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Steward Companions World Advisory is establishing a brand new division with the acquisition of Freedom Avenue Companions from Raymond James. The 7-year-old agency has 38 workers—together with 28 advisors—17 places and $3.2 billion in managed belongings.
Dubbed the Freedom Avenue Division, the channel will comprise all companies introduced in underneath Steward’s brand-new acquisition mannequin. With one exception, Steward has completely added new advisors via recruitment, rising the agency from $50 million to round $28 billion within the decade since its founding. (The one exception was the agency’s buy of Umpqua Investments in 2021, a transfer that introduced brokerage companies in-house.)
Freedom Avenue will kind the muse of the brand new division, which might be operated by the agency’s administration crew alongside Steward and supply a vacation spot for advisors in want of a succession resolution. Most, if not all, Freedom Avenue advisors will be part of Steward as fairness companions and workers when the deal closes earlier than the tip of the 12 months, however one or two could choose to affix underneath Steward’s recruitment mannequin and affiliate as a substitute.
“Leveraging Steward Companions’ deep assets and experience within the wealth advisory area permits us to supply our purchasers with enhanced entry to the very highest degree of experience and repair, and in addition frees further assets as we proceed to develop the enterprise as a brand new division of Steward Companions,” Freedom Avenue CEO Scott Danner mentioned in a press release.
“The addition of Freedom Avenue Companions as the muse of our new Freedom Avenue Division creates a brand new worthwhile, high-growth enterprise phase at Steward Companions the place we now have had excessive demand from advisors and wealth administration companies contemplating a transition from their present conditions,” added Steward President and COO Hy Saporta.
Steward is stepping into the M&A recreation to satisfy that demand and seize different development alternatives the agency sees available in the market, CEO Jim Gold informed WealthManagement.com. He famous the variety of unbiased RIAs—about 15,000—and mentioned many are reaching some extent the place additional development turns into troublesome and promoting is sensible to realize the advantages of partnership and scale.
“We even have advisors we’re speaking to who simply don’t need to be homeowners anymore and get again to operating their enterprise,” he mentioned. “After which, you’ve got the RIA and wirehouse breakaways that now need to promote—which is a brand new dynamic. Particularly from the wirehouses, as a result of the wirehouse offers, on common, you are speaking one- or two-times income and that is usually paid someplace between 5 and 10 years after retirement.”
Steward’s transfer is sensible as a result of “the good, sturdy breakaways do have the chance to view themselves as a future enterprise associate of a significant agency, and that may undoubtedly obtain their highest worth,” mentioned John Langston, founder and managing associate at industry-focused funding financial institution Republic Capital Group.
“There’s extra worth for the breakaway, however there’s additionally much more worth for the partnership as a result of their income is not rented and their asset retention and the potential that they’re going to keep on with the agency is a lot extra enticing to the skin investor,” he mentioned.
“All these items result in M&A,” Gold mentioned. “And I would like the expansion funnel to be as vast as attainable; I need to have as many choices as attainable.”
Acquired companies are given the choice of co-branding, becoming a member of underneath Freedom Avenue or just shifting underneath the Steward identify. Gold mentioned full acquisitions are most popular however he’s open to different preparations in the suitable conditions.
“We satisfaction ourselves on flexibility and optionality, so we’re not going to attract any traces within the sand, however I believe our common premise goes to be that we need to purchase the entire thing,” he mentioned. “If there is a actually, actually nice alternative that may be a minority stake or a majority, however not an entire buy, we’ll actually have a look at that and see if it is sensible.
“In a minority state of affairs, there must be actually optimistic and extenuating circumstances reminiscent of company match or the flexibility to develop it along with one other group,” he added.
Steward presently has seven or eight potential acquisitions within the pipeline, in keeping with Gold, and has been fielding requests from current associates who need to ultimately transition their practices to the brand new division. With places throughout New England, the Mid-Atlantic, Southern and Northwest United States, the Freedom Avenue acquisition will assist to bolster regional enlargement efforts there, he mentioned.
Steward has had its finest recruiting 12 months ever in 2023, onboarding about $6 billion in belongings to this point, and Gold expects the brand new division will solely amplify that development.
“This deal is a bit more than half of that,” he mentioned. “So then extrapolate that out 5 years.”
Majority owned by workers, Steward is minority-backed by Cynosure and The Pritzker Group. In late 2022, the agency acquired a $140 million credit score facility led by different funding agency Apogem Capital to assist recruitment and, now, acquisitions.
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