Sanctuary CEO Envisions Tripling AUM In Five Years

It was roughly a year ago when the board of Sanctuary Wealth, an aggregator of breakaway hybrid RIAs, abruptly fired its founder and CEO, Jim Dickson, who was under allegations of misconduct. In his place, the board appointed Adam Malamed, a 30-year industry veteran and Sanctuary board member who worked at Ladenburg Thalmann from 2006 to 2020 and played a key role in shepherding the firm into a sale to Osaic for “a touch under $1.5 billion.”

You were brought in as the result of some management drama, so perhaps part of your mandate was to re-establish good cultural practices at Sanctuary, as well as move the company forward. How has that been going?

There was no drama. No management drama. I would say Sanctuary has always led with its amazing culture. Sanctuary has attracted and built on some of the most elite advisors in the industry, and part of that has to do with the great cultural aspects of the organization. In 2022, Kennedy Lewis put $175 million of growth capital into Sanctuary. I was put in touch with the co-founder, and they asked me to go on the board. For me, being on the board was so influential as I was able to learn about the executive and senior leadership teams. I also got to learn about the incredible platform at Sanctuary that enabled it to be one of the leaders in the space for the previous five years. And then I was asked if I would take the role as the CEO. There was a lot of check-the-box items for me with that opportunity. I had been offered a lot of roles over the three years that I was off, and none of them felt right to me until this one. Although it has significant scale with 85 partner firms and almost $30 billion of assets, Sanctuary was still bite-sized enough for me to come in and put more rigor around the strategy, institutionalize the platform to continue its expansion and bring the firm through its next phase of growth. That's something I felt confident in.

What are some of the things that you've done at Sanctuary to advance the company? 

It's my one-year anniversary in this role. In the first three months I met in person every advisor, every partner firm, every employee, and every strategic partner that the firm had. I mean, I was on the road constantly. And for me, that was just very important because I was doing this in-person survey with our client base, our employee base, and our partner base, to learn more about the company. One thing I also thought Sanctuary needed to do was to have more rigor around its vision and its strategy as a team. After my road tour, we started to survey our partner firms, our advisors and employees. And then we went through a strategic planning process as a senior leadership team. We did something called an environmental scan, where we studied our environment and we looked at the influences, both externally and internally, that could impact our strategy. We did an analysis of where we're really strong and where we needed to make investments, where there's opportunities to improve. And then we put forth a five-year vision that in five years from now, organically alone, leaning into the space where we have been so successful in, we’ll grow from 85 partner firms to somewhere around 200 to 250 partner firms. This included putting more strategy around building internally and making investment services that help our partner firms and advisors grow their business and build equity in their businesses. That’s the organic growth strategy. But we're also leaning into other channels. Think about the elite nature of the Sanctuary partner firms. They have more assets than most in the industry. I think the average assets is about $300 million to $350 million. That’s the average per firm. The the financial advisors have pedigrees. They're all credentialed. And they attract other elite advisors who are at the top of their profession and want to network with similar firms. We believe there's a huge opportunity for us to continue to grow in this space.

In the last year, how much has Sanctuary grown in terms of assets under management? If you get those 200 or 250 advisors coming in the next five years, where do you think your assets will end up?

While they are technically financial advisors, at Sanctuary we call them partner firms. And at a partner firm, there can be many advisors who we really view as our partners. We wake up every day and understand that they are our clients and we serve them. But we serve them in partnership. We had a really good growth year In 2023, bringing on about $5 billion of assets. But the target, if I'm looking at over five years and at those 200 to 250 partner firms, the goal is an asset base of $80 billion to $100 billion. Today we're about $30 billion, so we believe we can triple the size of the company over the next five years. With that in mind, 2023 was also a year of transformation to a company that has more rigor around its strategy, institutionalization, and investment into the platform and its people. We brought on senior executives in 2023, and in 2024 we’re increasing head count within the organization by almost 18%. That's based on two things: serving our partner firms better and preparing for the pipeline of growth that we're seeing.

You'd been in this industry a long time before the three-year break between the Ladenburg sale and joining Sanctuary. Did anything surprise you when you got back in the game?

Just because I wasn't working day to day in the industry doesn’t mean I was completely gone. I always stayed around the industry and obviously this is my passion, so I was always on top of everything that was going on. I don't think that there was ever anything that was a surprise, but there's a lot of interesting stuff going on within the industry with the evolution of AI. And this is maybe something that was new to me when I stepped back in. There's AI that can be utilized for productivity enhancements that we need to embrace. You can't turn a deaf ear to that. There've been many case studies out there that say that using generative AI increases productivity by an average of 66%. .... If you're in a services business and you're servicing financial advisors every day, and you can improve the way you service them by a high percentage, you need to embrace the evolution of technology that's around you, and AI is really at the forefront of that.

Do you think that the way for firms to get through this period of evolution is to be rock solid on what their own business plan is? 

You're asking a really important question. At the beginning of January, we just announced a business consulting division that we're building. This is a department that is solely there to consult with our partner firms to help them in their business. You need to have rigor around your business planning and, again, embrace the evolutionary changes that are around us. It goes way more than just acknowledging the evolutionary changes. What are you strategically doing? What are you strategically doing to ensure that you are also integrating the evolutionary changes into your business? And that goes for businesses both large and small.

Is there anything that you want to add?

It’s been exciting to step into a role where I have a senior leadership team and employees that are focused every day on the greater good of our industry, leading with values and serving our partner firms. It’s an industry that I'm super passionate about. And I love the work that advisors do every day. I mean, think about the social good that an advisor does—working with people throughout our country helping them save for retirement or helping them with their insurance needs or helping them plan for the educational needs of their kids. The social aspect of this business is something deeply ingrained in me.