Two RIAs in Maryland and New York City are joining forces to create an employee-owned firm with over $4 billion in managed private client assets.
In an interview with WealthManagement.com, Greenspring Advisors co-founder Pat Collins and Wealthstream Advisors founder Michael Goodman emphasized the importance of keeping the new firm under the ownership of its employees.
The deal makes the combined company one of only a few dozen employee-owned firms in the country with managed assets in the billions. According to Collins, publicly-traded firms or private equity-backed businesses will have shareholders and investors to whom they’re accountable.
“In this case, we’re accountable to each other and to our clients,” he said. “I think that on the decision-making front, you can be much more aligned with your clients and with your team than just on overall financial return.”
After the merger, Greenspring and Wealthstream will operate as Greenspring Advisors, with over $10 billion in assets (in addition to the $4.3 billion in private client assets, the firm will manage about $6 billion in institutional assets).
According to the owners, the team includes 70 employees, 23 of whom own equity in the company (with plans to expand that number). The firm will operate out of offices in Towson, Md.; Lancaster, Pa.; Paramus, N.J.; and New York City.
Collins said he and Goodman have known each other for over a decade, and discussions about a potential partnership began about a year and a half ago. Goodman said they were part of a “strong subset of the industry” prioritizing an employee-owned model.
According to a deal announcement by Echelon (which advised both firms during the merger), the New York-based Wealthstream specializes in financial planning and investment management for high-net-worth individuals and families. The Maryland-based Greenspring specializes in advisory services for institutions and retirement plan sponsors (as well as wealth management and planning for individual clients).
According to Goodman, the scope of the deal will help the firm bolster its employee-owned structure by allocating more resources to its own team. While Goodman said regional priorities weren’t a “strategy,” the firm’s locations offer it “a nice region to operate in that’s pretty contiguous” from New York to Maryland.
“It wasn’t a focus, but it’s a nice benefit,” Goodman said.
Collins said Greenspring intended to build “the best training program” in the RIA industry, adding the firm had built a “strong” G2 and G3 population over the years. While the firm wasn’t closed to M&A opportunities, Collins said it intended to build organically rather than buying firms to develop talent.
Collins estimated that there were approximately 40 firms in the country with more than $3 billion in managed assets that were entirely employee-owned. Typically, such firms tend to be smaller, and when a firm reaches Greenspring’s size, it’s typically fielding private equity interest.
“Is that 40 going to grow? I actually think there is a very good chance that we see expansion, albeit from a very small base,” he said. “It won’t be the right fit for everybody, but for the ones that really feel passionate like we do and want to build something bigger together, I think there’s a subset it’ll fit for.”
