RIA Roundup: LMP-backed Pathstone Sells Stake to Kelso & Company

Multi-family office Pathstone announced investments from two different backers this week, while Allworth Financial made its second and third acquisitions of the year and Apella bought a California RIA. Meanwhile, NewEdge Wealth has a new principal.

In earlier news, Captrust Financial Advisors and Creative Planning both completed their first acquisitions of the year, adding $5.8 billion and $1 billion in AUM, respectively; Prime Capital Investment Advisors built on 500% growth in five years with the acquisition of a $400 million AUM Nevada RIA; and Private Wealth Asset Management recruited a trio that managed nearly $2 billion at Wells Fargo.

LMP-backed Pathstone Takes New Investment from Kelso & Company

Pathstone, a private equity-backed, multi-family office based in Engelwood, N.J., announced a new investment from middle-market PE firm Kelso & Company.

Kelso joins owner Lovell Minnick Partners, which bought a “significant stake” in Pathstone in 2019. At the time, the firm claimed $15 billion in client assets.

Pathstone has since grown rapidly to more than 350 employees, roughly half of whom are shareholders, across 17 offices. The firm serves families and individuals, family offices, foundations and endowments, with more than $80 billion in total assets.

“We have found in Kelso another investment partner who aligns with our values as a consistent champion of founder-led firms with employee ownership,” Pathstone CEO Matt Fleissig said in a statement. “Their partnership will provide capital to further support our culture of growth and innovation, as well as resources and expertise to enable us to accelerate our strategic initiatives.”

PE firm Kelso’s self-proclaimed strategy is to provide “investments in people, processes, technology and other resources that drive growth,” while existing management retains control of the business. The company has invested around $19 billion in more than 135 transactions since 1980, including more than $4 billion in the financial services sector.

“With a shared vision for the future, we look forward to partnering with LMP and supporting Pathstone’s leadership during this next important phase of expansion,” said Kelso Partner Steve Dutton in a statement.

According to Monday’s announcement, LMP will remain an owner and make an additional investment. LMP has stakes in more than 50 companies and, with 175 add-on acquisitions under its belt, targets companies in the financial services, financial technology and business services sectors. The firm has raised more than $4 billion in capital since its founding in 1999.

“We believe there is an industry tailwind favoring those who have made the necessary investments in their team, technology and resources,” said LMP Partner Brad Armstrong, who sits on the Pathstone Board of Directors. “We’re eager to support Pathstone as it looks to accelerate its growth trajectory and M&A strategy.”

The respective investments are expected to close during the second quarter of 2023, subject to customary conditions.

“Pathstone has emerged as a buyer of choice in the ultra-high-net-worth market,” said Peter Nesvold, a partner at Republic Capital Group, the wealth management-focused investment bank that acted as an advisor to LMP. “This fresh capital should help to keep that story going.”

Allworth Financial Adds $577M with 2 Acquisitions

Allworth Financial has announced its 26th and 27th acquisitions in five years, with Indianapolis-based One To One Financial Advisors and Las Vegas-based Red Rock Wealth Management.

One To One Financial Advisors brings an additional $417 million in assets under administration to Allworth Financial. The three-person team specializes in providing comprehensive retirement planning and client-focused investment and risk management guidance.

“We are always seeking new and better ways to meet the needs of the people we serve,” One To One partner Michael Schankerman said in a statement. “I know that I speak for my fellow partner-advisors in this transition, Benjamin Abraham and David Klaus, when I say that the additional services and technologies that moving under the Allworth Financial umbrella will provide to our clients made entering into this partnership an easy decision.”

Redrock Wealth Management adds another $160 million in assets to Allworth, along with a four-person team.

“By getting to know the principals of several firms they’ve acquired, I quickly became confident that Allworth’s philosophy of looking out for the interests of new partners, their employees, and the well-being of their clients, is completely genuine,” said Redrock CEO Greg Phelps.

The two acquisitions add a combined $577 million in AUA to Allworth Financial. Terms of the deals were not disclosed.

“Experienced RIA and BD affiliated firms and advisory teams that have built thriving practices, and which are good cultural fits, are what we look for,” said Allworth co-CEO and co-founder, Scott Hanson.

Founded in 1993, Sacramento-based Allworth oversees $15 billion in client assets, with 30 offices in 17 states. It is among the fastest growing firms in the nation.

Apella Expands on West Coast with $130M Clarity Wealth Management

Apella Capital, a registered investment advisory firm doing business as Apella Wealth, announced that RIA Clarity Wealth Management has joined the firm. The acquisition establishes Apella in Irvine, Calif., and adds $130 million in client assets.

Led by Gina Chironis, Clarity provides financial planning, portfolio creation, asset management and tax planning services. Joined by the entire Clarity team, Chironis is becoming a partner at the firm and stepping into the role of senior financial advisor.

“They’ll be a wonderful addition to our expanding footprint,” said Apella co-founder and Chairman David Connelly. “They share our enthusiasm for strategic thinking, client experience, and evidence-based investing.”

Based in Glastonbury, Conn., Apella provides financial advice and asset management to individuals, families, businesses and retirement plan sponsors, with more than $2.5 billion in managed assets across 14 offices nationwide.

“It’s thrilling to announce that we now have a new office in Southern California,” Connelly added.

Clarity clients will gain access to Apella’s resources, technology and expanded services, according to Tuesday’s announcement.

“We couldn’t be more enthusiastic about joining forces with Apella and the opportunity it brings us to better serve our clients,” said Chironis.

This is Apella’s first acquisition of 2023 and the third done with support from Wealth Partners Capital Group, an advisory-focused investment company that took a stake in the firm in September 2021.

The acquisition closed on Feb. 22. Financial and legal terms were not disclosed.

NewEdge Wealth Names Hunter Gehring as Principal

Hunter Gehring has become the newest principal at NewEdge Wealth, joining the firm from Arvest Wealth Management.

NewEdge Wealth, a registered investment adviser serving ultra-high-net-worth families, family offices and institutional clients, brought Gehring in to increase the firm’s assets under management and cultivate relationships with clients, according to Monday’s announcement.

Gehring and his team are based in Bentonville, Ark.

Prior to joining NewEdge, Gehring worked as a vice president and senior client advisor at Arvest, where he had become the youngest private wealth advisor in the firm’s history.

“We are impressed with his skillset and dedication to client service,” NewEdge CEO and co-founder Rob Sechan said in a statement. “Stay tuned… Hunter will be an advisor to watch, and we are glad his continued growth will be spotlighted at NewEdge.”

“I have finally found a partner that can provide the resources, research and technology that ultra-high-net-worth clients deserve,” said Gehring. “I am eager to show the Arkansas community what a new edge in wealth management looks like.”

NewEdge Wealth is a division of NewEdge Capital Group, which currently oversees more than $32 billion in client assets across multiple business lines. In addition to the new Arkansas office, the firm has locations in Coral Gables, Fla.; Manhattan Beach, Calif.; Miami, Fla.; Park City, Utah; Pittsburgh, Penn., as well as its Stamford, Conn., headquarters. The firm’s rapid growth has continued in 2023 with the announcement that high-profile investment managers Kyle Bass and Steven Einhorn joined the firm’s Investment Advisory Board. Further expansions are expected to continue throughout the year, according to executives. 

New Edge Capital Group is the wealth management business unit of EdgeCo Holdings LP, which has more than 700 employees and oversees more than $150 billion in wealth and retirement assets.

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