Focus Financial Partners

Focus Financial Partners, LLC is an investor in independent, fiduciary wealth management firms, founded in 2006 by Ruediger (Rudy) Adolf, Rajini Kodialam and Leonard (Lenny) Chang.

As of 2017, Focus has offices in both New York and San Francisco,^[1] and nearly 50 partner firms across the United States, the United Kingdom and Canada, plus an equity investment in Australia and a joint-venture in China. The partnership comprises over 2,000 wealth-management-focused principals and their employees.

According to news reports, Focus has been one of the leaders in the shift of financial advisors from wirehouse broker dealers to registered investment advisers (RIAs).^[2] For the year ended December 31, 2016, Focus revenue approached $500 million, 90% of which was fee-based and recurring in nature. Focus has been named five times to Inc. magazine's list of the 5000 fastest-growing private companies in America (most recently in 2016).^[3][4][5][6] In April 2017, Focus announced that an investor group led by Stone Point Capital and KKR & Co. L.P. would acquire a majority stake in the company, valuing Focus at approximately $2 billion.^[7]

Business Model and Programs

Core Business Model

Focus invests in Registered Investment Advisers (RIAs), and helps large investment-management teams leaving brokerage houses to start their own independent firms within the Focus partnership (through the Focus Independence program).

The Wall Street Journal notes that Focus partner firms maintain their entrepreneurial independence while they benefit from the synergies, scale, economics and best practices of a market leader to help them achieve their business objectives.^[8] As Rudy Adolf describes the process, "First and foremost, the selling RIA retains operating autonomy through the management company, because we believe in never turning a successful entrepreneur into an employee."^[9]

Additionally, Focus offers succession planning solutions for smaller RIAs or sole practitioners. An RIA can transition the management and ownership of its business to a Focus partner firm upon the retirement of its principal advisors or the occurrence of a key person event. ^[10]

Key personnel

Ruediger (Rudy) Adolf, Founder and Chief Executive Officer

Rudy Adolf founded Focus in 2006. He was previously Senior Vice President and General Manager of the Global Brokerage and Banking division of American Express. Before that, he was a partner at McKinsey & Company in New York, primarily focusing on financial services firms. He began his career with McKinsey in Munich.^[11]

Adolf has been featured on several lists of the most influential people of his industry. In 2006, Wealth Management magazine named him one of its annual "Ten to Watch."^[12]

Rajini Kodialam, Co-Founder and Managing Director Rajini Kodialam was a Vice President at American Express in New York, where she managed the overall online experience for the U.S. Consumer Card and Travel businesses. Kodialam was previously at McKinsey & Company in New York, specializing in consumer financial services firms.^[13]

Leonard (Lenny) Chang, Co-Founder and Managing Director

Prior to Focus, Lenny Chang was with the Boston Consulting Group, where he worked on a range of assignments for institutional asset management and financial brokerage firms. He previously worked at American Express in the Strategy and Business Development Group.^[14]

History

Adolf said of the company's founding that "We saw tens of thousands of independent firms out there, without good succession planning and handicapped by their small size. They were doing well, but could do better if they had some of the benefits of a big organization behind them without compromising their entrepreneurial independence and spirit."^[15]

Focus Financial Partners launched with four partner firms in January 2006. By October 2007, the company had expanded to a total of 14 partner firms.^[16] Focus began expanding internationally in 2008 with the addition of England’s Greystone Financial Services Ltd.,^[17] and later that year introduced its Focus Independence program to "help elite advisors fully realize their entrepreneurial potential". In 2009, Polaris Venture Partners and Summit Partners provided Focus with $50 million of new capital.^[18] Continuing to grow, Focus closed a $220 million credit facility in January 2012, making its access to credit "unique in the RIA industry."^[19] In 2013, Focus launched the Focus Successions program,^[20] and the company received an additional $216 million strategic equity investment from Centerbridge, at which time Financial Advisor magazine reported Focus had increased client assets by nearly 18 times in its first seven years.^[16] In 2014 Focus expanded to a $550 million credit facility,^[21] and continued to grow internationally with a joint-venture in the Shanghai Free Trade Zone. In 2015 Focus expanded into Canada through Dorchester Wealth Management and announced a $1 billion credit facility.^[22] In 2016, the firm expanded internationally once more with an equity investment in MW Lomax in Australia,^[23][17] and the total number of Focus partner firms passed 40.^[24]

In April 2017, Focus announced that an investor group, led by Stone Point Capital and KKR & Co. L.P. will acquire a majority stake in the company, valuing Focus at approximately $2 billion.^[7] In May 2017, Focus announced that SCS Financial and its subsidiary, SCS Capital Management, an independent registered investment advisory firm based in Boston, Massachusetts and New York, New York, entered into a definitive agreement to join the Focus partnership. With $16.5 billion in regulatory assets under management, SCS is the largest deal in Focus' history.^[25]

References