Curian Capital, one of America’s largest TAMPs with $12B in AUM suddenly announced it would shutter at the end of last year. Since then vultures like SEI, AssetMark, Brinker and others have circled the carcass and grabbed up and ate Curian AUM and resources to the bone.
• AssetMark EVP of National Sales Michael Kim says that his firm picked up 300 new advisors from Curian Capital by the end of 2015 – and about $1 billion in new assets under management. AssetMark also hired five of Curian’s top consultants.
• Al West SEI’s CEO, on the SEI 2015-Q4 conference call, said “While we had not actively recruited all Curian advisors, we have sought out those that meet our profile. During the third and fourth quarters of this year, we signed 195 new Curian advisors and brought on approximately $1.3 billion in assets from the Curian affiliated trust company. We are still seeking to grow Curian advisors.”
• In August, Brinker Capital hired Greg Verfaillie, a 13-year Curian veteran, to head up its recruiting efforts.
• EQIS, a San Rafael, CA-based asset management firm also active in the hunt, declined to comment on either assets or advisor relationships gained. “While we’re not at liberty to discuss specific AUM that we added to the EQIS platform as a result of the Curian event, we can say that many advisors chose to move their clients’ assets to EQIS, resulting in record setting growth for us,” said a spokesman, adding that the firm had hired Curian consultants Rick Parker and Zach Stout last fall, and that Parker has since been promoted to National Sales Manager.
Here’s how they did it:
The feeding-frenzy occurred during sharp volatility in late 2015 and early 2016. From July 30, 2015 to February 19, 2015, as the S&P slid more than 9%, putting extra pressure on advisors trying to move their clients’ assets.
Acquiring firms swooped in on advisors and their accounts, fighting off competitors with a combination of service and product offerings.
Kim says that AssetMark won advisors over by making their jobs easier. For instance, his firm streamlined paperwork, prefilling client information into multiple forms.
AssetMark also worked with advisors to provide recommendations that were best aligned with client holdings, mapping AssetMark offerings onto existing client strategies. AssetMark consultants held onsite meetings with advisors and their clients to let them know what to expect during the transition process.
The company’s product mix also helped. “Specifically on the product side, we had very tax sensitive strategies to help the advisors transition these accounts without triggering a lot of tax liabilities for these clients,” Kim explained. “Also in many cases, these advisors held socially responsible strategies that had all kinds of filters to weed out securities or certain sectors or industries. So we had a number of strategies that would meet what these client were looking for.”
“One of the most popular investment solutions was what we call our custom strategies where we literally build a customized portfolio for the client to really meet their specific goals and objectives and that really played well with those advisors that were really looking for, frankly, an opportunity to upgrade the investment experience for their clients,” Kim concluded.
Kim says that his firm has been getting very positive feedback from advisors who joined during the transition. “They’re saying that in a difficult period due to market conditions, we were able to make it as easy as possible. Beyond that, we’re hearing that we were able to help them grow even further and faster than they ever did.”
SEI’s Withrow cited a dedicated transition team, its full suite of business services including investments, custody technology, administration and practice management services and competitive pricing as key to attracting Curian advisors.
More casualties ahead?
Vultures, by their nature, cull the weak and sick, and they seem to have done the same with Curian. No one will say exactly why Curian folded so quickly and without trying to find a buyer. Curian’s interim president and CEO Mark Mandich said summer that, “When Curian launched 12 years ago, the competitive landscape and market trends favorably supported the business. Given the industry-wide changes in technology, product offerings and market size, Curian has determined that it is no longer commercially positioned to provide clients high value investment programs over the long term.
This was a difficult decision. We appreciate the loyalty of our clients, business partners and staff and remain committed to assisting them throughout this transition.”
An August Financial Times article, however, pointed to deeper problems at the asset manager, such as the £33m ($47 million) its parent company Prudential has set aside to repay allegedly mischarged customers.
Firms that brought in Curian advisors, assets and professional staff all refused to speculate on reasons behind the firm’s demise, but AssetMark’s Kim suggested that scale — or rather the lack of it — may have been a factor. “Just seeing what happened with Curian, many of the sub-scale the smaller TAMPs are going to be in a position to re-evaluate their business,” he said, noting that even before Curian closed, his firm had acquired two other boutique TAMPs. “I know that advisors are examining the viability of a number of these long-tail, sub-scale TAMPs and their ability to continue to thrive in this industry going forward.”
SEI’s Withrow concurred that strength and financial stability had been a determining factor in many advisors’ decisions about where to move their businesses. “The financial stability of the firms advisors are working with is very important. Furthermore our stability provides the safety and security advisors seek for their investors’ assets and gives us the ability to invest millions of dollars to enhance our solution through technology platforms, practice management tools, and new investment solutions,” he said. “As to the broader implications, we feel advisors are now more focused on the financial stability, commitment and staying power of the providers they select in the industry.”
Moreover, there may be more events like Curian’s closing as the industry matures. “I would not be surprised to see more consolidation,” said Kim.
And when it happens, the vultures will gather for another meal.