Page 36 - Investment Advisor December 2022/January 2023

COVER STORY

he new affiliation option for independent financial business from hiring employee No. 1 to … all of those now with
Tadvisors that Raymond James announced in May was the firm today,” said Advisor Group President and CEO Jamie
under consideration for a while before its launch, especially Price, in an interview.
after the firm saw a similar option work for rivals including “The firm has been staunchly independent, and [Dolber] was
Commonwealth, according to Scott Curtis, president of the not looking for an exit … ,” Price explained. “But he was looking to
Private Client Group at Raymond James. partner [with another entity] in order to expand both the growth
The company’s new corporate registered investment advisor and the advisor capabilities of American Portfolios, so it could bet-
model for investment advisor representa- ter serve clients. … We’re honored to be able to partner with them.”
tives, or IARs, who run fee-only prac- Dolber, who started the firm 21 years ago, said in a statement:
tices was launched with three offices “As we look to the future, we recognize that building scale for
in 2021, but “we wanted to make the advisors and practices we support will be essential to long-
sure, if there were any bugs, that we term sustainability. … The opportunity to work with a partner
got the bugs worked out before we that understands our culture and success … makes good busi-
announced it more broadly,” he said ness sense, and we found that with Advisor Group and the
during a media briefing. backing of [its owner] Reverence Capital Partners.”
Competitors had already started The integration of American Portfolios into Advisor Group
offering an option like this; Curtis point- should be relatively easy given that both firms are privately
ed to Commonwealth as an example of a firm held, Price says. In contrast, Advisor Group’s $1.3 billion pur-
that’s had “great success with it.” This was “something we talked chase of the publicly traded Ladenburg Thalmann, announced
about for a while” before launching it, he explained. There were in 2019 and completed in 2020, had “many nuances.”
a small number of advisors who had already expressed interest
in it and they “raised their hand” and basically said, “if you need
a pilot or you need a test case, we’re happy to do it.”
The new program presents another option for “advisors who
are interested in becoming fee only, but perhaps not taking on
the responsibility of managing their own RIA” and dealing with
compliance policies and procedures, hiring a chief compliance
officer and managing cybersecurity, Curtis explained, noting
that “we do all of those things on their behalf.” Some seven months after UBS Group AG agreed to buy robo advi-
sor Wealthfront for $1.4 billion, the two firms said in September
they have “mutually agreed to terminate their merger agree-
Advisor Group said in June that it is acquiring American ment,” according to a statement. UBS, however, planned to buy
Portfolios Financial Services, an independent broker-dealer a $69.7 million note that is convertible into Wealthfront shares.
with some 850 financial professionals working with $40 bil- “UBS remains committed to its growth plans in the U.S. and
lion in client assets, for an undisclosed sum. The news came will continue the build-out of its digital wealth management
about a month after Advisor Group announced plans to buy offering,” it explained in a press release. When the deal was
Infinex Financial, which includes a BD with about 750 finan- announced on Jan. 26, Wealthfront had some $27 billion in
cial professionals who oversee $30 billion in client assets and assets under management and over 470,000 clients in the U.S.
some 230 community-based bank and credit union programs. In his analysis earlier this year, Nexus Strategist President and
Headquartered in Holbrook, New York, American Portfolios CEO Tim Welsh concluded that the average level of assets per cli-
is led by Lon Dolber, who plans to remain the firm’s chairman, ent account was about $57,000. “Wealthfront’s pricing schedule of
CEO and president, and to join Advisor Group as vice chair- 25 basis points (the first $10,000 being ‘free’) means that UBS is pay-
man. While American Portfolios will become a member of ing $3,000 for just $117 of annual recurring revenue (ARR), which is
Advisor Group’s network, it will continue to do business using problematic when looked at on an ROI basis,” he explained.
its own brand and operating model. The news about the canceled Wealthfront deal comes four
“It’s highly unusual to find an entrepreneur who has built a years after UBS shut down SmartWealth, a digital wealth man-

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