Category

Current Events

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June 4, 2018

Summer Reading for the RIA Community

Focus Financial’s IPO Filings

Money, being what it is, never sleeps.  It also never goes on vacation.  I was, however, about to spend ten days away from the office with my older daughter in Scotland and England when Focus Financial (finally) filed for a public offering.  One of the most anticipated events in the wealth management industry, the pendency of the Focus IPO didn’t cancel my trip, but I knew that my vacation was going to be at least punctuated by reading the S-1 along with my peers’ commentaries.  I’ve now read the 275-page document a few times, and while it’s not your typical beach novel, the Focus prospectus is required summer reading for anyone in the RIA community.

May 29, 2018

Out with the Old and In with the New

Advice Rule Likely Successor to Recently Vacated Fiduciary Rule

Recent judicial decisions have all but nullified the DOL’s proposed regulation, and the SEC’s Advice Rule appears poised to be the likely successor.  This post explores the recent turns in this ongoing saga and what it might mean for your firm.

May 21, 2018

1Q18 Call Reports

As we do every quarter, we take a look at some of the earnings commentary of pacesetters in asset management to gain further insight into the challenges and opportunities developing in the industry. This quarter the conversations center around market volatility, regulatory developments, and the potential cash flow into fixed income products.

May 4, 2018

What We’re Reading about the SEC Advice Rule, Fiduciary Rule, and Broker Protocol

Most of the sector’s recent press has focused on the SEC’s proposed advice rule. We’ve highlighted some of the more salient pieces on the proposed rule, as well as articles on a few other topics that have been making news in the industry.

March 26, 2018

The Impact of the 2017 Tax Cuts & Jobs Act on the Investment Management Industry

This whitepaper is a compilation of thoughts we have gathered in the early days of this new tax regime. We present what we think are the major issues that RIA partners should consider.

March 18, 2018 Transactions

Two Perspectives on RIA Transactions in the Wake of the Tax Bill

There is an argument to be made that the 2017 Tax Cut and Jobs Act is bullish for RIA M&A, but there is also a counter-argument. In this week’s post, we address both.

March 9, 2018

Your RIA May Qualify for the QBI Deduction, But Don’t Get Your Hopes Up

The Tax Cuts and Jobs Act (TCJA) introduces the Qualified Business Income (QBI) deduction as a partial offset to the bill’s reduction in the relative tax efficiency of pass through entities (S corporations, limited liability companies, and partnerships) versus C corporations.  Still, many RIAs will not be eligible for the deduction, and those that do will have a lot to keep in mind as it pertains to reasonable compensation levels and investment income.  We’ll try to sort it all out for you in this week’s post.

March 2, 2018 Industry Trends

What We’re Reading about the Tax Bill

Most of the sector’s recent press has focused on the tax bill’s impact on RIAs, so in addition to our own writings on the matter, we’ve highlighted some of the more salient pieces we’ve come across regarding the tax bill as it relates to the asset management sector.

February 23, 2018 Practice Management

The Tax Bill Rendered Your Shareholder Agreement Obsolete

The Tax Cuts and Jobs Act has really shaken up the underlying economics of investment management firms and, with that, the value of those firms. As a consequence, many owners of RIAs have inaccurate ideas of what their firms are worth, and, worse than that, they have outmoded shareholder agreements suggesting the willingness to transact at inaccurate valuations.

February 16, 2018

Q4 Call Reports

Triadic Effects of the New Tax Law

The Tax Cuts and Jobs Act has been especially beneficial to the RIA sector, as lower corporate tax rates has had a positive impact on equity markets, boosting AUM and earnings, which are now taxed at lower rates.  Many firms are still assessing the full impact of tax reform, but what is clear is that lower corporate tax rates in 2018 will give asset mangers increased flexibility in capital management, M&A activity, and technology investment.  As we do every quarter, we take a look at some of the earnings commentary of pacesetters in asset management to gain further insight into the challenges and opportunities developing in the industry.

February 12, 2018 Practice Management

What RIA Owners Need to Know About the New Tax Law

For this week’s post, we’re offering the slides and recording from our recent webinar on the tax bill’s impact on the investment management community.  On balance, we believe most RIAs are better off as a consequence of the legislation, but there are nuances to the “win.”

February 2, 2018

S Corp RIAs Disadvantaged by the Tax Bill

New but Unimproved

We covered much of what we think the new tax bill will mean to RIA valuations in last week’s blogpost – and it’s mostly good news.  The “rest of the story” involves the bill’s impact on shareholder returns for RIAs structured as tax pass-thru entities (S corporations, LLCs, Partnerships), for which the news is not so buoyant.

January 29, 2018 Practice Management

Are RIAs Worth More Under the New Tax Bill?

Absolutely (Well…Probably)

The tax bill is bullish for the RIA community. Focused on the implications of the tax bill for investment management firm valuations, there’s much to consider as discussed in this week’s post.

December 4, 2017

What We’re Reading About Broker Protocol

Most of the sector’s recent press has focused on broker protocol, so we’ve highlighted some of the more salient pieces as a preface to our take on the matter in next week’s post.

November 20, 2017

3Q17 Call Reports

As we do every quarter, we take a look at some of the earnings commentary of pacesetters in asset management to gain further insight into the challenges and opportunities developing in the industry.

July 31, 2017

2Q17 Call Reports

The More Things Change, the More They Stay the Same

As we do every quarter, we take a look at some of the earnings commentary on pacemakers in asset management to gain further insight into the challenges and opportunities developing in the industry.

May 22, 2017

1Q Call Reports

As we do every quarter, we take a look at some of the earnings commentary of pacemakers in asset management to gain further insight into the challenges and opportunities developing in the industry.

May 15, 2017 Transactions

Focus Financial’s Quest for an Unfair Advantage

A Long Journey to an Uncertain Destination

As part of the analyst community that closely follows developments in the investment management industry, we were disappointed (but not surprised) that Focus Financial Partners pulled their S-1, again, and found a private equity recap partner instead of going public. Picking up on last week’s blog theme, Focus likes to tout their strategy of building an international network of efficiently connected wealth management firms as an “unfair advantage”, but it appears that their real capability is finding capital when necessary to avoid a public offering. Stone Point Capital and KKR bought 70% of the company, enabling prior private equity partners, affiliates who had sold their firms to Focus in exchange for stock, and employees with equity compensation to monetize their positions while Focus remains private.

April 10, 2017

Will the Fiduciary Rule Ever Become Law?

RIA Central Investment Forum Follow-up

Last week, Matt Crow and I presented at RIA Institute’s 3rd Annual RIA Central Investment Forum, and this question was asked to the crowd of 70+ industry participants in attendance. Only about half the audience raised a hand. This comes after another delay last week, further extending the rule, now set to go into effect June 9th. Even most of those at the conference who thought it would eventually become law thought this deadline was too ambitious. So why the delay?

March 6, 2017

Looking through the Buffett Brouhaha

The Oracle Still Believes in Human Innovation

Since I gave up politics for Lent this year, I’ve had more time to keep up with the deeper recesses of the financial press, which led me to Warren Buffett’s annual letter to the shareholders of Berkshire Hathaway. Buffett’s prose is a literary genre unto itself; a remarkably plain-spoken approach to making even the most complex and dull aspects of investment management simple and entertaining. If all “management letters” were penned as well, shareholders might actually read them. Perhaps that’s why they aren’t.

February 27, 2017

Q4 Call Reports

As we do every quarter, we take a look at some of the earnings commentary of pacemakers in asset management to gain further insight into the challenges and opportunities developing in the industry.

January 30, 2017 Asset Management Margins and Compensation

ESG Investing Comes of Age Despite (or Maybe Because of) Trump

Investment strategies that screen for environmental, social, and governance criteria (ESG) is a still developing product niche that has, until recently, been more about talk than action. The pitch is that investing in businesses that demonstrate broad-based corporate responsibility provides a pathway to management teams who think long term, mitigate risk, and lead their industries. The beauty of an investment product like ESG is client stickiness.

November 21, 2016 Transactions

U.K. Based Henderson Group Acquires Janus Capital for $2.6 Billion

Coming to America

Though probably not as historic as Plymouth landing or even the Eddie Murphy comedy, Henderson’s purchase of Denver RIA Janus Capital last month is a rare sign of confidence in active managers that have been losing ground to passive investors for quite some time. The era of ETFs and indexing has dominated asset flows for quite some time, so this transaction seems to counter the recent trend.

November 14, 2016

What Donald Trump’s Presidency Means to the Investment Management Industry

The purpose of this blog is to consider the implications of the election for the investment management industry, which is no easy feat. The Trump campaign was generally heavy on rhetoric and light on policy details. The investment management industry rarely came up, other than when Trump suggested that he would advocate taxing carried interest returns as ordinary income. He never mentioned, for example, the DOL’s Fiduciary Rule, which is set to phase in three months after the inauguration. The clearest indication of what a Trump presidency means to financial services, so far, appears to be its impact on the banking industry.