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Focus Financial CEO Rudy Adolf
Focus Financial CEO Rudy Adolf

Focus Financial Continues to Grow As It Debuts Trust Services

As the firm's strong pace of M&A activity continues, Focus Financial Partners rolls out trust services to its partner firms, which "will create a significant opportunity for our partners, advisors, to expand and retain multi-generational client assets,” CEO Rudy Adolf said.

Focus Financial Partners said it’s on track to have its most successful M&A year yet, having closed two new partner firms—St. Petersburg, Fla.-based ARS Wealth Management and Seattle-based Badgley Phelps Wealth Managers—and seven mergers on behalf of partner firms during the third quarter.

Year-to-date as of Nov. 1, the firm closed on 28 transactions, including eight new partner firms and 20 mergers, eight of which were for its Connectus business. The firm has three additional pending deals in the pipeline already in the fourth quarter.

“I don’t see next year or any of the coming years some significant change in the pace of M&A opportunities that we see,” said Rudy Adolf, founder, CEO and chairman, during a call with analysts Thursday. “Yes, tax may or may not have some implication in the U.S. But let’s always keep in mind that the fundamental driver of industry consolidation, the fundamental driver of our acquisition business is really the aging of the founders and the founding generation.”

On the analyst call, Adolf said the firm also began offering dedicated trust services through Focus Fiduciary Solutions, a division led by Ted Simpson, a former senior wealth planning strategist at Wells Fargo. The firm currently has a roster of about 10 trust companies, both domestic and international, that it’s working with to provide those services, with plans for expansion.

“These services will create a significant opportunity for our partners, advisors, to expand and retain multi-generational client assets,” Adolf said.

He also highlighted the growth of the firm’s cash management and credit solutions, a national network of banking and lending institutions that work with Focus partner firms at competitive pricing levels. Since inception of that program, Focus has helped with the closing of $2 billion in transactions.

“We view this as just using the scale—the aggregate scale of our organization, using our purchasing power—to create better solutions than any of our partners or quite frankly anybody in the industry could provide for our end clients and our partners,” Adolf said.

“The key theme for all of these value-added programs is ultimately about equipping our partners with all the capabilities, all the skills of a high-end private banker, without any of the baggage,” he added. “We are really going beyond the private banker in the sense that we have introduced the concept of open architecture to the high end of the credit market.”

Overall, Focus reported third quarter non-GAAP earnings per share of 98 cents, beating analysts’ expectations by 2 cents, according to Revenues were $454.5 million during the quarter, up 37% year-over-year, beating expectations by $9.1 million. Its partner firms saw organic revenue growth of 28.8% during the quarter, higher than its expected range of 24% to 27% for the quarter.

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