At least three Advisor Group-controlled registered investment advisors disclosed a new potential conflict of interest at the end of last month that stem from the various financial services pots the firm's owner, private equity manager Reverence Capital Partners, has its hand in.
In 2019, Reverence Capital agreed to buy Advisor Group, a leading network of independent broker-dealers now with more than 10,000 financial advisors working under various roofs. Advisor Group is currently looking to reshape its brand and services in coming months to show a more unified front.
That was the first pot. The second was last year, when Reverence Capital invested $100 million in CAIS, which has facilitated more than $15 billion worth of transactions on a platform that connects alternative asset managers with financial advisors. CAIS said the $100 million from Reverence Capital represented about 10% of its enterprise value at the time.
That Reverence Capital investment in CAIS has created the conflict of interest disclosed at the end of March in updated Form ADVs by the three Advisor Group RIAs: Securities America Advisors Inc., with $38.1 billion in client assets; Arbor Point Advisors, with $6.4 billion in assets; and Triad Hybrid Solutions, with $4.6 billion.
The agreement between Advisor Group and CAIS on the sale of alternative investments, and the revenue such sales would generate, is the crux of the matter. And Advisor Group could very well have selected the CAIS platform before Reverence Capital made its investment, softening the appearance of the conflict of interest.
The RIA firms' deals with CAIS "provides for a payment to us of up to 10 basis points on the sale amount of alternative investment products sold through the CAIS platform," according to language in each of the three firms' updated disclosures. "The firm has therefore an incentive to recommend alternative investments on the CAIS platform to you, which is a conflict of interest. However, your Advisory Representative does not receive any portion of this compensation."
A basis point is one-hundredth of a percentage point. Ten basis points of $100,000 is $100.
"The CAIS offering enables advisors to provide best-in-class access to alts, and many of the industry’s top firms use its platform," Matt Schlueter, president of products and platforms at Advisor Group, said in an email. "These reasons are why we offer CAIS among many additional alternative investment solutions we make available to our advisors. The annual disclosures were updated to reflect this new offering."
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
