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  • Writer's pictureKevin Elvington

The $14.5bn wealth management firm has taken its first-ever outside investment.


Stratos Wealth Holdings, a collection of advisory firms that oversees a combined $14.5bn in assets, has turned to one of the wealth management industry’s largest investors for its first-ever infusion of outside capital.

Emigrant Partners, an arm of New York Private Bank & Trust, has purchased a minority stake in Stratos. Emigrant and sister company Fiduciary Network have stakes in 15 RIAs with a combined $50bn in assets. Specific financial terms of the transaction were not disclosed.

The Stratos Wealth Holdings umbrella encompasses a wide range of business models for its affiliated advisors. Its largest platform is Stratos Wealth Partners, an LPL-affiliated hybrid firm which oversees around $13.2bn in assets. The firm also maintains Stratos Wealth Advisors, a traditional RIA for fee-only advisors who want to custody their assets with a firm like Fidelity and Charles Schwab, Stratos Wealth Enterprises — an RIA acquisition vehicle — and Fundamentum, an in-house asset manager.

Much like its new financial backer, Stratos is a serial investor in other RIAs. It also frequently recruits advisors onto its platform. Stratos chief executive Jeff Concepcion (pictured, right), told Citywire the firm has added eight new partners with around $1.1bn in assets between December 15 of 2019 and March 15, deflecting the impact of the coronavirus-induced market downturn on the firm’s asset levels.

‘I just think the size of deals and volume of deals that we have capacity to do, we’ll feel more comfortable doing with Emigrant at our side,’ Concepcion said.

Emigrant plans to help Stratos fund its future deals. Emigrant and Fiduciary Network have provided similar assistance in recent months to affiliated RIAs such as RegentAtlantic and Sand Hill Global Advisors as they’ve made their first acquisitions.

‘The nice thing about our model is because we’re not an aggregator, we don’t consider ourselves a platform. We consider firms like Stratos or RegentAtlantic or Adviser Investments as the actual platform,’ said Emigrant and Fiduciary Network chief executive Karl Heckenberg (pictured, left). ‘Every relationship with a firm that we’re partnered with is really tailored to what they want. Stratos has done a great job on the M&A side. I think what they’re looking for is a partner to help continue to make sure they’re evolving as a professional organization as they continue to grow as fast as they do.’

Emigrant Partners also plans to lend its intellectual capital to Stratos.

‘Stratos, I think, easily could at some point be a public company,’ Heckenberg said. ‘They needed a capital partner that could be flexible enough to help them continue to grow to whatever they aspire to do.’

Beachwood, Ohio-based Stratos Wealth Partners has been self-funded since its 2009 founding. Concepcion, formerly an executive at Lincoln Financial, launched the firm in the midst of the financial crisis and ate a $1m loss in its first year of operations.

A little more than a decade later, the first outside investor in Concepcion’s firm arrives as the coronavirus-induced economic slowdown has rollicked markets around the globe.

‘[To close this deal now,] I think it says a couple things,’ Concepcion said. ‘About Emigrant, it says they are exactly what we looked for and hoped for, which is a long-term capital partner and a patient capital partner. Someone who had a shorter view of the world might have been put off by what’s happened in the last 30 days but for someone who hopes — and we hope — will be our partner 10 years from n0w, it’s sort of inconsequential.

‘I think it’s a tribute to Stratos that our assets were so modestly impacted... I don’t think Emigrant would have paused absent that, but I think it gave them the confidence to say “yeah, we picked the right horse to bet on and these guys are plugging along and doing what they’ve done historically.”’

Raymond James served as Stratos’ investment banker on the transaction, while Walter | Haverfield served as its legal counsel.

Stratos Wealth Partners, Stratos Wealth Advisors, and Fundamentum are separate entities and are not affiliated with LPL Financial.

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