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Citizens Buys $6.6 Billion RIA to Bolster Services to Wealthiest Clients

The tuck-in acquisition will improve scale and elevate services for the ultra-high-net-worth.

Citizens Financial Group has reached an agreement to purchase Clarfeld Financial Advisors, a wealth manager and multi-family office with $6.6 billion in assets, to help scale its wealth management business and elevate its services offered to the wealthiest clients.

The Tarrytown, N.Y.-based Clarfeld Financial Advisors will continue to operate under its current brand name as a division of Citizens Bank Wealth Management. Combined, the two businesses will manage approximately $14.4 billion, the vast majority belonging to private individuals. Terms of the deal were not disclosed.

The tuck-in does more than simply grow assets under management and scale the bank's wealth unit, John Bahnken, president of Citizens Bank Wealth Management, told Citizens has been outspoken about its goal to serve all client segments, and Bahnken admitted there was room for improvement when it came to high-net-worth and ultra-high-net-worth clients. The two client segments typically include those with investable assets totaling at least $1 million and $30 million, respectively, and who have more complex needs than other segments.

Citizens captures a significant share of the ultra-high-net-worth market in consumer and commercial banking. Out of 70,000 banking customers at Citizens, about 6,000 fall into the ultra-high-net-worth segment, a meaningful chunk of the 60,000 total in the marketplace, Bahnken said. But without wealth management services like Clarfeld's to meet the needs of the higher segments, the unit would not be able to capture a similar marketshare of those clients in wealth management.

An existing division of the bank's wealth management unit, Citizens Bank Private Wealth Management, with 82 employees and approximately $3.5 billion AUM, will be folded into Clarfeld Financial Advisors. Robert Clarfeld, who founded the firm 37 years ago and serves as its CEO, will remain chief executive of the firm.

Banks were once a common landing place for RIAs looking to make a strategic sale, said Elizabeth Nesvold, the founder and managing partner of Silver Lane Advisors, an investment bank that advised Citizens on the deal with Clarfeld. Now, those deals account for only about 15 percent of all RIA transactions, but Nesvold said that percentage will likely creep up as banks look for ways to grow fee-based assets. However, like in the deal between Citizens and Clarfeld, banks will continue to view sophisticated RIAs as a way to bolt on services they seek to add or improve, too.

The transaction is expected to close late this year or early next, subject to regulatory approval. Debevoise & Plimpton acted as the bank's legal advisor. Kramer Levin Naftalis & Frankel was the legal advisor to Clarfeld on the transaction.


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