Like many advisors of his generation, Bob Wacker, president and chief investment officer of R.E. Wacker Associates Inc. in San Luis Obispo, Calif., decided last year to tie up the loose ends in his succession plan. And like an increasing number of his colleagues, he decided to sell his firm to a bank, in this case Pacific Capital Bancorp of Santa Barbara, Calif.

"Part of my own study group's discussion-and everybody else's discussion now-has to do with growth of the business and succession planning," says Wacker, who is 58. He believes he made the best deal possible for himself, his clients and his staff.

The Pacific Capital Bancorp deal to acquire R.E. Wacker closed in January. Wacker manages $475 million with 10 staff people serving 360 clients. "I owned the whole firm and we sold the whole firm," Wacker says. The bank paid $6.9 million cash for the practice and over the next five years will make a future payment based on the financial performance of Wacker's firm. That final earnout will be shared with the staff, Wacker says.

I've been surprised by the number of top independent advisors who, like Wacker, did their research and due diligence and then chose to be acquired by a bank. Last month, we reported on the sale of Shine Advisory Services in Denver to Western Alliance Bancorp. Like Shine, Wacker was first approached by a friend who operated a similar firm and sold out to a bank.

In Shine's case the friend was Dennis Miller, a planner in Phoenix whose business had exploded from  $450 million to $1.7 billion in the five years after he was acquired by Western Alliance. In Wacker's case, it was Lon Morton of Morton Capital Management in Calabasas, Calif., who had sold to Pacific Bancorp a year earlier. Morton "affirmed that the bank was getting out of his way and letting him work independently," Wacker says. "The bank recognizes that the firm does well on its own. We still will make our own investment and personnel decisions."

Like Shine, Wacker talked with a number of potential suitors over the last several years, including Rudy Adolf, who is buying up firms and bringing them under the umbrella of Focus Financial in New York. "Rudy Adolf is buying up financial planning firms but also insurance and pension administration firms," Wacker says. "Many are fee only, but the firms are not solely fee only."

Wacker also talked with Mark Hurley, president of Fiduciary Network LLC in Dallas, who buys strictly fee-only, fiduciary firms. "The fiduciary model of Mark Hurley is better for people to whom fee-only is a core value," like him and like Shine, Wacker says.

Hurley's firm buys part of the advisory firm and provides liquidity for the younger staff to buy out the older partner or partners. Yet neither Shine nor Wacker chose to go with Hurley. Hurley's firm doesn't offer the same degree of liquidity as Pacific Bancorp did for Wacker. On the downside, choosing to be acquired by a bank for cash, "does take away the entrepreneurial opportunity for the younger people," Wacker acknowledges. Shine's take on that was different. Simply put, she didn't want to saddle her younger generation with so much debt.

But I don't see any of this stuff. Perhaps I'm looking backward and perhaps I'm allowing my own personal experience to cloud my idea of the ability of a bank to be objective, detached and even-handed when it comes to acquiring fiduciary, fee-only investment advisors. Is that redundant? Fiduciary and fee-only? It shouldn't be, yet for some reason it feels like it is.

As for me and my dim view of bankers, I'm still smarting from an experience I had five years ago with some private bankers.  A book I wrote called In Search of the Perfect Model (for a financial planning firm, not a TV reality show) had just come out to some decent reviews and I was asked to talk with a group of what we used to call private bankers and are now referred to as bank wealth managers.

First « 1 2 3 » Next