“When we complete our five-year plan and we’ve recruited the advisors we want to recruit, advisors will be the single largest group of shareholders within our firm,” &Partners founding partner Kristi Mitchem told InvestmentNews.

More than 80 advisory teams have joined &Partners since former Wells Fargo Advisors CEO David Kowach launched the hybrid RIA in August 2023 with an equity-focused compensation structure. The firm is capping equity distribution as part of its five-year plan to recruit advisors.

“The equity cap is at 40 million shares. We have remaining undistributed equity that can support our growth up to approximately $120 billion in AUM. After that, we would recruit with cash,” an &Partners spokesperson wrote to InvestmentNews.

Executives from &Partners confirmed in a June 13 interview with InvestmentNews that the firm manages around $35 billion in client assets, with plans to reach $40 billion to $50 billion by the end of this year and the $120 billion mark by 2028. Founder John Alexander said &Partners expects to hit about $400 million in pro forma revenue by the end of 2025.

“When we complete our five-year plan and we’ve recruited the advisors we want to recruit, advisors will be the single largest group of shareholders within our firm,” said Kristi Mitchem, who founded &Partners alongside fellow ex-Wells Fargo senior executives Kowach and Alexander. There are 13 other founding partners in &Partners, according to an investor presentation.

Mitchem, Alexander, and Kowach collectively own less than 15% of &Partners, with about “one-third of equity owned by friends and family and the rest split roughly half and half between home office employees and advisors,” said the &Partners spokesperson. No individual holds more than a 5% equity stake in &Partners, according to WealthManagement.com. 

“As an advisor when you join us, you get a significant piece of equity of the firm, and we made a decision that we were going to cap the amount of equity that we were going to issue. So there’s a scarcity factor that comes into play too,” said Alexander.

&Partners launched in 2023 with the intent to hire 100 partnered advisor teams. Advisors added thus far have largely come from Wells Fargo, Edward Jones, UBS, and Merrill Lynch. About $40 million in funding was raised to launch &Partners in 2023, and the firm says it has no plans for further raises at this time. 

Advisors showing interest in &Partners include some teams from Commonwealth, the independent broker-dealer acquired by LPL Financial for $2.7 billion in March. 

“We’re certainly aware of Commonwealth; we’ve had a lot of folks reach out to us from there. I also know that a lot of the recruiters are heavily involved, but we’re not involved with those recruiters,” said Alexander. “To the extent that you have folks from Commonwealth who are used to a smaller, more collegial, and maybe more nimble place, I think we appeal to them and we have had a lot of them reach out.”

Alexander added &Partners’ advisors are seeing “no fee compression from the people joining us from wherever they may be coming from.” The standard industry advisor fee has been 1% of a client’s assets under management, but a recent study from Cerulli Associates found that 83% of financial advisors expect to charge less than 1% by 2026 for clients with more than $5 million.

“We’re big users of ETFs and SMAs, we only use triple clean share classes, we don’t charge for in-house investment management, and we don’t charge for in-house asset allocation,” said Mitchem. “So it is almost invariably the case that when an advisor moves from wherever they are today to &Partners, it represents a pretty significant cost savings for their clients, and we hope an uptick in quality.”

Reprinted with permission.