an interesting RIA that includes a small, young hedge fund that is simultaneously acquiring a Boston-based advisor team from Morgan Stanley Smith Barney and RAM Financial Group, an existing RIA in Austin, Texas. The combined grouping is taking the name of the Chicago-based entity, Risk Paradigm Group LLC, that owns the hedge fund.
The MSSB team is led by David Gatti who was part of the family office business of Citi. He is now CEO of Risk Paradigm Group.
None of the parties to the transaction would disclose the level of assets that they manage, though Chris Jensen, COO of RPg says that they expect to have about $500 million of AUM by this time next year. Jensen adds that no cash was used to acquire Gatti’s practice or RAM and that he expects to make several other lift-outs that could turn RPg into a multi-billion company in a few years. The firm also is expanding its asset management product offering with a new fund, ICP Endowment Stability Fund, which will complement the firm’s flagship Diversified Risk Parity Fund (NASDAQ: DRPIX).
Shirl Penney, CEO of Dynasty, says that RPg will give him a chance to show off all his company’s capabilities.
“I think the deal is a good example of a company using all our core services for setting up their practice including: logo, building a website, selecting a custodian, PR strategy, technology for wealth management and trading and providing financing for getting the business up and running,” says Shirl Penney, CEO of Dynasty.
Gatti was part of Citi Family Office before the group became part of MSSB’s purchase of Smith Barney and only about 200 of the wirehouse’s 12,500 brokers were part of that subset. He crossed paths with the principals of Dynasty during his time there.
Mentioned in this article:
Dynasty Financial Partners
Consulting Firm, Specialized Breakaway Service, RIA Set-up Firm
Top Executive: Shirl Penney
Focus Financial Partners, LLC
Top Executive: Rudy Adolf
Top Executive: Timothy D. Welsh
Envestnet | Tamarac
Portfolio Management System, CRM Software, Trading/Rebalancing, Performance Reporting
Top Executive: Stuart DePina
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