News, Vision & Voice for the Advisory Community


First Republic pays a staggering sum for Luminous Capital, sources say, and shifts the breakaway and M&A games in the bargain

Recruiters are getting renewed interest from big wirehouse teams and the $125 million deal shows that breakaway brokers can realize big enterprise value in short order

Author Brooke Southall November 8, 2012 at 4:53 AM
no description available
Mark Sear says that referring clients to outside lenders was not working well for his firm.

Ken Aguilar

Ken Aguilar

November 8, 2012 — 5:39 AM

A good example of what a joke it is to tax massive income at such low rates.

15% is just a ridiculously low rate on people that are über wealthy.

Elmer Rich III

Elmer Rich III

November 8, 2012 — 7:10 PM

I would argue they may have been underpaid and perhaps misled by a big check. Present value calculations are often done poorly or not at all.

Stephen Winks

Stephen Winks

November 8, 2012 — 9:11 PM

Powerful manifestation of the value of fiduciary standing not possible in a brokerage format. Yet, to actually execute expert fiduciary counsel and make it scalable and easy to manage as a high margin business at the advisor level—extraordinary skill is inherent in the Luminous model which is not easily replicated—confirming broker reticence expressed by Mindy Diamond’s clients.

As it becomes easier for brokers to legitimately achieve fiduciary standing through the democratization of the necessary enabling resources, how could brokers justify staying at a high cost low value added brokerage firm where they are not accountable or responsible for their recommendations, counter to their client’s best interest.

Without the necessary enabling resources, brokers are jumping from the frying pan into the fire. With the necessary support—Luminous will be repeated time and again. Many of the alternatives out there today for brokers are simply an extrapolation of the brokerage business model. What is different here is Luminous has adopted an advisory business model, delivers and extraordinary level of counsel at an attractive margin not possible in a brokerage format. The multiple is more than justified as an operating advisory services business, while brokers are selling advice products entailing far less skill and far lower margins.


John Flynn

John Flynn

November 13, 2012 — 11:54 PM

Why is it a joke that they are paying the capital gains rate and not the ordinary income rate. They invested long term in the company and through hard work, made the company grow. That is the definition of capital gains.

Just because it is a big number, doesn’t mean that the rate should be higher. This is nothing but pure jealousy.

Stephen Winks

Stephen Winks

November 14, 2012 — 3:09 PM


You are missing four important points: (1) A brokerage format is inadequate for advisory services as the broker is neither accountable nor has any ongoing responsibilities for their recommendations essential for advisory services and fiduciary standing, (2) Rather than selling advisory products that minimize the role, skill and responsibility of the broker, Luminous is actually engaging the authenticated prudent processes, advance technology, work flow management and conflict management necessary to actually act in a fiduciary capacity. This is valued at four times earnings, twice what a broker, who can not act in a fiduciary capacity, commands. Luminous is not using disclosure to excuplate themselves from their fiduciary responsibilities Luminous is actually expertly fulfilling their fiducuiary duties. (3) There is nominal transferable value achieved in selling brokerage advice products for those that have ambitions of selling their practices, for two reasons (a) the relationship is with the broker limiting transferability of value to a subsequent practice buyer, and (b) the range of counsel is limited to that incorporated in the advice product, very little flexibility to deal with investors and their holdings as they are. There are a lot of IARs that have been indoctinated to believe they are advisors and have fiduciary standing when that is not the case. If arbitration proceedings were to be made public—the truth would be known. (4) The tax play is a nice angle to be valued.

No joke.


Related Moves

Shirl Penney hands over 'front end of the house' to Andrew Marsh as Dynasty reboots -- post-$100-million raise, post-IPO withdrawal and post-Schwab partnering

The Dynasty CEO is handing over sales, custody relations, breakaways and M&A sales to the un-retired Canadian -- and wildly promoting from within.

September 21, 2023 at 1:53 AM

Executive shake-up and staff hiring binge change Dynasty Financial Partners' talent mix, with Todd Thomson, Scott Welch, Ed Friedman and 12 women as headliners

The St. Petersburg-based producer of 'synthetic RIA scale' will continue to aggressively hire and adjust its talent ranks as it readies for next growth push.

September 24, 2019 at 2:02 AM

After 13 years in the Shirl shadow, Ed Swenson gets a mandate to grow a $20-billion corporate RIA as old AIG IBD unit, Advisor Group, reorganizes and seeks new brand identity

The Dynasty veteran is key man in Jamie Price effort to take Advsior Group and finally streamline and up-RIA it for a new era.

June 6, 2023 at 1:46 AM

Biz Briefs: Vanguard's tax-loss harvest yields a caveat• Vermont green with envy ... of red states? • CFP Board spends $12 million on bungee metaphor • BlackRock isn't neutral on Credit Suisse • Women are the Goliath of 'David' in UK finance

Tax-loss harvest gains may have some home assembly required, says Jeff DeMaso • Adrian Johnstone is now in the driving seat at Practifi • CFP Board spending just topped $150 million • and Vermont shares some Texas thinking on ESG investing.

March 25, 2023 at 1:32 AM

See more related moves

Mentioned in this article:

Diamond Consultants
Top Executive: Mindy Diamond

DeVoe & Company
Consulting Firm
Top Executive: David DeVoe

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo