Disrupting an Industry for the Better

The main floor at the Ritz-Carlton in St. Louis is full of excitement and an energy you feel walking into the lobby. The Ritz is buzzing because it is playing host to the first annual advisor meeting for the aptly named &Partners.

Since its inception less than 18 months ago, the firm has amassed over $30 billion in assets across more than 70 advisor teams. Planned growth for 2025 is expected to add another $10 billion to $20 billion to the platform prior to year-end. The secret ingredients for what appears to be one of the fastest-growing independent wealth management firms in the country are equity ownership and the alignment that comes with it.

As the name suggests, the advisors that join &Partners hold a meaningful equity stake in the firm. As shareholders, advisors at &Partners help to shape the company and its future. But they don’t act alone.

The firm is intentionally designed to be co-owned by its home office professionals, advisors, and managers, creating an alignment that is atypical in the industry. The result is a culture of responsiveness that, according to the advisors who have joined, is second to none. Advisors at &Partners assert that the value of shared ownership is manifesting itself in a better experience for them and their clients that is tangible and meaningful. In fact, in a management Q&A that anchored the second day of the conference, advisors took to the microphone to actively thank the management team for “disrupting an industry that needed to be disrupted.”

Building something great for advisors and clients

The disruptive force of &Partners began as an idea that was shaped principally by its founders — David Kowach, the former CEO of Wells Fargo Advisors (WFA) and John Alexander, WFA’s former head of divisional network. The two have worked together closely for almost 25 years. When queried as to why they decided to launch their own firm, both answered similarly — “to build something great.”

For many years, wirehouses had focused on size as a key differentiator, a strategy that both Kowach and Alexander acknowledge was the right approach prior to the advent of the cloud and the expansion of fintech investing. “Ten years ago, integrated technology could only be achieved at scale, so in order to deliver a strong client experience, advisors needed to affiliate with larger organizations,” notes Alexander.

Kowach and Alexander believe that size is no longer a positive or a beneficial differentiator. By leveraging advances in fintech and cloud-based computing, they have built a technology platform that they argue rivals the best that most wirehouses have to offer. But they maintain that technology isn’t the only factor drawing advisors to &Partners.

Client and advisor centricity is the key. “Our operations, compliance, and supervision platforms have been built on the idea of dedicated onshore service, with an affirmative rejection of decisioning based on what we call lowest common denominator thinking,” states Kowach. To deliver on this mission, &Partners has attracted experienced and tenured professionals, including an onboarding team whose members, during their tenured careers, have by their estimation collectively transitioned over 4,500 advisors.

Leaders who work hard and know how to deliver

Recognizing the need to bring something fresh and valuable to the investment side of the equation, Kowach and Alexander teamed up with one of the industry’s top talents — Kristi Mitchem. Mitchem and Kowach had worked closely together during Mitchem’s stint as CEO of Wells Fargo Asset Management. Kowach sheepishly admits, “Kristi and I didn’t always see eye to eye when we were at Wells — but there is no one I respect more. She is hands down the smartest person and most creative leader I have ever met. We couldn’t be luckier to have her.”

Consistent with her reputation for spurring innovation and demanding excellence, Mitchem has staffed her team with a cadre of institutional asset management professionals who focus on lowering costs and enhancing investment quality. The vibe during the investment session at the conference, introduced by Randy Bradshaw, another noted industry executive who joined &Partners from Ed Jones, reflected a level of positivity that was striking for these types of events.

At one point, an advisor in the audience stood up to recount his experience with Mitchem, thanking her personally for taking time to speak at a local conference in Olympia, Washington, which he noted had generated millions in new client opportunities for him. It is telling that in a private moment, he also shared that his success in his first year at the firm has been beyond his expectations. He attributed his banner year to the &Partners Investment Team, which has provided him with a level of individualized support, tailored insights, and access to high-quality products that he did not have in the past.

A unique approach to capital

Of course, any discussion of new entrants into the independent space would not be complete without a discussion of capital, given accelerating private equity interest in this area. Here too, &Partners has chosen to walk a different path — raising minority equity primarily from friends and family and using debt capital from traditional and alternative credit providers to finance advisor loans.

When asked about the capital stack, Kowach reflects, “I think we may have fallen into something super special here, which really came from John. Alexander adds, “My dad was a mailman, and he always kept me grounded in terms of how to define success. I knew that we could all do well, in fact great by most standards, if we committed to broadly sharing the equity in the company. And as founders, we bought into the concept of distributed ownership. Consequently, no single executive, or small group of executives, owns an outsized share of the firm. The only way we win is to win together.”

Importantly, the firm sees the desire for equity ownership as helping it attract the right advisors. In response to a query about cash deals in the industry, Rich Getzoff, the former head of branch network at Wells Fargo, notes, “We are going to miss advisors who are looking for big upfront money, but that’s okay. We attract advisors who want to build lasting wealth, through participation in shared value creation for clients. Advisors who choose us do so because they are seeking a place where client-centered, growth-oriented franchises can thrive, and win longer term.”

A big start

It is clear from reading the room at the inaugural &Partners conference that the firm has developed a distinctive approach to independence — one that rests on the idea that distributed ownership drives better outcomes for clients, advisors, and staff.

&Partners is a “who’s who” from the industry — from Kowach and Alexander to Mitchem, Getzoff, Byer, Bradshaw, and Warren Terry — so the early success is perhaps not surprising. However, it is important to recognize that &Partners is certainly benefiting from a larger migration from big to small, and that the competition for advisors leaving the wires is likely to intensify as more capital flows into this space.

While it may become increasingly difficult to entice advisors away from the wirehouses, like Wells and UBS, as smaller teams consolidate into larger practices and succession agreements take hold, don’t expect the waves made by &Partners to abate any time soon. When advisors become disciples, as they appear to be at &Partners, the only limit for the firm may be its stated intention to be an invite-only platform, where size never becomes the enemy of the great.

Reprinted with permission.