It turns out being a money manager can be a profitable investment itself.
Joe Duran in 2005 co-founded United Capital Financial Partners Inc. Last month, he said he’d sell his Newport Beach-based company to Goldman Sachs Inc. for an estimated $750 million.
“It worked out all right—only in America,” Duran told the Business Journal after the deal was announced.
Duran will continue to manage the firm, which had $21.5 billion in assets as of last December and is ranked No. 4 on the Business Journal’s listing of Registered Investment Advisers, or RIAs.
The first-ever ranking is based on discretionary assets the companies manage and report to the Securities and Exchange Commission.
Forty-seven companies made our cutoff of $500 million assets under management, or AUM. Eight of these have headquarters elsewhere.
The Business Journal ranked firms’ assets companywide not by local office, which are often not broken out by firms. More assets also indicates more in-house experts on topics like taxes and inheritances.
About a hundred OC-based RIAs didn’t make the list; their AUM were under $500 million, SEC filings show.
The list includes a separate category on nondiscretionary assets that the companies don’t manage and sometimes include in their assets under advisement, known as AUA.
OC employment for those on the list has climbed 3.2% over the past year to 815. That figure includes 293 RIAs, a 2.8% boost from a year ago.
Actual returns by RIAs can be tough to measure due to clients’ investment strategies and risk-tolerance. A rough proxy for RIA health can be growth in assets, which considers funds flowing into a firm and appreciation of stocks, dividends and bonds. AUM growth can also come by acquisition; some OC-based RIAs are rolling up smaller firms and becoming giants themselves, including United Capital.
RIA World
RIAs often say their fiduciary obligation to consider client interests first when dispensing advice gives them an advantage over brokerage houses, which often handle stock trades and can sell supplementary products like insurance (see separate list, page 26).
The growth of the RIAs is seen by a 20% annualized increase in the past three years—a benchmark timeframe for the industry—to a total of $229 billion in AUM for companies on the list. Only three listed firms reported a decline.
“The fiduciary model is growing” faster than brokerage houses, said Harmon Kong, who co-founded Apriem Advisors in 1998. “The RIA industry is gaining momentum.”
No. 42, Irvine-based Apriem, saw assets climb to $697.4 million, an annualized 17% growth from December 2015. Kong attributed growth to referrals, a “great team” and a focus on women and retired industrial workers as clients.
Big Names
• Andrew Fuller, managing director of the Irvine office of Creative Planning Inc. has grown local ops to almost $1 billion AUM (see separate story, page 23). Creative Planning took the top spot with $36.5 billion firmwide.
• No. 46 Tarbox Family Office was begun by Laura Tarbox, a director of the personal financial planning certificate program at University of California-Irvine. Her firm has grown assets 14% annually to $609 million.
“We’ve recently enhanced our service offerings by offering tax and bill paying so it’s attracted some large clients,” Tarbox said. “Our biggest challenge is finding talent.”
In recent weeks, it’s also added an office in Arizona and the company’s AUM could top $1 billion by the end of the year, she said.
• No. 2 Pathway Capital Management LP of Irvine and No. 3 WCM Investment Management of Laguna Beach have grown surprisingly large with little fanfare. Pathway had an annualized 6.2% growth rate to $33.3 billion in assets. WCM’s assets climbed an annualized 56% to $23.1 billion.
• No. 7 Research Affiliates of Newport Beach has increased an annualized 9.5% growth rate to $10.5 billion. The firm was started by Rob Arnott, considered the father Smart Beta investing and who works closely with PIMCO, which manages $1.8 trillion in assets.
• No. 11 Flexpath Strategies of Aliso Viejo made the largest leap, reporting a 171% annualized growth to $5.1 billion in assets.
• No. 19 Canterbury Consulting of Newport Beach has grown its AUM 40% annually in the past three years to $1.9 billion. The firm often advises nonprofits and family offices.
• No. 21 The Bahnsen Group, began in 2015 by David Bahnsen, has seen its annualized growth surge 38% to $1.6 billion. He’s one of several advisers in OC who often appear on national RIA lists; others include Laila Pence of Pence Wealth Management, No. 27, and Mark Hebner, who founded Irvine’s Index Fund Advisors, No. 13.
• No. 28 Acorns Advisers LLC climbed 136% to $1.2 billion (see story, page 1).
