Under CEO John Dowd, Fiduciary Trust Company International, the wealth management arm of Franklin Templeton Investments, is turning its focus toward the ultra-high-net-worth market and on Monday announced its first acquisition in 18 years, that of $6 billion Boston-based registered investment advisor Athena Capital.
Dowd said the move came from his company’s desire to grow its outsourced chief investment officer business for households with assets under management in the range of $100 million and up, building portfolios with alternative, nonpublic investment options.
Dowd said that since he assumed the helm of Fiduciary Trust over three years ago, the firm has been making “significant investments into the infrastructure of the business” and that, alongside its parent, Franklin Resources, will look for more opportunities in the HNW and UHNW space.
The New York-based trust company also wanted to expand geographically. With the Athena merger, it will now count Boston among its network of seven offices sprawled throughout the country from New York to San Francisco through which it serves its 1,600-clients around the globe.
Dowd said that far from pursuing a rollup strategy in acquiring Athena, Fiduciary Trust was looking at the RIA’s “focus and dedication to the foundations and endowments” sector; at Fiduciary Trust, only $4 billion of its $19 billion in AUM comes from those type of institutions. “We had a good presence in it but frankly I felt we needed to be bigger.” Dowd sees a bigger opportunity there as UHNW clients are seeking “private investments and moving their exposures a little bit further away from the public markets.”
"These folks act like institutions in terms of trying to get asset allocations," he said; the trend toward institutionlike investing among UHNW and family offices is increasing, particularly as public markets seem to promise less stability and more risk moving forward.
The outsourced CIO group within Fiduciary works with family offices and endowments to gain access to “an open architecture of multi-asset class third-party managers” to invest in alternatives and private placements, like private equity and hedge funds.
But Athena's focus on that market means it was further along in building out the infrastructure to work with those types of clients, said Dowd.
“There's a lot of reporting requirements that make up those portfolios; it’s extremely manual,” he explained. “Unless you've got dedicated, systems technology, you've got the right accountants, you've got the right auditors, it can be very time consuming and very manual.” Athena has a dedicated recording group and a research team focused on alternative markets and investments.
“We’ve organically grown the business but they're further along in terms of the maturation of the foundation,” said Dowd.
A spokesperson for Franklin Templeton said the company “has a long history of making strategic, sometimes bold, acquisitions as part of its long-term growth strategy” and sees “opportunities to capitalize on the ongoing consolidation of the asset management industry.” The company, the spokesperson said in the email, intends to “be more proactive with our acquisition strategy and will continue to seize opportunities when presented with appealing prospects where interests are aligned.”