Industry Spotlight RIAs

Jefferson National Completes Management Buyout

January 17, 2012 at 08:55 AM
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Jefferson National Financial, Louisville, Ky., has a new ownership structure after the completion of a management buyout led by Financial Partners Fund, a unit of Citi Capital Advisors; the Stephens Group, and Eric Schwartz, a private investor.

Helming Jefferson National's executive management team in the buyout deal was CEO Mitchell H. Caplan (left). "Jefferson National will deploy the new capital from this transaction to move forward aggressively and drive greater growth of our successful RIA and fee-based advisor distribution strategy," said Caplan in a statement announcing the deal. The former CEO of E*Trade Financial, Caplan joined Jefferson National in 2010.

Jefferson National focuses on products and services for RIAs and fee-based advisors and their clients. It has a national network of more than 1,500 RIAs and fee-based advisors. In 2005, the company launched Monument Advisor, which it touts as the first flat insurance fee variable annuity with a selection of more than 350 funds. Since its launch, the product has amassed more than $1 billion in sales.

"Through this transaction we've been able to join forces with a group of like-minded investors who recognize the tremendous growth potential of the RIA and fee-based advisor distribution channel," said Caplan in an email statement to LifeHealthPro.com. "With this infusion of new capital, we can ramp up our growth and accomplish several important goals: We can continue to build on our track record of success, which hit record levels in 2011, we can develop deeper relationships with our existing network of 1,500 RIAs and fee-based advisors, we can expand our reach to a broader base of even more advisors, and we can introduce the innovative products and services that our advisors have been telling us they need to navigate the volatile economic environment."

According to a company statement, the $83-million deal will support the company's growth initiatives, including targeting high net-worth investors as well increasing its product offerings to RIAs and fee-based advisors. Cerulli Associates estimates an increasing number of advisors will move away from commission-based revenue models, projecting that more than 44 percent of all advisors will work within independent channels by 2015.

"The transaction continues our firm's strategy of investing in financial services companies with a fast growing and unique position in an expanding market," said Robert Covington, managing director at the Stephens Group, in a statement. "With its focus on RIAs, fee-based advisors and high net-worth investors, Jefferson National is capitalizing on some of the industry's most influential trends."

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