The deal, announced last month, came about through the two groups' shared acquaintances. "A friend of mine who knows the advisor for the tribe called and asked if we had an interest in being bought," says Westrock CEO Donald Hunter. "At first I said no. Then he said, 'What if it was by an Indian tribe?' And I said, 'How can I find out about this?' I knew right away the benefits that come with being a minority-owned business." From there, the two sides began a roughly two-and-a-half year due-diligence process before they closed the deal.
Founded in 1995, Westrock offers financial services through its three different business groups-Westrock Advisors, a full-service independent broker-dealer; Westrock Institutional Group; and WestÂrock Asset Management. The company has roughly $1.4 billion in assets under management and 150 employees. Westrock will continue to operate as an independent broker-dealer, and its daily operations and management will remain unchanged.
Michael Jandreau, chairman of the Lower Brule Sioux Tribe, said his group bought Westrock to diversify its revenue stream and participate directly in the U.S. capital markets. "With an unemployment rate of 44%, we'll use the money to create jobs and to strengthen products we're already involved with, such as Lakota Foods," says Jandreau, who has led the tribe for 30 years.
The Lower Brule Sioux Tribe is a band of the Lakota Nation whose reservation occupies a large swath of land along the Missouri River in
central South Dakota. The tribe's main economic activities are construction and agriculture, and it supports assorted other businesses such as the Golden Buffalo Casino and its motel. The tribe says its farm corporation is one of the country's biggest popcorn producers.
One result of the tribe's Westrock acquisition is the creation of a tribal services advisory group that will manage money for both the Lower Brule Sioux and other tribes around the country. The advisory unit, which will also help finance projects done on reservations, will be led by Gavin Clarkson and Dennis Ickes. Clarkson, a member of the Choctaw Nation, is an associate professor at the University of Houston Law Center with a research focus that includes tribal economic development and finance. Ickes is a longtime advisor to the Lower Brule Sioux Tribe.
"That business is aimed at tribes in general, and it's not looking down the food chain at individual tribal members," Hunter says.
Reaction to the deal at the tribal
level was mixed. "Of course, some people are concerned about what this exposure means," Jandreau says. "Others are
very supportive."
$800 Billion In Client Assets Will Change Firms in '09
Due to large numbers of financial advisors switching employers during these topsy-turvy times, $800 billion in client assets will likely change firms this year, according to Cerulli Associates.
In a recent research report entitled Advisor Migration: The Changing Landscape of Retail Distribution, the Boston-based consulting firm projects that wirehouse firms will lose the most assets and that registered investment advisors and hybrid advisors will gain the most. The report looks at asset flows across seven different channels.
Cerulli estimates that the wirehouses will lose $188 billion to other channels. It also estimates outflows of $13 billion and $6 billion for insurance and regional channels, respectively.