Aspiriant picks up $850M Silicon Valley RIA

Firm's `100-year-plan' includes future deals in March and June, says CEO Rob Francais

Dec 12, 2016 @ 7:00 am

By Jeff Benjamin

The growth continues for Aspiriant, as the Los Angeles-based advisory firm is about to lock up its third RIA transaction in a year, with at least two more deals slated in coming months.

In the latest deal, which is expected to close Jan. 31, Aspiriant is folding in Silicon Valley-based Stanford Investment Group Inc., which has $850 million under management and serves 260 clients. The private-stock transaction will push Aspiriant's assets to $10.4 billion and its client base to 1,400, making it among the largest and fastest-growing RIAs in the country.

“Growth is our strategy and I'd say we're still in our infancy,” said Aspiriant chief executive Rob Francais.

“We have a 100-year business plan,” he added. “We will do another transaction in March, another in June, and this will continue because the RIA industry that shares our values wants to remain permanently independent.”

Aspiriant, which kicked off 2016 by taking over two different California RIAs within 90 days, was formed in 2008 through the merger of San Francisco-based Kochis Fitz and Los Angeles-based Quintile Wealth Management.

The name was changed to Aspiriant and, as Mr. Francais explains it, the foundation was in place to build scale and a national footprint.

Stanford Investment Group, which was founded in 1982, is already in its second generation of ownership and appealed to Mr. Francais for its location and client base in an area where Aspiriant already has clients but no offices.

Helen Dietz, chief executive at Stanford, said the merger talks with Aspiriant began 15 months ago, and that the appeal was an opportunity for the firm to become a part of something larger and more sustainable.

“About two years ago, we had a meeting about getting better and staying relevant for the next 30 years, and we decided if we can't build it we should go out and find somebody to merge with,” she said. “Joining Aspiriant will allow us to provide our clients with access to more services, including tax, estate, family office and a large dedicated investment team, as well as the strength and stability that comes with being part of a nationwide firm.”

Once the deal closes, the members of Stanford will become employees of Aspiriant, with the five principals joining the 55 principals already at Aspiriant.

The closing transaction, which Mr. Francais said is not an acquisition, will likely bump Aspiriant up a couple notches to No. 15 on the InvestmentNews list of fee-only investment advisers, where it will take another $3 million under management to crack the top ten.

David DeVoe, founder of the research firm DeVoe & Co., said Aspiriant is tapping into a growing desire by RIAs toward consolidation for competitive advantages.

“When I started in this business 14 years ago it was mostly about selling to exit the business, and that has shifted profoundly in last two years,” he said. “We're seeing a second consecutive year of record M&A activity among RIAs, and the driver has been strategic transactions with the objective of achieving scale.”

Of the more than 10,000 RIAs across the country, Mr. DeVoe said less than 600 have more than $1 billion under management, which means there is plenty of room for Aspiriant's growth plan.

(Related read: RIA mergers could be headed for another record in 2016)

“What's happening in the RIA space today is advisers are more likely to examine a partnership with a firm that can help them run their business better,” Mr. DeVoe said. “A growing number see power in partnering with a large firm that can handle things like compliance or at least take it off their plate.”

We will do another transaction in March, another in June, and this will continue because the RIA industry that shares our values wants to remain permanently independent.—Rob Francais, Aspiriant's chief executive

With the Stanford transaction, Aspiriant will have a solid footprint in California, with offices in San Diego, Irvine, Los Angeles, San Francisco and Silicon Valley.

But Aspiriant also has offices in New York, Boston, Minneapolis, Milwaukee and Cincinnati.

Mr. Francais said the next two transactions will likely include another RIA in Orange County, Calif., and something in the Midwest.

(Related read: Aspiriant to add $570 million San Diego RIA to its ranks)

Without tipping his hand too much, Mr. Francais said he prefers larger RIAs, with close to $1 billion under management, in locations where Aspiriant doesn't already have a presence.

“Location and size are actually down the list in terms of what's important to us,” he said. “If we can't satisfy their clients on a post-merger basis it makes no sense to us.”

With that in mind, Mr. Francais said he will avoid transactions with RIAs that are just looking to cash out of the business.

“People who are just looking for a transaction would not be interested to us,” he said. “And we're also not interested in people who are just looking to just sell product.”

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