Sanctuary Wealth, the Indianapolis-based partnership of independent registered investment advisors, will play a larger role in the M&A space in the coming months, said CEO Adam Malamed, who took over for founder Jim Dickson in a surprise move in February. Malamed and his team are currently working on defined strategic initiatives that touch on multiple aspects of M&A.
“It’s not really a matter of if; it’s a matter of when Sanctuary is more acquisitive in the marketplace,” Malamed said in an interview with WealthManagement.com. “Since I’ve taken my seat, I’ve started to scratch the surface on putting a lot more rigor and a strategic plan around working with our partner firms and also being in the RIA aggregation space.”
He said Sanctuary has done some minority deals, but this would be a more concerted effort.
Malamed said he’s actively looking at deals, and will look to acquire companies that compete with Sanctuary—other service providers in the independent space, whether they’re focused on breakaways or RIAs.
“One of the opportunities would be to expand what we do here at Sanctuary," he said. "Our model of partnered independence allows us to make investments into our platform that benefit our partner firms and advisors. Our investments are made with the purpose of growth—their growth. Our investments are focused on building equity—their equity in their businesses.”
Sanctuary will also look to aggregate RIAs, whether that’s through helping its partner firms acquire or doing its own deals.
“Their M&A strategy makes sense if they can pull it off,” said Mike Wunderli, a managing director at ECHELON Partners. “They want to simultaneously build out their platform offering while also growing their RIA, which is a real driver of value. This allows the company to cast a wide net and quickly expand both their internal and external network. At the same time, they are focused on expanding their advisory toolkit through their fully owned Sanctuary subsidiaries. Creating a wide range of attractive and empowering resources for advisors is a great strategy for enabling a successful M&A campaign.”
Malamed said his history at Ladenburg Thalmann, which built a network of several independent broker/dealers through acquisition, lends him significant credibility to be able to transact deals successfully. (Advisor Group, now Osaic, acquired that firm in 2019 in a $1.3 billion deal.) He started acquiring firms in the wealth management space in 2006.
“I was early then,” he said.
Some of the factors driving his acquisition strategy then included the fragmentation of the industry, economies of scale driving the margins of the business, demographic trends and the emergence of technology.
“When you couple those factors—that was what led me historically in my M&A strategy, and it’s what is going to lead me today,” he said.
"[Malamed] has unique M&A experience and understands how to use acquisitions to create real value in the wealth management and diversified financial services space," Wunderli said.
Since Malamed took over earlier this year, he’s been building out his executive team. In March, the firm hired David Vaughan as chief financial officer from Axos Clearing. In April, he brought on Kevin Miller as chief legal officer from Carson Group, and reappointed Kevin Chase as chief compliance officer. And most recently, the firm added Chris Shaw—who spent the last three decades with Morgan Stanley, including almost 20 as managing director—as its East Coast regional managing director. He’s still looking to hire someone to lead the West Coast region.
In addition to M&A, Malamed said the firm will continue to lean into the breakaway space. He added the firm can play in this white space outside the wirehouses, which he calls “the warehouses.”
“It’s your larger independent firms that have 15,000-20,000 advisors, where sometimes the business is managed to the lowest common denominator, and the elite nature of the advisors that are there, potentially, might fit within the pedigree of Sanctuary,” he said. “That’s really an area we see white space, where a smaller firm like Sanctuary that provides more of a white-glove type of service can add significant value to already independent advisors, so we’ll play there.”
WealthManagement.com recently reported that Sanctuary’s assets have flatlined, hovering at about $25 billion over the last year. Malamed said the firm is, in fact, growing. It brought on 12 new partner firms in the last year, and it’s common for assets to fluctuate up and down, he said. Malamed's five-year plan includes a goal to grow to $80 to $100 billion in assets.
Sanctuary is majority-owned by Azimut Group, a European-based asset management firm. Last July, Sanctuary announced it closed on a deal with New York–based Kennedy Lewis Investment Management, a credit manager, to receive $175 million in financing in the form of a convertible note.