Marty Bicknell adds an investment bank to his $10-billion RIA and $26-billion asset manager

Brooke’s Note: Yes, it seems to go against the natural order. Financial advisors are in the midst of an historic run of divorcing themselves from the investment banking industry. In a sense, that nuptial split is the very definition of the breakaway of a wirehouse advisor. Now Marty Bicknell and his Mariner Holdings are going in the opposite direction. But nobody ever said that having investment banking expertise and wealth management smarts under the same brand was a bad idea. The pairing of these financial services only foments conflicts when the investment bank’s interests supersede those of the financial advisors who 'distribute’ on their behalf. This purchase of a deal maker by Marty Bicknell to bolster his asset manager and RIA, with their combined $36 billion of assets, does not have any obvious conflicts. This appears to be more than an interesting experiment at a time when succession gets lots of press on the RIA side but high-net-worth and UHNW clients have even bigger succession issues on their hands.

Mariner Holdings has acquired an investment bank so that its clients with businesses worth tens of millions or hundreds of millions can get advice from the same company that manages their liquid holdings.

The Leawood, Kan.-based parent company of Mariner Wealth Advisors, which manages $10.4 billion, and Montage Investments, which manages $26.7 billion, has acquired Allied Business Group LLC, a 15-person Kansas City, Mo.-based company that handles investment banking, i.e. deal-related services, mezzanine-level company owners and their advisors. See: Mariner Wealth Advisors buys a $1.3 billion wealth manager that first unwound its ties to a bank.

Controlling the product

The ownership of an M&A shop by an RIA is fairly rare. A wealth management firm needs a critical mass of owners of large businesses to even consider it. Even then, most RIA owners subscribe to the theory that investment banking should be outsourced.

But although outsourcing looks good on the whiteboard to Marty Bicknell, chief executive of Mariner Holdings, it is less appealing in reality.

Elizabeth Ostrander: Not every advisor needs
to go out and acquire an
investment banking firm.

“To me it’s the same argument as why I own a tax practice, trust company or insurance agency,” he says. “The thing I manage is reputational risk. I want a solution where I have confidence in the outcome of client-based advice and not riddled with a lot of fees.” See: A giant San Francisco RIA/investment bank is poaching a Northern Trust talent to create a Chicago duchy.

Conflict under one roof?

Bicknell, whose family had a big liquidity event when it sold a large chain of pizza restaurants, says he already helps oversee three to five business sales annually on behalf of clients, ranging from $10 million up into the hundreds of millions. See: The explosive growth to $20 billion AUM of Marty Bicknell’s second roll-up-like venture, Montage Investments, and where his $8 billion wealth manager fits in.

But doesn’t Mariner now become conflicted by having deal making and wealth management under the same roof?

Not at all according to Bicknell, who says his investment bank helps clients sell practices, not do IPOs or create products that then get a boost in distribution from advisors who get leaned on or are given special incentives.

Clients with businesses

Actually, Mariner’s purchase of Allied is a progressive move that fits with the direction in which many wealth managers are headed, particularly considering the nature of baby boomer wealth that extends well beyond liquid securities like stocks and bonds, according to Elizabeth Ostrander, director at Intelligent Edge, a New York City-based firm that helps counsel RIAs on advising clients on investment banking deals. See: Five reasons for RIAs to think more like Goldman Sachs about businesses owned by clients.

“We have observed more and more RIAs evolving from pure investment advisors to 'holistic’ wealth managers over the past several years, but in order to really live up to that title — to offer truly comprehensive wealth management — it is necessary to incorporate all of a client’s assets liquid and illiquid into the financial planning process,” she says. See: Marty Bicknell adds an investment bank to his $10-billion RIA and $26-billion asset manager.

Tim Skarda: Most importantly, it will
allow both Mariner and Allied to
better serve our clients.

Ostrander adds: “That may seem somewhat obvious, but it does require advisors to step outside of their comfort zone in order to begin a dialogue with clients about assets that traditionally have not fallen within the realm of their responsibility — and they must, of course, obtain access to the investment banking/capital markets resources their clients with businesses will need throughout the lifecycle of their companies.”

Pricey proposition

For now, Allied will stay in its own office space just down the street from Mariner and continue to do deals and provide valuation services for non-Mariner clients. Allied has, to date, not done a deal for a Mariner client.

“This relationship will provide opportunities for growth for both of our organizations,” says Tim Skarda, Allied’s founder. “Most importantly, it will allow both Mariner and Allied to better serve our clients by combining our extensive expertise in developing solutions specifically to meet client needs.”

Bicknell expects that Allied will refer clients to Mariner in the post-liquidity stage.

An RIA that wants to outsource deal advice on big private assets can do so effectively, Ostrander says.

“Not every advisor needs to go out and acquire an investment banking firm,” she adds. “It’s usually far too expensive, even for a large institution, to 'build’ or 'buy’ an investment.”