Wealthspire will be the newest name in the large, private equity-backed registered investment advisor space as it begins to take shape following a $2.7 billion acquisition from its former insurance brokerage and risk advisory parent, Aon, by private equity firm Madison Dearborn Partners.
Wealthspire, which had been the individual wealth arm of the recent acquisition, will become the overarching brand for its four affiliates as the firm seeks to solidify a business bridging wealth, institutional advisory, retirement markets, and family office services, according to CEO Mike LaMena. LaMena views the launch of the $580 billion RIA as unique in the market because the firms have been working together in some capacity for years, but will now operate as one entity with a dedicated private equity backer.
“This is not new businesses being brought together for the first time, and there’s an open question of, do the pieces fit together?” he said. “You have a whole bunch of people that have operated kind of under the radar, because our story was lost in the overarching narrative of our insurance brokerage parents…. Now you put the band back together, and we’re going to simplify the brand story.”
The other four entities, which were previously owned by the global insurance firm Aon, include Canadian wealth firm Newport Private Wealth, retirement plan managers NFP and Fiducient Advisors, and Ground Control, which provides family office services, including tax, accounting, and estate planning, in the U.K. and the United States.
Madison Dearborn is also not a newcomer to the businesses. The private equity firm had been the majority owner of NFP since 2013, when it acquired the company for $1.3 billion. It then agreed to sell it to Aon roughly 10 years later for $13.4 billion.
As LaMena recounts, Aon and NFP came to realize that wealth and retirement advice firms were not central to their acquisition. Aon had bought NFP to move further into the middle-market insurance space. With that realization among senior leaders, Aon put Wealthspire and the other divisions up for sale, with Madison Dearborn emerging as the return buyer.
“This was an opportunity to do two things, which was bring the brands together more purposefully and to simplify the brand story and the optimal structure for that business to thrive,” he said. “That wasn’t going to happen in an environment where NFP was owned by a separate but connected company with a focus on growing the insurance side of the business.”
The newly combined entity has 1,200 employees across more than 40 offices, including Wealthspire’s 130 financial advisors.
It enters the RIA space with an overall asset size comparable to that of CI Financial’s Corient, Creative Planning (which recently acquired retirement-heavy SageView Advisory), and Captrust. However, it is strong on the retirement side, with about $500 billion in assets there, and only about $80 billion in wealth.
While the thesis of linking client referrals and business across wealth and retirement makes sense, it requires a balance across divisions to capitalize on the setup, said Matthew Eickman, chief legal officer at the Fiduciary Law Center.
“If you are at a retirement-dominant shop with very little wealth experience, those firms are really struggling to get their retirement purists comfortable with the entrepreneurial spirit it takes to really build those relationships with participants,” Eickman said. “On the other side of the equation, if you are a wealth-only shop without retirement expertise, then it is tough to get the two sides working together.”
Eickman said, when considering Wealthspire and its new setup, “from a pure commitment and expertise and passion perspective, there seems to be pretty good alignment.” One of the challenges, he said, is for both sides to see themselves on equal footing and to believe in the opportunity to work across both business lines.
LaMena sees Wealthspire’s setup as different, partly because the entities have already been making those connections for years.
“When you look at the compilation of businesses we have, it’s not a new set of businesses,” he said. “The seeds of what represents Wealthspire going forward were planted over 2 1/2 decades ago, when NFP first made investments into DiMeo Schneider, which grew into Fiducient, and Sontag, which grew into Wealthspire. NFP has been in this space for a very long time, and they believed in these businesses.”
Carl Nelson, previously executive vice president of mergers & acquisitions at NFP, will serve as president of Wealthspire, overseeing integration and acquisition. LaMena called Nelson the “architect” of much of NFP’s growth, as well as being behind bringing on many of the businesses that now make up Wealthspire.
The institutional division will now be rolled up into Wealthspire Retirement Advisory, led by President Mike Goss, who previously ran Fiducient, a role he will continue to hold while that brand exists. He will also be chief revenue officer of Wealthspire, a move LaMena said will position him to help connect the retirement plan and wealth businesses.
Eric Sontag will head the individual wealth business, keeping his post as president and head of wealth. He had been chief operating officer of Sontag Advisory, which merged with Bronfman Rothschild in 2019 to form the original Wealthspire.
Shortly after the acquisition, Wealthspire and the entities went to market with Madison Dearborn to raise $1 billion in debt financing to go toward technology, employee investment, and “thoughtful, consistent M&A across business lines,” LaMena said.
He also said the team is glad to have Madison Dearborn’s full focus, as opposed to being part of the larger NFP ownership structure.
“Our team is incredibly excited about us being the entirety of the business [for Madison Dearborn],” he said. “We were maybe 20% of NFP’s business, but now we are the business. When you think about that alignment and having private equity that is directly reflective in the business.”
Despite Wealthspire’s scale, acquisitions are definitely on the mind, with LaMena saying that RIAs who join the firm in its fully integrated, W-2 model have a chance at an equity stake at the start of the private equity-backed ride.
LaMena said the wealth and technology platforms for the combined entity would be developed over time, with a key focus on serving clients with varying assets and at different stages of life.